Cometh the hour…
By Peter Knight
After 9/11 an article in the NY Times stated: “Don’t rebuild, reimagine” and whilst comparing BREXIT with that awful act of terrorism some might feel is inappropriate, I cite the idea that this is a moment, perhaps forced on us rather than chosen by many, to “think different” as Steve Jobs would have it – let’s reimagine what our future can be rather than seek to repair and restore what has come and now gone.
“Uncertainty is the only thing to be sure of” said Anthony Muh of Citigroup and so called “Black Swan” events now seem increasingly regular and should be expected. This is a turbulent period of time yes, but many great things have happened during challenging moments – and will again now I believe. Innovation dies during comfortable times of complacency only to be turbocharged when the dark stuff
hits the fan.
But let’s deal with the here and now first.
Many, indeed too many, forecasters are saying the property market will see a short term reduction in transactions and a fall in prices. And of course the more people say this is what’s going to happen then it will become a self-fulfilling prophecy.
So what can you do?
- Your teams need to get closer than ever to their clients. They need to understand their motivation to move and work with those who feel they have to. The 3 D’s, Death, Divorce and Debt will continue as will the more positive life stages of Birth, Marriage, New Job – it’s really important to identify who the most motivated sellers and buyers are and make sure you’re helping them move and they’re not going to someone else.
- Whilst not helping immediately, it’s really important to keep in close contact with those less motivated too – the market will return and if you’ve kept them informed and shown real interest in their situation they will return to you when they’re ready.
- IF prices fall then this is the best time to trade up as the net difference reduces. You must make sure your team are properly trained to discuss this with clients.
- Are people really wanting to put their lives on hold? I doubt it very much. Clients need to be thinking about the other than financial consequences of not moving – not getting into the right school area, living in a cramped environment, etc., plus what goes down will come back up – it’s a timing issue.
- Last week I was offered a 5 year fixed, interest only mortgage at 2.15% – and potentially rates might come down even further. These are once in a lifetime mortgage deals and considerably offset a price reduction.
- If you or your clients are waiting for a market when they can buy cheaply, with prices then rising, with low interest rates and a huge selection to choose from then they’re dreamers. That market has never existed – our job is to highlight the pros and cons of a market and make sure that our clients make an informed decision.
- If it’s tougher for the best agents, then spare a thought for the poor ones and cut-price merchants… they’re going to have a really hard time of it. Now is the time to attack your weaker competition – you need a specific plan for each. These plans should include raising fees – if you were budgeting on 10 transactions a month and now anticipate 8 then your fees need to rise by 20%. This can be a blended fee including conveyancing, FS as well as the commission charged. Raise your fee from 1.25% to 1.5% and this will offset a 20% reduction in transactions. Improve FS and conveyancing conversions as well and you’re ahead.
- You should also consider different methods of marketing. Reluctant sellers can be tempted by marketing their property discreetly – indeed, the Josh Phegan line comes to mind – “look, if we had a buyer at £XXX,000 could I mention your place or should I sell them something else?”
- Encouraging offers will be crucial to getting transactions up and this requires intense vendor management – weekly calls to discuss changes in the market is the recipe for greater acceptance when a low offer is made.
- Finally, there is a silver lining – lettings. Many landlords will defer selling so there should be less churn plus rents are likely to rise too.
So having dealt with the actions you can take to influence what else? Well “necessity is the mother of invention” and now is as good a time as any to properly look at your business and to make changes for the longer term benefit.
- Take a real hard look at your team – are they all A* people? If they’re not at least A grade, then tough times are a good time for a clear out.
- Are your overheads under control? After people the next biggest expense is marketing – are you getting a proper ROI on every marketing £? Now is the time to cut those projects that appeal to the ego, to cut the strings of those mediums that once delivered but are now well past their sell by date.
- Now is not the time to order the flash new motor nor to take the once in a lifetime holiday. Look to see if you’ve got excesses anywhere and tighten the belt – but only where appropriate.
- Continue to invest in your best people and keep your radar tuned for future recruitment. How you deal with your best people now will determine their loyalty when the good times return.
- Train your people like never before – pass on your experience and provide the reassurance they need.
- Look at your incentive and recognition programmes. Can these be overhauled to ensure people are focussed on the right activities for the market conditions?
- Look at different models. Can functions be combined, can your call centre/central support do more?
- Is it a time for fixed fee models to be explored? Or perhaps performance related bonuses etc.?
The temptation for many will be to batten the hatches down and hope the storm will pass. Instead why not tighten the hatches yes, but keep on deck steering the ship
on a steady course. “Smooth seas don’t make skilful sailors” – these are the days when the best have the opportunity to prove themselves and to learn even more for future benefit.
This is an adaptation of the “Change Curve” by Kübler-Ross.
It highlights the stages people will go through following a major incident such as the referendum result. The key is to get through to ‘acceptance’ as soon as possible as only then can you progress.