The global estate agency organisation Century 21 is on a mission to boost its presence in the UK with the launch of a ‘Direct Agent’ franchise.
The model follows similar 'personal agent' propositions launched by the likes of Hunters in the North and Davis Tate in the Thames Valley, by allowing individuals to run their own estate agency and letting businesses from home.
The new offering is being specifically targeted at those working in financial services, especially mortgages, who want to add to their current businesses.
Costs are significantly lower than Century 21’s traditional office-based franchise models, priced at £3,250. Franchisees will get an exclusive territory, training, stationery and promotional material start-up pack.
The new model has been piloted since January with four new Direct Agents.
Payam Azadi, marketing director at Century 21, said: “It’s a well-known fact that the majority of business is now generated via the online portals, which gives a fresh approach to how traditional estate agents operate.
“Our new Direct Agents proposition fits in perfectly for individuals looking to get into the estate agency market but want to test the market first and save themselves a large initial outlay.
“I believe this proposition is ideally suited to brokers in the financial sector and presents a tangible opportunity for a new revenue stream without the associated costs.
“A low fixed-cost base keeps operational costs to a minimum and allows the individual agents to flourish under the world’s largest estate agents’ brand.”
.png)
Comments
All I can say is who would be daft enough?
Yes it would be great to start up with some help from another company but.... Having previusly being a c21 agent in Scotland and being screwed out of thousands by the help of Stuart White I soon learned going it alone was best thing, set up with nothing but home computer and phone and a wee sales patter and I did not invest a penny (never took a wage mind you) within 2 years we have grown from kitchen table to 4 members of staff and now have other business under our banner turning over 720k+ a year
All this from starting up with nothing and Just yourself so if I had a spare 3k+ when I started then god know what could have done so why would anyone?
End of the day to be successful with c21 system you have to be able to do it yourself! Kinda defeats the purpose you not think?
@Jay
Whilst what you say is true - and certainly in the town I used to live in the corporates could not get a look in - yet you also say the industry is dominated by a few big corporates.
So, another big corporate, taking the 'who needs a high street office / massive central corporate overheads' model seriously - and spending some money on technology - with the right brand and marketing - could easily take on at least the big corporates - and maybe some of the lesser independents.
Apologies for all the mistakes in that post....i-phones and chubby fingers are not a good mix!
Re: jonnies post. Iagree that working from bedrooms cannot work for anybody hoping to turn over more than 100k per annum. However there are more costs on high at than merely rent. In my area you can easily do 20k pa on just rent and rates and then what happens when your competitor over the road refurbishes their office, you have to donthe same, then you have window display costs, the fire extinguisher serviced, spiralling car parking charges and that extraember of staff Becos you
Couldn't possibly close
The office and forward calls and through all
This you will only attract customers a 3 mile radius of your front door which 8 other high at offices are competing for. Only 3 of the 8 offices can make a profit realistically. My model is a cost of 7k per annum for rent/rate all in versus approx. 40k pa on high st when factoring all the above in and Becos it's an Internet business has no geographical limitations and a much larger area/higher volume of properties can be sourced from the one office.
Jay is correct. Having managed an office for WH Brown, two offices for Haart and an independant before setting up our own business, I can clearly say that all the red tape and paperwork simply slow you down all the time. Not kidding I spent all my time doing stats, 1to1's with career development, sickness reviews and even more stats that I wasn't taking the business forward.
Most independants keep stats to a minimum, 1to1's happen over a pint on a Friday afternoon down the pub and too much sickness gets you looking for another job!
I remember once a national campaign set by head office to go out touting for the big premier properties and at the time I was thinking "What a waste of time" we already had too many big properties we were struggling to sell, yet could really do with more first time buyers, yet my office was forced to waste time targeting something we didn't need! Independant's don't have these difficulties and quickly adapt to market conditions, whereas changing direction in a corportate is like turning an oil tanker, it just takes forever.
