Monday, 11 July 2016

Estate & Letting Agents Are Not Going To Like This!

When Landlords & Homeowners Can Save So Much Money Online, Why Use A High Street Agent?!

A change is currently sweeping through the Estate Agency world, largely unnoticed but it is starting to make its mark and it is forcing the traditional High Street Estate Agent & Letting take notice, don’t just take my word for it.. It has recently been announced that Savills one of the worlds leading Estate Agency brands has invested £16million pounds in a new on-line Estate Agency YOPA, talk about keeping your friends close and your enemies closer!!!

Due to the rise in popularity of Purple Bricks and the serious investment in YOPA, property professionals like myself need to be innovative, we need to stand out and we need to be able to hold our own against the cut throat world that is the High Street Agent and the commodity driven market that is beginning to throw its weight around on-line.

Is it all about fees?
Of course its not, but there’s no doubt about it, the on-line property market will take a significant market share through its varied and attractive fees model. Leading industry experts estimate on-line agents account for 5% of property transactions per year currently, with the rise in popularity and the number of on-line agents we can expect up to half of all property transactions being completed on-line by 2020.  

The High Street needs to wake up, smell the coffee and ensure their offering, and their fee structure is in line with their products and services. The High Street can, justifiably in my view charge a higher fee but the lame excuses of higher overheads and increased staffing costs needs to be replaced with innovative services, increased market exposure [increasingly via social media] and a back to basics approach with the idea of being a true local property professional – this starts with the tea person and follows through to the top of the organisation, and not just the Owner.

The ‘local touch’ will be the on-line models stumbling block, it is my prediction within the next 3 years the on-line property revolution will be bursting at the seems and the only way to truly dominate will be to have a ‘local property expert in every town’. This change in concept from a regional expert to a town expert will bring a new era of property sales and lettings to the UK, and at a time where property prices in certain regions are stagnating, where house sales have fallen of the edge of a cliff in certain postcodes and landlords are literally being beaten down with a stick by local and central government [google Wrexham Property Market Newsletter for info] this increased on-line based offering will be a heaven-sent to the masses.

Let’s look at a slightly different Hybrid Agency After 15 years working in the property industry & 11 of those for a High Street Agent I recognised the changes happening within the industry.
Buyers and Landlords are being hammered by George Osborne with wave after wave of new legislative requirements and tax changes – it is clear to see why minimising costs becomes so important, but, and it’s a big but, there is still a huge appetite for using local  

and the clear message I received?

the majority of Homeowners and Landlords do not mind paying more whilst giving a local company the opportunity to sell or rent their property if they believe the service warrants it, service is the key.

My answer to all of this? A competitive fee structure whilst maintaining a high standard of quality. The local knowledge offers is second to none in the Wrexham and Chester property market. We have the ability to look at an overall picture in a refreshingly unique way.   

The fee structure is appealing too! No Tenant Finders Fee for our managed service! We simply start charging a competitive monthly management fee from the day your new tenant moves in.

If you self-manage your rental property offers a range of tenant find packages starting from £99. Our unique product range also offers Pik N’ Mix service where you can employ us to complete one off tasks for a competitive fee, useful if you ever need an extra pair of hands!

Will it all come down to fees?

There’s a few different scenario’s being played out in the graph below, the Jones family have built up a property portfolio and are considering using High St vs Online. Mr Jones owns 7 properties, his brother owns 3 properties and his daughter Miss Jones owns one Buy-To-Let property.

  • ·       An average rent of £700pcm
  • ·       Assuming a High Street Agent only charges Half of the 1st months rent plus Vat
  • ·       Each property is let once in the 1st year
  • ·       10% a month management fee
  • ·       Savings for a landlord with 7 properties | Savings for a landlord with 3 properties | Savings for a landlord with a single rental property

Mr Jones has 7 properties. In our example they recently completed new builds and currently unoccupied. By employing to find a tenant and manage his rental properties Mr Jones has increased his rental income by 8.5% in the first year alone! Where else can you move your asset management structure so easily and generate an additional 8.5% overnight?!

In fact, this scenario is the same for the whole family. The concept is a game changer, and with the introduction of Rent Smart Wales for Welsh landlord and Clause 24 [The Tenant Tax] in England & Wales from April 2017 the extra income generated by simply switching agents could mean the difference between a Buy-To-Let Landlord making a profit or a loss.

After reading this what are your reasons not to swap to an on-line agent?
The savings here make for some interesting reading. All three examples in the graph show a Fee Saving of over 41% - that is real savings, cash left in your pocket!
If you would like any information about the content of this post or if you would like to read more posts, please google the Wrexham Property Market Newsletter Blog written by Craig SwireWrexham & Chester Local Property Specialist.