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 Much to my surprise, I found this leaflet from Gascoigne-Pees on the doorstep yesterday. For a moment, I actually thought that I had received a piece of canvassing literature from a political party. My home constituency of Epsom is apparently safe as housing policy according to the brilliant voterpower.org.uk and hence, none of the parties seem to have bothered troubling me with doorstep propaganda. I was actually rather disappointed to find it was a gimmick from an estate agent. But, fair play, they got my attention for a moment. Coming up with fresh and exciting ideas for marketing the services of estate agents is always a challenging task. What have we got to say that's new? What would be really compelling to potential vendors? Why would anyone pay attention to this? The challenge to come up with ideas to answer these questions can have a tendency to lead you away from a solution that adheres to one of marketing's most clichéd mantras: Keep it simple, stupid. The phrase was actually originally "keep it simple and stupid" and although it's true meaning has been debated by minds immeasurably superior to my own, I take it to mean that you should keep marketing communication simple to the degree that it seems stupid to the creator. The creator after all has an intimate understanding of the subject, the company and the proposition. We should not necessarily assume that the recipient is as familiar with the services that estate agents offer. Stupidly simple = easy to understand. This is perhaps why I still hear many a tale of new instructions arising from the oldest, the simplest, maybe the stupidest of estate agency marketing lines: "Call us today to arrange a FREE valuation" In an age of brand engagement and viral marketing where we marketers are increasingly pressured to disguise advertising as entertainment, this dinosaur of a headline may seem almost vulgar. But it works... It works because it is simple, it is compelling, it uses the word FREE (in CAPS preferably). It offers vendors what they really want; insight into the value of their property at no cost and with no obligation. You may say, well we've all offered that for years, but in an age of FSBO services with up front fees and crude automatic valuation models, there may be a renewed appeal for this old faithful line. No doubt a fresh slew of cheap estate agency leaflets with a World Cup theme are poised for print at this very moment. And some of these will provide a moment of mild entertainment to disinterested customers on the short journey from front doorstep to recycling bin. But I was reminded in a seminar the other day of the pent up demand that
exists in the property market. 800,000+ households want to move, but have continued to wait with frustration and anticipation for the financial pieces of the puzzle to fall back into place. These people are receptive to property news, insight and advice without the need for gimmicks or overly complicated offers. I wonder how many "FREE Valuation" letters and leaflets there are already stuck
to fridges in the homes of those 800,000 households ready and waiting to
be 'redeemed' at some point in the not too distant future.
I know from my experience of working with The Conservative Party in 2005, that the outcome will be determined by a small yet very powerful minority.Five years ago, Lord Saatchi organised a competition for creative agencies and individuals to create a campaign for the Conservative Party. Several thousand entries from some of the most talented people in the communications industry resulted in a shortlist of 100 ideas, which included three from my colleagues, one of which went on to win. Part of the “Let down by Labour” campaign and parodying the film, our poster titled “The Blair Which Project?” was duly unveiled in front of the cameras, made the headlines in the papers and subsequently was forgotten as Tony Blair succeeded in being re-elected in preference to Michael Howard. During the campaign we met with Lynton Crosby, the Australian brought in to mastermind the Conservative effort, who showed me what really matters in a general election campaign and I remain to this day both amazed and shocked by how few people actually count. The “swing voters” from the constituency of Houghton & Washington East (64.3% Labour) and Richmond (59.1% Conservative) don’t count - it wouldn’t matter who stood – even a Tory with a duck house would be elected in Richmond. The majority of seats, around 380, are safe – they will almost never change hands (the Hamiltons of Tatton prove the exception to the rule). Then there are the 40 odd seats that are likely to change to whoever gains power – the highly marginal who will almost certainly elect a Tory this time round. There are roughly 80 seats which actually matter, the ones needed to be won to form a majority. Within these constituencies, applying the national average, just 61% of people will vote and therefore around 3 million people in theory determine the outcome of the election. But this number is reduced still further, indeed dramatically, when you consider that the vast majority are fixed in their voting habits so the only people who really count, the vital minority, are the swing voters in those constituencies which are only possibly going to switch. We’re talking a very small number of people, perhaps less than a million, who really hold the power. And we pride ourselves on living in a democracy!
