A reduction in the number of ready, willing and able purchasers can obviously lead to a downturn in sales activity and a reduction in banked income. This situation is clearly unpalatable and unsustainable.
Some investment buyers start to sit on their hands and become unwilling to commit to imminent purchases until there is clarity as to future property price movement. Many first time buyers stall for similar reasons, while others are victims of financial institutions’ change in approach to lending. On top of these categories of customer are the ones who are simply unsure what to do in uncertain market conditions – their confusion typically leads to them doing nothing until certainty returns.
However, that there are plenty of people still trying to move home. Many of them are looking to stay within the same area. The way an agent manages this key group can make the difference between success and failure.
By doing the right things, sales can be made to happen. Diligent efforts to assist these local property-to-sell customers to find somewhere suitable from the selection of available properties (or previous instructions/valuations etc) ensures chains of transactions are formed. With subsequent careful negotiation from the top of the chain downwards, each vendor involved may reduce their ideal sale price, ultimately allowing the dependent property at the bottom to be offered at a sufficiently competitive figure to generate interest from first time or investment buyers. Once this base property is sold, the whole chain can progress.
A Partner in one of our estate agency client companies has spent a lot of time visiting vendor clients to discuss this concept, encourage price flexibility to assist in building such chains. He took the decision to do this over a four week period after becoming increasingly frustrated at the number of subject-to-sale offers his office had agreed which could not proceed. At that time, his branch had a total of 18 potential sales that were going nowhere until the bottom property secured a purchaser. His vendor visits led to price reductions cascading down to these bottom links, making them more saleable and ultimately leading to the next two months being far better sales periods than would otherwise have been the case.
One success story of this nature was an incomplete chain where Mr and Mrs A, the vendors at the top, were emigrating to Spain, and had a subject-to-sale offer from Mr and Mrs B of the asking price of &245,000. Mr and Mrs B in turn had a subject-to-sale offer of &192,500 from Mr and Mrs C who were attempting to find a buyer for their &155,000 property. Mr A had already moved across to Spain, therefore he and his wife were extremely keen to get their sale proceeding quickly, and had indicated to their selling agent that should a quality buyer be found, any offer over &220,000 would be considered. After a series of conversations with the various parties, Mr and Mrs B revised their offer to &225,000, allowing them without hesitation to reduce their own price to &182,500. Being equally keen to move themselves, they contributed a further &5,000, allowing them to accept &177,500 from Mr and Mrs C. The latter couple in turn immediately revised their asking price to &140,000 and a first time buyer was secured within two days at an agreed figure of &137,500. All parties were delighted with this outcome and with the subsequent swift exchange and completion. Had the agent been less creative in their approach, these transactions would probably only remain on the potential sale list to this day.
Local applicants moving downmarket can also serve as a key to maintaining desired sales performance, as they can complete the chain in the same way as proceedable buyers.
Our consultancy work with estate agency firms has included assisting them in creating and maintaining a manual or computerised “chainbuilding opportunities register”.
Each local applicant who registers on the mailing list and has yet to sell is logged onto this register which contains details of the type of property they are selling, the approximate price they are hoping to achieve, as well as what they are looking to buy and to spend. A daily review is carried out by the office team to identify chainbuilding and swap opportunities – then targeted calls are made to the relevant individuals.
Having set up their register and undertaken the appropriate staff training via ourselves, one client company reported back to me that in the subsequent few weeks they were successful in effecting two swap situations from within the register generating fees of almost &13,000, and one “circular” transaction (where client X bought from client Y who bought from client Z, with client Z moving downmarket to buy from client X) worth over &12,000.
Such is the power of positive linking!