@Mike Wilson
Yet gain today your post prompts me to respond :0)
You have missed a point here on the make up of the EA market. There are three really big players being Countrywide, the biggest by far, followed by Connell / Sequence and LSL who are about ½ the size of Countrywide then Spicerhaart 4th who despite being in 4th are about 20% of the size of Countrywide.
If you look at any town in the UK it is rare that one of the above is the market leader, that position is normally an ‘independent’ sometimes a one office business, this is the key issue with the EA market, unlike say the grocery business where the local market leader is normally the national market leader, Tesco is a name that has popped up here.
To summarise, if the grocery market was like the EA market you would find independent supermarkets in each town that were market leaders and Tesco would be about 4th.
Right, lets not mess about here the argument boils down to one thing, high street office or not.
So, its cheaper to take a few square feet in a Regus suite with less commitment than a retail unit and the only way of doing it cheaper is to work from your own house – even that depends on your house / family because once half three comes and the kids get home from school no part of my gaff is worthy of working from and Ive got a pretty big place.
So, from home with the bloody kids and Mrs around all afternoon, Summer and weekends or in a cheap little serviced suite, lets then assume it goes well for you and you start employing more people, a neg, an administrator etc, what are you going to do, cram them all in to your back bedroom?
Well if you are in an office you get a bigger one, and when you start to look at anything bigger than 500 sq ft guess what? That’s it, a nice A2 retail unit starts to look cheap, perhaps a freehold with a flat over it you can rent to one of the millions of poor sods that cant afford to buy on the high street with lots of empty units we keep hearing about and stuff like the first 12 months rent free.
So there we go – if you are lucky enough to have the space at home and avoided breeding and you just want to work alone for ever then great, if not take a little shop unit, its cheaper and you can fit your secretary in it too, and perhaps a mortgage man, and sod it a lettings lady……and her property management team, you might even start to create a really buzzing environment that is a great place to work and attract the best staff and you can all have a beer together on Fridays, like a real business / team.
I know what id prefer.
Jonnie
What seems to be being suggested here is what I understand to be the American system. Qualified Realtors with a central regional office (people like to know there physically is one) providing EVERYTHING for the sales/puchase process including multi-listing. PLUS commisson based field Sales people contracted to the individual realtors with exclusive territories but shared instruction/sales commissions based on who did the business? All advertising carries the name of the realtor and contact number of the individual sales person?
In this country we do suffer from being the first to instigate many years ago original procedures for many things (not just property) and it takes a long time to change.
The above may not be absolutely correct but in my view something similar will eventually happen.
@Chris
You said: "The magins are just not there once you strip out all the advertising costs & running costs (I.e. Company cars, wages, business rates, telephone costs, printing & postage, for-sale boards, internet portals, newspapers, branch/office space, gas water & electricity, insurance, accountancy etc. etc. etc.) the list goes on. Then everyone wants a no-sale, no-fee service, so the agents need to charge extra for those who do sell, to cover those that don't."
You make my case. A big organisation with the brand and marketing clout ... using a thousand home based agents (all of whom would be experienced estate agents) ... connected together with state of the art technology ... could do everything an agent does (provide accurate local valuation based on local knowledge, measure up, prepare details, upload to portals, organise and accompany viewings, negotiate sale, progress chase sale etc.) ... but without the high street overheads. It would require a big investment and commitment - something people like Tesco have not done yet.
Why anyone would think this might happen in 20 to 30 years baffles me. 20 to 30 days is more likely. This would be all about brand - and there are not many around that are big enough or trusted enough. But there are some.
That is another option we are considering Jonnie.
@Dave Bradshaw
On the flip side, if you are really smug and so successful why francise your brilliant business model to other areas and not swing your huge goolies on the block and do another one yourself?
Jonnie
Well said Dave you are so right.
Always baffles me why anyone would not have the gumption to set up on their own . Why have a franchise and kiss goodbye to your profit % . If you are that good do it by yourself.
Mike, plenty of the big boys have looked at the market and walked away. This includes the likes of Tesco's (Much bigger than Virgin) and Asda.
