Online Estate Agency vs Traditional Estate Agency

Posted by & filed under Industry News, Opinion.

I think it is clear to see that we are in a tougher market than we have seen for many years, with the effects of the Brexit vote and also the General election it has made the role of an estate agent much harder than it has been for many years and in terms of the calibre of agents, the bar has been raised substantially.

The days of “All you had to do is answer a phone first and you would have a deal” are long gone, it is now a case of educating your buyers, sellers, landlords and tenants on the market, advising them on the current market conditions, the processes and what the likely outcome is for them.

I am seeing a lot of very experienced agents leaving the industry that they love, due to work life balance and in some cases their concerns about earning potential in this tougher market. It is a shame to see so many of my peers leaving, another thing I have noticed is the shift from experienced professionals moving to online agencies.

As a recruiter on a daily basis I, just like many property professionals, see the constant battles on Linkedin between online agents and the more traditional agencies. I have noticed that now many of the smaller independents and the larger corporate agencies who previously used to Linkedin to battle with each other now reserve their usage of Linkedin to join forces and battle with the online agencies.

To me, it has raised a few questions:
Is traditional estate agency is becoming a thing of the past?
Is the new flashy hybrid online agency going to become our future?
Which model will come out on top?
Is there a place in the market for both traditional estate agency and also online agency?
Is the model so different? Surely it is just paying the fees upfront yet still working with estate agents who were trained in the traditional way?

In terms of revolutionising estate agency, the objective is still the same, a property is listed by a professional and then sold or let, the majority of online agents seem to be agents who cut their teeth so to speak in traditional agency but then moved over to online, taking years of experience with them.

Many business analysts from outside of the industry have likened the evolution of estate agency to; Blockbuster and Netflix or the black cab to Uber, 10 years ago who would have thought that in 2017 the world’s largest taxi firm would own no taxis and the world’s largest accommodation providers Airbnb would own no property.

The online agents that I have spoken to, all seem very happy with their choices and put this down to having flexibility in their work life balance and not being constricted to a structured diary, in their words they are able to make more money, working better hours and providing a greater level of service to each client.

Many of the traditional agents question the service that is provided by online agents and the processes that make them different, so paying fees upfront, whether the property is sold or not, which they say questions the motivations of the agent, they are also questioning the way that the fees are presented and also the service that customers receive.

However, looking at reviews for both online and traditional agency, I see common themes in customer complaints, it seems to be clarity, service and the age old, over promising and under delivering, could this be the answer?
Surely both models can exist harmoniously if they operate with integrity, clarity, provide outstanding service and do not under deliver, look at First Direct they are an online bank, who operate perfectly well within a market full of physical branches.

What are your thoughts?

 

Cost Per Hire – Guess The Cost Of Hiring a Negotiator In To Your Business…

Posted by & filed under Advice, Industry News.

IMPORTANT – Before reading through the costs calculated below, have a guess as to how much you think an empty Sales or Lettings negotiator seat might cost an Estate Agency or Property Developer…

Write it in the comments below and see if you’re close!

So, I’ve been doing some workings on the cost per hire for Sales people within the Property sector.

Here are the potential costs of what might go into securing a suitable Sales Negotiator, Lettings Negotiator or Property Consultant…

  • Assuming that the position will remain open for 2 months and it will take this person 2 weeks to be fully integrated into the company – (based on a conservative £10k / month target) lost revenue – £25,000.
  • Job Advertised across multimedia platforms– cost of £1500
  • 600 CV’s will be received and need to be reviewed:
    • Typical review time is 3 minutes per resume – 30 hours of time.
  • 25 phone screens will take place (15mins / screening) – 6 hours, 15 minutes of time.
  • 8 face to face initial interviews will occur – 8 hours of time.
  • 3 face to face, 2nd, more detailed interviews will occur – 3 hours of time.
  • Background checks and reference checks will take – 2 hours total of time.
  • Hiring Manager earns £100k per year or £48.08 per hour (assuming only one person is involved in the hiring decision). Time invested of 49.25 hours = £2367.94.
  • Training and two-week ramp up of new employee – £1,500.

Total cost: £30,367.94

But wait…

I haven’t included the time lost from the core responsibilities of the hiring manager; they could be devoting a whole extra week per hire to generating revenue for the business.
Or they could be spending more time with the existing team to develop them and increase productivity and retention. This, in turn, would reduce the need to recruit.

Then, of course, you must also take into account the bad hires, people who aren’t right. These are the people who also take a wage out of the business and don’t generate revenue!
If you lose 1 out of 4 people hired at the end of their 3-month probation that would be £30k in lost revenue PLUS their wage cost of £4500 (3 months at £18,000pa) = £34,500 in total.
Spread that over the 4 placements = £8,625 / placement extra for each hire.
If that turnover is higher, I know many property companies and estate agencies where the turnover rate is as high as 1 in 2, that’s £17,250 extra/placement!

This makes the total cost per hire = £38,992.94 (or £47,617.94 if there’s a 50% dropout rate)

Of course, the biggest cost here is the loss of revenue – £33,625 / placement and the cost of bad hires.

So you want to see the best people as quickly as possibly but it’s important not just to hire anyone as you will be going through the whole process again, at more cost. Of course, recruitment companies can help but make sure you pick the right one – but before going down that route see my blog “recruitment agencies are a waste of time!”

The most important thing is getting the RIGHT person and do all you can to keep your BEST people. If you would like more information or advice on interviewing and selection as well as the best ways to increase retention – feel free to get in contact with me (alex@cherrypickpeople.com)

Really interested to hear if your guess on the cost per hire was close! And if you have anything to add or feel I’ve missed anything in my calculation please comment!