As with politicians, the success of many estate agencies depends on influencing a handful of significant people – those looking right now to sell or let. So why then, do the politicians spend so much time appearing to be concerned with the majority opinion and why also should you continue to appear to be seeking to engage with a wider audience than you truly need to?
For the politicians, Lib Dem’s apart, the first past the post system helps secure power – typically one or other party has it and this is a better outcome for either Labour or Conservative than the prospect of having to form a minority government with other people. Again this principle can be seen in the business world for many of us – rarely have I been asked to share the marketing of a property with a competitor – we either win or lose the pitch, there’s seldom a draw. So one reason the politicians continue with their pretence that we all matter to them is not to let the secret out that we don’t! But the main reason for the national advertising, the billboards, the high profile interviews and so on is that whilst they appear to be communicating with the majority in fact they are addressing the vital minority. The swing voters in the key marginals are researched continuously, literally every day, possibly not realising that they are so significant and imagining everyone else is asked by professional pollsters 7 times a week their opinion on this issue or that which are then translated into the message communicated within the next 24 hours or so.
You too should be careful to target your key audience, the real decision makers, the home owners who are looking to sell or let their property, yet recognise that whilst specific messages to key individuals are powerful these are amplified when they are seen to be communicated more widely – so if you’re looking to influence Mrs X and target her directly then make sure that your web site is reinforcing your message when she visits. Indeed, all your communications should be considered through the lens of your vital minority and not be seeking to influence everyone – as everyone doesn’t matter.
 The people over at Luvthecity.com were kind enough to interview me last week to get my views on what's so special about Letting Agents and in particular, Award Winning Letting agents.
The interview was to promote entry to  the forthcoming Letting Agency of the Year Awards in association with The Sunday Times. Entries close this Friday and so agents wanting to benefit in the same way that Young London have, must get moving asap.
The entry process is really simple – register your entry online , fill in and submit a simple questionnaire before Friday 23rd April and then you will be called for a telephone interview.
Any agents working with our sponsors as listed to the right will be able to benefit from a reduced entry by asking them for their voucher code.
You can read the interview here.
You can enter the awards here.
I was having my house valued last night. We moved 13 years ago and although we've thought about it a couple of times since, we really do need somewhere new despite the financial conditions, so we had 3 agents round to give us a valuation or "market appraisal" as they call it. The first one; the red agent, was from the same company we chose last time. It wasn't the same chap as we dealt with before though; he was a charmer! This one was rather more serious, but knew his stuff. He had a report from Rightmove which showed lots of similar properties and stuff he’d sold before. I got the sense that he was claiming glory for sales that had little do with him and it was clear that he's more used to dealing with stuff on the northern side of the town. He said they are the market leader, but he seemed more concerned about discrediting his competitors than talking about the benefits of his own service. He also told me his wife gets involved in lots of charitable things and goes on Twitter a lot, but I don't quite see what that has to do with anything.
The second; the blue agent was clearly very passionate about what he does. He spent a lot of time talking about the feedback he'd had from other people moving (a lot of them with the red agent) and was keen to do things differently. He said that they don't advertise in the newspaper any more as it is a waste of money and means they don't have to charge as much. He was keen to stress that their approach is more consultative than red, but I got the sense that his pitch was rather too polished.
The third; the yellow agent was the most surprising. I hadn't really wanted to bother getting 3 of them round, but my therapist said that she'd used them and was very impressed. He's obviously been trying very hard to build his business to compete with the other two and has plans to open several new offices. He was at least able to give more direct answers to some of our questions. He did have some different ideas about marketing the place, but couldn't really show me where he'd done this sort of thing successfully in the past.
In essence, all three of them seem to offer relatively similar services and although there was a lot of detail in what they had to say, there wasn't anything tangible which would make me choose one over another. One thing the blue and yellow ones said is that I didn't need to worry about a HIP whereas the red one was very keen to point out the virtues of them. The way he went on you'd think he'd invented them. Perversely, I got the impression that the blue one was offering a better service in some areas for a lower fee, when I thought he would charge more considering he deals more at the top end. You should have seen the property he'd sold with the duck house and a moat! The yellow one, I was tempted by, but he said that we'd have to see his financial adviser too if we were to really appreciate the service that they provide.