One day it might happen, but it might be twenty or thirty years down the line before it does.
Too many people think estate agency work is easy money. Like football, everyone outside of the industry thinks they can do a better job! If it was so easy, why has 40% of the estate agent profession closed between 2008 & 2009? Thousands of branches have closed/ gone to the wall and tens of thousands of staff have lost their jobs.
The magins are just not there once you strip out all the advertising costs & running costs (I.e. Company cars, wages, business rates, telephone costs, printing & postage, for-sale boards, internet portals, newspapers, branch/office space, gas water & electricity, insurance, accountancy etc. etc. etc.) the list goes on. Then everyone wants a no-sale, no-fee service, so the agents need to charge extra for those who do sell, to cover those that don't.
Unfortunately the property misdescriptions act stops private home howners from lising their properties on Rightmove and the other big portals and this means the agent must be held accountable for measuring and photgraphing each property. This all takes time and money.
Basically Virgin and others like them are better off focusing on things like food or health & beauty where the margins are 200 to 300%.
If anyone reading this thinks that they can do a better job than the estate agents trying to cut a living, then take up the C21 challenge and have a go!
I bet very few do though!
One of these days someone big like Virgin is going to do this properly. With a couple of thousand home based agents, massive marketing budget and state of the art communication.
When it happens, and it will happen, they'll take a big chunk of the market. And sell all the associated services too.
PeeBee, If I calculated back to when we started in 2004 it was around a 60% sale rate, but now established, I just went back the last 12-months and the figure was nearly 90%. I haven't done anything differently me old, but you can have a virtual drink on me if you must. :-)
Dreampad, people in mansions buck the trend, because to them, it's all about the prestiege of the board that is outside their home. A small time internet agency advertising £500 fees on the board simply will not do.
Online agents fall by the wayside here in the East Midlands every day as do some of the traditional agents. It's not about how you operate (Although this is part of it), it's about who you are and how you come across to the vendor during the valuation. The most important person in estate agency these days is the valuer. (Sometimes called the Lister) Without an experienced valuer who can bring home the bacon, the business will fail.
Before anyone thinks about throwing thousands of pounds at an estate agency business, be it online or traditional, ask yourself the question. Will you or the person that will be doing the valuations have sufficient knowledge of the industry and the local market to present themselves and the business confidently? If the answer is not a resounding YES, then don't even bother. The costs associated, even in an online agency is vast and you need to have enough upfront money to run the business for up to 6-months before you see your first cheque/ payment.
Running a good size corporate agency ten years ago, I was shocked to learn that the business required an income of £44,000 per month to stay out of the red. Eye watering amounts of money really.
We are also in one hell of a tough housing market, where transaction levels are less than half what they were in the good years. Unless you know what you are doing, it's a brave/ stupid move. Sure C21 want you to think it's all a bed of roses so that more people hand over their cash and give it a go! Do they really think that people are that dumb? Maybe the clue is in the amount they are asking! In a booming market where everyone wants a piece of them, I'm sure their fees will be much higher!
Dear EAT
Bung a bill in the post for the ad below
Jonnie
Hi. Interesting article with some good comments. Online estate agency market share is growing every year and will continue to do so due to the econimes of scale argument pointed out by monkey tennis and the fact that portals now dominate estate agency. C21 are right to look at this growing market. The problem for C21 and anyone else working in bread/butter market from their homes is that the fee benchmark is set at such a low figure, that vendors who use internet agents will do so to save money on fees, in the same way that they compare car insurance. What will a C21 franchise home based agent provide that i-sold or the like won't for half the cost? Therefore internet based estate agency will be dominated by a few pile-em high national companies. Anyone starting up an online agency in the mainstream market will struggle to find any profit as they physically won't be able to sell 20 houses a month at £500 + VAT. So how will online agencies infiltrate the Luxury end of the market where low fees aren't the clients motivation. I believe the answer is in experienced/talented people providing high quality presentation, internet presence and excellent service. Indeed I've been doing it successfully for a few years now with an average fee around £10k per property. RE: completion day. key-handovers are better for the client because we meet them at the house on completion day saving them an unwanted journey. I'm interested in licensing my seductive and proven brand/website to others in the industry who feel that they have more to achieve in estate agency, feel free to contact me. Jonathan, Dream Pad
Chris: "We also have an 87.84% sale to listings rate over the last 12-months..."