If you are interested in further reading on this topic here is an article posted in the Telegraph, it’s not specific to property sales people, however they calculate similar costs across various sectors…

http://www.telegraph.co.uk/finance/jobs/10657008/Replacing-staff-costs-British-businesses-4bn-each-year.html

Sales Market Update – is Prime Central London just not affordable anymore?

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The past year of the London Property Sales Market has been very interesting, something I have constantly kept track of. I have worked within the Property Recruitment industry for almost 5 years and this past year has been particularly different to previous years!

In my last blog, So Happy My Offer Has Been Accepted! But Oh Wait, The Dreaded Stamp Duty… I discussed the effect the increased Stamp Duty was having on first-time buyers and the London property market and whether it was even an issue for the most affluent?

Is everyone moving from Zone 1? Is it a boycott of Prime Central London!? PCL has been a location desired by many, I personally have always aspired to live in areas such as Kensington, Notting Hill, and Chelsea – if I could afford to move to the beautiful South Kensington or calm Little Venice I definitely would. But has that Hot Spot changed for potential buyers? Is it now the purchasers that are filtering from the Centre to what was known before as the ‘dreaded’ Zones 3-6. The Evening Standard has stated the largest drop in property prices has been in the Central Boroughs such as Camden (down 16.4%) and Hammersmith & Fulham (down 11.6%). The borough with the most increased growth has been Hackney with an increase of 15.6% and Bromley (even further out I know) has had a rise of 11.6%.

Data firm LonRes have also stated the number of houses over £1m sold in 2016 were down 21% year on year. City A.M reported London’s house growth is level with Portsmouth… Hometrack has stated prices in PCL are just becoming unaffordable, in Chelsea house prices have fallen by 10%. Savills concurred that the prices of PCL have fallen by 6.9% compared with last year (which was 4.9%). However, the real estate firm has said within the collapse of Sales (Brexit and increased Stamp Duty) the asking prices of properties have had to reflect this. Is this all doom and gloom? It was predicted that the fall in PCL would be 9% – so it is actually less than anticipated.

(Source from Knight Frank)

Even though Savills have reported lower prices, Persimmon has stated a rise in revenue (their average selling price was up by 4%) as the availability of mortgages have helped to boost prices!

More and more buyers are now buying New Homes which seems to be a strong choice for buyers.  New Homes are competitive with mortgage offers and therefore makes the purchase very affordable (I recently bought a new home myself!). The FTSE 100 in January showed the builder was the best performer with share up by 5%.

Richard Donnell of LonRes has shared that house prices in London are 85% higher than they were in 2009!!! – so it is not surprising the pace has decreased. Helen Cahill of City A.M has said the slump in the prices are at the top end due to Stamp Duty on homes worth more than £1m and has meant that some homes have slashed their prices by 30% – it is all to do with affordability. Are buyers simply not able to physically pay the price for PCL?

But will it all be over soon?        

Or will it be a case of Zone 1 buyers fleeing to the likes of Bromley? Or the up and coming Hackney? As the Sales Market changes so do consumers.

So happy my offer has been accepted? But oh WAIT, the dreaded stamp duty…

Posted by & filed under Blog, Cherry Pick People News, Industry News, Opinion, Uncategorised.

So happy my offer has been accepted?  But oh WAIT, the dreaded stamp duty…

The Times recently stated, “Stamp duty only used to be paid by the wealthy property buyers but now it makes younger buyers poorer”.

As promised, here is an update on my last blog – the sales market is it doomed? I started the process of buying my first ever home in London.

To give you an update – I have had an offer accepted on an amazing property in my perfect location! So happy! But the excitement flattened, as a first-time buyer I was shocked in the increased stamp duty to 5%. I sat there – looked over all the figures – How do they expect first-time buyers to save for a deposit, pay the mortgage and solicitor’s fees as well as pay a hefty stamp duty? Naomi Heaton (CEO of a Property Investment firm in PCL) has said the fall in home sales is ‘very concerning given additional government schemes for first-time buyers’. The Guardian have also blamed the huge rise in stamp duty as London home sales fall by 40 per cent!

The Telegraph has stated that stamp duty is not actually helping first-time buyers – an example was shown of a married couple trying to buy in Brixton, found their dream home at £345,000, offer accepted but did not budget for the stamp duty and had to pull out due to an additional £10,350 for stamp duty that they could not find the money for! Contradicting the latter, Marsh & Parsons have stated that home purchases have increased from 22% to 34%, according to data collected from buyers across all Prime London. The FT have also said the 3% rise in stamp duty for private landlords has scared off buy-to-let purchases which have given a larger market to just regular buyers.

According to the Land Registry in 2016 we have seen that the huge rise in stamp duty is blamed for London’s sales falling by 40% with the average stamp duty at a whopping £16,500 – even more so in Central London with a 60% fall (only 62 properties were sold in Central London in 3 months!). Comparethemarket.com has shown that a third of people are choosing to renovate their homes instead of selling/ moving. I had this experience a few times whilst looking – viewings booked, properties had already decreased their prices by 20-30% and then the seller decides to not sell!

However, if we scrapped the stamp duty – what would happen to house prices?! Of course in logical thinking, bringing more people into the property market without increasing supply is likely to push prices up? It has also been suggested by Yorkshire Building Society, that Stamp Duty should be paid by the house sellers rather than the buyers to remove the burden of money so that younger generations who are struggling can actually get on the property ladder earlier in life!

So, what are you thoughts? Should the stamp duty be paid by the sellers? Should it be different for first-time buyers? Or has the increase actually helped the property sales market?  I’m interested in your thoughts on this.