The valuations they gave us were quite different and none of them could really give me a straight answer as to why their price was a realistic one, although they're all going to confirm it in writing.
I suppose it comes down to the credibility of the individual more than anything. Who should I trust to sell my most important asset? No doubt this will be a topic for further debate...
 
I recently predicted that sometime in the next 10 years Lettings will become the equal of Sales if not the most important part of an agency’s business and the recent £48 million MBO of Leaders suggests I’m not the only one to see the value in the rental side of the industry. Unlike Sales, where the “work in progress”, other than new homes, is no more than three months pipeline, Lettings has the huge benefit of renewal income and it’s this near guarantee of future revenue which is causing such significant business valuations – Leaders is worth £1.1million per office or more significantly around £3,200 per property under management. I’ve long held the view that Lettings value is found on the balance sheet whereas Sales is much more to do with the P&L account. Both are important as most business owners will appreciate but I wonder how much time and resources are invested in balance sheet items compared with initiatives to drive immediate profits? I know from when Jackson Property Services was sold to the Halifax for £25million in 1988 (incidentally also for a figure of around £1million per office) that the value we achieved for the business had much more to do with balance sheet items than the profit, and no, I’m not referring to bricks and mortar – most of our offices were leasehold, and a number of these were quite short. The reason Halifax were so keen to get their chequebook out was the brand they were acquiring – that and the key territory of South East London where no other single business had such penetration and market share. Placing a value on a brand though is very subjective and consequently overlooked by many agencies. However the Foxtons deal surely confirms how valuable a brand can be and why it is so important to care for it, develop it and invest in it. In agency, for both sales and lettings, the balance sheet items which will ramp up a company’s value, are brand, market share and people. Any potential acquirer will pay a premium, sometimes a considerable one, for a business which has these three in place. That’s why I believe the best agencies are more focussed on maximising their market share and revenue per office than the total number of offices – which would you rather invest in, a business with six offices averaging £1.5million turnover or one with 12 averaging £500,000 each? We’re working with some of the best estate agencies in the UK with individual offices turning over in excess of £2 million and have seen how significant Lettings has become, and not just financially. Lettings has much higher regulation and compliance issues which in turn necessitates better trained people and more robust systems. Also, as Lettings value is in the repeat business, the need for a decent Customer Relationship Management (CRM) programme is essential and whilst this is still yet to be delivered by most of the very best sales agencies it will be sooner rather than later. At Lettings LIVE on June 15th many of the seminars will be focussing on the balance sheet items such as brand and CRM – places are extremely limited and priority booking will be given to entrants to The Lettings Agency of the Year Awards in association with The Sunday Times – visit www.lettingsawards.co.uk
 In a recent Rightmove Consumer Confidence Survey, 61% of those in rented accommodation stated that they would like to buy but could not currently afford to do so. With today’s budget announcement of a further stamp duty holiday, this time available to only FTB’s but for properties priced up to £250k, will this be the boost required to bring a significant number of FTB’s back to the market?
Three key factors in FTB’s ability to get on the housing ladder are Affordability, Availability of Mortgages and the level assistance available to help with the purchase.
Let’s consider these three elements to see if the time is right:-
Affordability – Mortgage Payments V’s Earnings
It doesn’t take an expert to tell you that house price are pretty low at the moment with the average price paid by an FTB in 2009 being 10% lower than in 2008, at £133,794. As a result the average mortgage for a new FTB in 2009 was £104,000 which was 14% lower than in 2008 (£122,000).
So with prices being so low that suggests a good time to jump onto the ladder, reflected in mortgage payments 27% lower than the average monthly mortgage payment in 2008.
If you assume a 25-year repayment mortgage at the industry average tracker variable interest rate for a new borrower this equates to a mortgage payment of £562 versus £768. That’s over £200 per month to go towards that flat screen TV to go in the new pad.
One measure of affordability shows that the proportion of earnings required to pay a mortgage has halved in the last two years, a result of the combination of lower house prices and interest rate reductions.
The tightening in lending criteria over the past two years is, however, making it very difficult for some to take advantage of lower property prices and mortgage rates. So what mortgage deals are available?