So, if NOTHING else, I've increased
a) your success rate
b) your pride!
I trust you use those figures as boldly with your prospective customers...?
Looks like you owe me a pint - OR THREE, mate!! ;o)
Cheers Wardy, but with that comes with greater expense without the guarantee of more business. Keeping costs to a minimum reduces the risks if the market freezes up in the way it did in 2008. Furthermore how my buyers or sellers go into branches these days? Not very many.
I remember the pre-internet days where a good negotiator was the difference between success and failure because apart from for-sale boards and the newspapers, buyers had no way of hearing about properties on the market. In today's world, buyers sit behind their computers and search out property themselves leaving the negotiator little to do apart from aranging the viewings on negotiating the final sale price.
I'm not paying vast sums of commission to negotiators for sales that would have happened without them, so negotiator's in the traditional sense are no longer required, but admin assistant's on a salary with a small top up of overall office commission is sufficient these days. Of course all the negotiators will now respond with "What, no way man!!!!" We have proved that we can outsell ALL of the other agents in the area without a typical office and without normal negotiators, so how does having an office add any value?
Nice one chris, imagine the buisness you could be doing with a proper office! :-)
Hey Watching, your right of course, but our @ home/ online agency can do all those things too! :-)
See image of our home office below:
http://postimage.org/image/3r9vughw/
http://postimage.org/image/3rqf7xfo/
We also offer free parking, full brochure details, newspaper advertising, free virtual tours, free floorplans, Rightmove and other major portals, no-sale, no-fee marketing, we value the properties, list them too, are regulated by the property ombudsman, have proffesional indemnity insurance, are VAT registered, pay business rates and charge slightly lower fees than the traditional agents!
We have sold hundreds of multi agency properties in competition with every single agent in the area (Around 40 of them) and not one agent has ever sold one of our properties, so our service is unprecedented. We can basically do it better & cheaper than anyone else in the area. We also have an 87.84% sale to listings rate over the last 12-months listing hundreds of properties, which means that nearly nine out of every ten properties we list, we sell, so please do not knock our business model.
We started the business in 2004 and will be retiring in 2014. Ten years from nothing to having enough to retire on sounds good to me!
@Tim M
Yes mate you are right...........but
Take the salary of a pretty good EA manager, let's say £60 k yes? 5k a month, ave house price, say £160k at max 2% is £3200 so he needs one and a bit completions a month, allow a bit of farting about for fall throughs, costs and bits and bobs, bung in a listing to completion ratio of 50% so we can say is £10 k a month gross sales or three nice solid deals and six decent listings a month and I'm not bothering with the start up period of not completing on anything in the early day or employing anyone and your franchise fees etc
So if you can do that then you will do alright, or, sod the risk and aggro and work at countrywide but not as hard for the same dough
No, it still doesn't work
Jonnie
I know! but I am 'watching'
Watching . . . they don't need to nail all of the market to be successful, just some of it.
Hey Mr Monkey Tennis,
Sounds like you are a fan of this idea, why not buy a C21 franchise and post back here how well you did in a years time?
Just one thing (no, 20 or 30 things to be honest), you just wouldn't believe how many people walk in my estate agency door on a day to day basis, dropping keys off, picking keys up, surveyors in and out (comps), buyers wanting to discuss price and advertising options face to face, buyers wishing to do anything from pick up details to place offers, negotiate after survey, the list is endless, there are T & D reports, EPC's to be done, etc. I am just touching the top of the list of why people come through my door. Keys, Keys, Keys would be the bain of your life if you become a home agent, you won't want any vacant propeties on your books as a home agent. Is this service?? What about completion day? Will the buyers and sellers sort the handover out themselves, where is thier handover point? At the gate I assume? Not often are the buyer and seller in the same place at the same time on completion day. I doubt an internet based home agent would do much business with developers who buy propositions to knock down and rebuild, buy land, buy 'potential' and need help dealing with planning, getting marketing, advertising etc. and making a profit !