Mortgage deals availability
The tightening in lending criteria since the summer of 2007 has meant that some potential FTBs have been unable to enter the market despite the marked improvement in affordability. The good news though is that there are significant signs that lending criteria has stopped tightening
The number of live mortgage products rose by 33% from a low of 1209 in April 2009 to 1610 in December and with interest rates set to remain low for some time, most industry experts predicting them to stay at the current rate until the end of 2010, this rise in mortgage products looks set to continue.
There has been a modest increase in the availability of mortgage credit recently, including signs of products with 90 and even 95% LTV emerging, but lenders are targeting the more credit-worthy applicants as they seek a greater share of the good margins currently available in the market to rebuild their balance sheets and profitability.
Assistance in buying
Recent research has found that increasing numbers of FTBs have been receiving financial assistance to raise funds for a deposit with the latest estimates indicating that around 80% of FTBs are getting such help.
The CML estimates that the average age of those FTBs who have not had financial assistance has risen sharply from around 33 in late 2007 to 36 now, showing that even FTB’s well into their 30’s are seeking assistance from family.
The national average deposit required for a FTB in 2009 was £29,439 (22% of asking price), so the stamp duty saving of up to £2,500 is hardly going to make much of a dent on the savings required to get moving.
Other assistance comes in the form of incentives from new home builders and also affordable housing schemes allowing aspiring home-owners to purchase a share in a house while renting the rest – giving them an opportunity to get on the housing ladder earlier and buy the remainder of their home as and when their finances allow.
One example of this is the Government’s Homebuy assisted purchase scheme for new-build properties, but recent research by Rightmove has uncovered a lack of awareness in the scheme among those whom it is intended to help. They found that only 22% of the 3,463 potential first-time buyers surveyed stated they were aware of the scheme, with another 34% saying they had heard the name but were unaware of the details. 44% had never heard of it and whilst these scheme’s aren’t going to help estate agents (unless you have retained developer relationships) they give an indication of the appetite of FTB’s to actively search out routes to get on the ladder.
In summary, whilst affordability is good, there are too many factors weighing against FTB’s for the latest stamp duty holiday to have a significant effect and availability of credit at favorable terms remains the primary issue. Confidence would seem to remain low and for the short term at least, it seems that the bank of mum and dad will have to remain firmly open for those few that decide to take advantage of the low house prices and interest rates.
Ask a travel agent if he needs a high street branch to run his business these days and he will probably tell you that he can’t talk because he’s got burgers to flip.
Over the last 5 years the travel agency business has taken a significant hit on the high street, with the majority of high street businesses not being able to compete with national online services which feed on the view that online is quicker, cheaper and you don’t need to worry about where to park your car.
Many hold the view that a similar fate is going to hit high street letting agents, whereas agents with high street offices claim that landlords still prefer to use an agent with an established high street presence because of personal service, an improved profile and the tangible reassurance that a physical high street branch can provide.
One thing is for sure, the benefits of using a high street agency are slowly eroding and the internet is offering a range of alternative models that have different benefits. There are some very good online agents starting up in business and offering what seems to the general public like a fresh approach.
Letting a property is in most cases a decision made with margins in mind and any fees paid to a third party eat into profit and so need to deliver demonstrable benefit. This is reflected by a recent survey by Specialist lender CHL Mortgages showing that the majority of residential landlords manage their portfolio’s themselves, with only 34% who rely on the services of a Letting agent to manage their properties.
This 34%, that are probably looking to save time and reduce hassle, have a growing choice of options for marketing and managing their property. These range from the traditional high street agent offering a complete ‘hands on’ experience including face to face valuation, viewings, inspections, inventories and so on, through to the online agencies offering little more than a marketing route for owners to sell privately with the added benefit of access to estate agent only portals such as Rightmove. It is important to note though that many high street agents offer marketing only options and equally online agents commonly will provide ‘hands on’.
So what will be the deciding factor as to whether these landlords decide to take this business online?
My view is that rather than landlords deciding to take their service away from the high street they will just continue to go with good service at the best possible price. Gradually more and more letting agents will acknowledge that they can still offer a personal, high standard of service whilst significantly reducing their overheads and so we will naturally see a shift as more agents move away from expensive high street locations.
Letting agencies with associated sales operations (roughly 70% of estate agents also have a lettings business) may be the last to leave, closing their costly offices and switching to central locations, but they will do so eventually and with it they are likely to make their traditional service available on a more ‘a la carte’ basis.
So rather than 'traditional' estate agents being cut out, they will simply change their model to take advantage of changing habits and improved technology, a change which has already begun.
If agents don’t change, which inevitably some will fail to do, they may find themselves asking “do you want fries with that”.
I had a conversation last week about doing business with people we like and whilst it seems a bit of an obvious one, we all prefer to do business with people we like which means we need to also be liked ourselves.
I’ve always had the view that potential clients/partnerships need to tick a number of boxes in order to be worth doing business with and the ‘likability factor’ is one of those boxes. If you don’t like the people selling a product or service, the deal has to be extremely compelling for it to be worth doing and there are very few of these cases.
Most of us decide if we like someone pretty quickly and first impressions last and make a very deep impression. We have the process we refer to as ‘ice breaking’ where we might talk about the weather or other mundane subjects and there is also an element of storytelling that goes on – we ALL love to hear stories. This ice breaking process is effectively us trying to build some rapport one another and seeing if we like one another.
So how can we use our online marketing to facilitate the ice breaking, first impression building through letting people have a glimpse of our personalities before we meet?
I was with a friend of mine last week who when he first meets clients, is often told that they feel as if they already know him. This is because he films product videos which include him demonstrating and talking through the product and they are posted on his web site and viewed by potential clients. By watching these short videos people ‘get to know him’ and this definitely helps him in the sales process because they build trust in him too.
Prior to meeting people I can now find out much more about them as a person and vice versa, so we need to think about how we can give clients an insight into our business and our personality before we meet them.
If people like you they are more likely to ask you out to value their home, more likely to list with you, more likely to buy additional services from you.
How are you using video, social media and other tools to create ways of giving potential customers an insight into your business and accelerate the relationship and trust building?
Apologies for once again writing about a challenger to the traditional estate agency service, but they're coming out thick and fast at the moment and I think there are important lessons for us all to learn from these new approaches.
After months of speculation as to how they would do it, Spicer Haart have sort of unveiled their new estate agency service using the Tesco brand. iSold.com offers a fixed price estate agency service for £999 and is being launched in Bristol this weekend. A curious decision to launch it under a new brand name with the Tesco name merely being used in association, but probably more to do with branding rights than marketing strategy. However, unlike when Tesco launched Tesco Property Market, I think it is probably the right call to launch it in one area where marketing and PR efforts can be focused and delivery can be managed rather than nationally where they end up with a couple of instructions here and there. The Foxtons approach to new offices was always to divide and conquer one town at a time and I would expect iSold to adopt a similar strategy. The price is a likely to be a crowd puller and their tech is also going to be quite slick by the looks of things. I registered on the site this morning for updates and within moments, I received my fully personalised update...
EA Today had comments from some this morning mocking Spicer Haart for undermining their own business model. I don't think any of their brands operate in Bristol itself anyway, but on the basis that iSold will go national at some point, is there any merit in this criticism? Who better to set up an Estate Agency business that can operate more efficiently at lower margins than the established players in the industry than one of it's biggest players?
If you are able to run a very
tight ship on the estate agency front; low office costs and
massive discounts from suppliers; newspaper advertising,
fleet vehicles not to mention portal listings, then you can operate on much tighter margins than the good,
local agent with higher relative overheads. What's more, SpicerHaart have profitable operations in many areas relating to the core business;
Mortgages, Conveyancing, Surveyors and can make plenty of money on
referral services without worrying too much about the profitability of
the estate agency operation on its own.
Under the Haart brand, they opened a 'super office' last year in Milton Keynes which very much adopted the Tesco model of an out of town location with plenty of parking serving a large catchment area. Open longer hours, it's more convenient for the consumer and cheaper than running several high street locations that nobody visits through fear of being ticketed or towed. iSold appears at first glance to be further refinement of this concept; eliminating unnecessary cost without compromising the customer experience.
They also seem to be taking another leaf out of the Tesco business manual by launching with "Essential", "Premium" and "Premium Plus" levels of service. Echoes of Tesco's own structure of offering a Value range, Normal (this one is just called Tesco I think) and Finest.