I could go on and on, and on.
But what the heck!
I know plenty of 20 - 40 year olds in the property business as both buyers and vendors who wouldn't dream of going near an internet based agency. It could be a kid in his bedroom? couldn't it?
Watching
I believe that for the foreseeable future and probably longer, the majority of people feel there is more security in being able to physically locate an actual regional (not necessarily very local) estate agents business office. This does not mean the negotiators (sales/valuation staff) cannot, mainly, work from home - the technology is available.
One other thing, I personally would not deal on a major transaction where the communication was ONLY via a mobile 'phone
makes me laugh when people use online agents because they are cheaper. They always seem to be overpriced and have no chance of selling, But...they pay £200-500 for the fun of it, thinking they are saving money. It is a very good con.
Why not waste a local agents time, we will do it for free (stupidly)
I know somebody who runs an online estate agency and does very well from it. In 5 years i think estate agency will be mostly online because business always comes down to economies of scale. Sure there are some of the older genreration who don't like change and will hold on to the old days when they could write out cheque's and chat to the greengrocer and visit their estate agent etc. but the under 40's are very internet savvy and will utilitse the savings the internet provides in all aspects of life.
Oh dear! Another one.
There are many, 'home based' estate agency options out there for you to buy and run if it is your desire to become a 'home based' estate agent on the 'Internet'. Some have even advertised on here. None have really taken off.
If you wish a list of these put up here, let me know.
I will list some UK alternatives to this American option.
If on the other hand, you want to be a home based estate agent without the fees, send me a mere £10, and I will tell you how to do it, and wont want a percentage of your earnings.
If you are not already an estate agent, please dont attempt buying one of these franchises, even with the so called 'training' you would recieve, you will fail.
Im watching
I’m clearly missing something here. Is he suggesting that mortgage brokers set up small, work from home online agencies to 'test the market'? So in other words, if you are loosely involved in property, pay us a few grand and see how easy it is to flog them at the same time. Brilliant.
I also like how portal/internet only advertising is still being banded about like the new 'fresh' idea. A different approach....that line is getting boring surely?
Rich,
Firstly, I would choose a traditional EA over online. Many reasons, but I would always buy/sell through a high street.
BUT, to say you are "dodgy" if you don't have an office or that they "do not provide a service" is stupid.
There are some decent online agents out there, but there are too many rubbish ones. It's ironic that the puclic have the same feelings towards traditional agents.
Online agents do provide a service. From my experience, not as detailed and pro-active as a traditional, but there is still an ok service on offer.
The key here is the cost of using them. You pay less, you typically get a lesser service. But that is what some people want, and even NEED. Variety is a good thing.
Like the attitude, let people see if they like it, ?? they wont and then we are left to pick up an over priced house with a pi**ed off customer because of another cowboy idea. If you havent got an office you are dodgy and cant provide a real service!! And before you internet kids get annoyed..you are not providing a service so dont kid yourself!!
For this personal thing to work the brand has to be really good / strong / local to where you are – I understand that Hunters in Yorkshire have done this with a good degree of success where a ‘franchise’ can operate in say a borough of Leeds with the benefit of the brand and profile in and around the city..................
However C21 have about 20 offices spread very thinly across the country, presumably all franchises so its fair to say the current take up is ‘slack’ to say the least, Winkworth are nudging 100 offices soon and in comparison to C21 have been doing it for 5 minutes.
……………so, and to my point, like the other ‘international’ one REMAX they have little concentration of coverage, a brand and image that is dogged with more than a whiff of out of dateness, that irrelevant ‘it works in America’ mantra that no one really gets and now if you want to work from home you can pay them a split of your earnings for the pleasure.
It’s a non runner.
Jonnie