  
Many other industries adopt similar models: Airlines have Economy, Business Class and First Class. Car manufacturers have S, SE, GTi and various other iterations on the same theme. Depending on what you are buying and the importance that you place on it, you choose a level of service, but most importantly, your choice is between different levels of service from the same company. Traditionally, to choose between estate agency services has meant choosing between agents. The trick is to ensure that the most popular tier (usually the middle one) is also the most profitable. Does the difference in service and legroom for Business Class travel really justify the extra expense?
I also wonder if those that enquire to sell through iSold would be offered an upgraded service provided by Haart or Spicer McColl at some point in the process once they go national? Maybe after they've been on the market a few weeks? Maybe straight away? Different levels of service can just as easily be offered by one company using different core brands instead of sub-brands. This is the tactic which has brought success to the Fine & Country brand in the last few years, giving middle market operators access to those plum instructions at the top end that their core brand never had any presence with.
I am sure that if you can afford it, there is only one way to fly; First
Class, but not all of us can and in these times of enforced austerity we may choose to compromise. There is a world of difference between Value and Cheap though and I cannot see Tesco allowing their name to be associated with anything that provides poor customer service. I would expect they have planned this carefully to ensure they can provide a very decent basic service for £999. In Bristol at least, continuing to be a reassuringly expensive agent just got a little bit trickier.
Why the likes of Zoopla are better instigators of change for the industry
So the OFT have decided that the industry doesn't need further regulation. Some may feel that is a bad thing, but you only need to look across the road to the financial services industry to see how toothless and ineffective regulators can be at keeping an industry in check. The process of buying and selling a property in the UK has much potential for change and improvement, but surely it is better for that change to be embraced and developed by the industry, rather than imposed on it? To provide an effective prescription, you need to have a good diagnosis. And the anatomy of the property industry is very poorly understood by those outside of it. That is why we have endured years of 'consultation' with Government, only for them to fudge it with HIPs.
While committees have been debating the nuances of first day marketing and formulating pages of tick boxes for purposes only known to them, others with a better understanding of property have been thinking long and hard about ways to do things better. Change for the better is usually achieved much more easily through innovation than regulation anyway.
One such innovation came good last week. 57 properties were sold last Sunday having been on the market for just 4 days... 4 days? 57 properties? Sunday??
This was the result of Zoopla's first online property auction. The first time property has been auctioned online in the UK and with 1,000 registered buyers, a robust proof of concept for them that has spurred the announcement of more auctions starting next week. 
At this stage, Zoopla's auctions are focused on repossessed properties, but having spoken to them about their plans for the service, they told me that they will be enabling member agents to put any property into an auction for free up to 30 days prior whilst continuing to market it conventionally. What's more, Zoopla will actually pay agents whose properties successfully sell at auction an additional 0.25% commission on top of what they get from the vendor!
The objectives for most vendors will always be to sell a property for
the best price in the least possible time and it strikes me that by making it accessible and lucrative to agents, Zoopla may have a very viable mainstream alternative to treaty sale to help achieve that ubiquitous vendor objective.
From a buyer perspective, I think it also ticks a lot of boxes. As Omid Djalili points out in the current Moneysupermarket.com adverts, we don't like to haggle as a nation. As an agent, you might love it, but your average buyer will approach negotiation over price with fear and trepidation. They would probably feel the same about raising their hand in an auction hall, but when they are sat at a computer in the comfort of their own home, they are much more at ease and quite happy with the idea of bidding online. We are, after all, a nation of eBayers.
So Zoopla seem to have come up with something new that works for buyer, seller and agent. Finding new ways to keep that trinity happy should be the job of every agent too. Continuing to do it the way you do it, just because that's how you've always done it is a dangerous mentality to adopt.
Darwinian theory applies as much to business as it does to nature. Even big
companies fail when they are too slow to adapt to changing
marketplaces. You only need to look at the speed at which change has affected other
agent industries like travel and insurance to see how quickly the game can change radically. Those who are aware of
change, who embrace it, influence it and ultimately, exploit it are the
winners of tomorrow. The legislators will catch up eventually and if
you still need to smarten up your act by the time they get around to
sorting out theirs, then you will probably find yourself part of property paleontology sooner rather than later.
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