The easiest way for this to be done is by addressing any internal inefficiencies that might be obstacles to current and future success. In this climate, I think the most important of those is...you’ve probably guessed it by now...fall-through rates.
Since the turn of the year, it has been projected by many that the UK housing market is set to dry up in 2018, continuing along its downward slide from the back end of 2017.
Between Q4 2016 and Q4 2017, the number of sales agreed was down by 5.5%. Stock levels remain ‘stubbornly low’ and prices are rising accordingly.
The price of a typical first-time-buyer house, for example, rose by 1.1% on the month, and as Rightmove Director, Miles Shipside, says: “...would-be buyers in some sectors and locations of the UK are seeing less choice to tempt them, fuelling some localised price rises. While potential buyers are still busy looking, they are looking for good value.”
Meanwhile, fall-through rates are through the roof, as it were. Q3 2017 saw 28% of sales fall-through, up 2% from the previous quarter. People will say anything to excuse it; buyer haggling, cold-feet, even Brexit.
But we all know the truth, it’s the inefficiency of the buying process and lack of transparency that are largely to blame, both of which are issues that, in this age of technology, are remarkably simple to fix.
Home-buying is one of the most stressful moments of our lives, not to mention a financial Everest. As such, it’s no good for us to drag people through the long, drawn out, expensive process that making a purchase has become.
Buyers grow weary and minds change; they feel powerless and they panic; they grow frustrated and turn hostile. It’s all completely understandable and it is down to the professional to provide a service which is as clear and concise as is possible.
Whilst, for a long time, this was far easier said than done, today we have a real and tangible opportunity to fix this issue that has bugged the industry for so many years. Now is the time to take stock of where you are, where you need to be, and the tools you’re going to use to get there.
There are a number of PropTech companies on the market whose technology works to radically reduce fall through rates. I have reached out to three of them, because it is they who are best qualified to explain exactly what’s causing the fall-through problem, and how their solutions work to effortlessly solve it...
Toby Wilde, Director of Estate Agency Partnerships, Sprift
“Some estate agents have been slow to adopt to the demands of 21st century business, specifically in relation to transparency and technology.”
“Sprift’s online dashboard effortlessly brings together everything really needed to be known about any property. Sprift partners with agents who offer awesome standards of customer service and believe in sharing information, whilst saving them time doing so.”
“These agents understand that providing key facts to potential buyers at first enquiry, which highlight the positives of a property, as well as any negatives, leads to more informed and committed purchasers, resulting in lower fall through levels.”
Sohail Rashid, Founder & CEO, View My Chain
“The market has slowed down throughout 2017 and fall throughs have increased. This has had a significant impact on the cashflow for many agents and is a high priority for most agents in 2018.”
“Our data also shows that agents lose 40% of the vendors on the other side of a fall through, which is a significant amount of commission.”
“View My Chain uses data and machine learning to identify, predict and notify agents of sales that are at risk of falling through. We use our whole of market data coverage around key milestones to identify potential issues much earlier than manual processes. This enables agents to be far more proactive and efficient with managing chains and de-risking the transaction. Our clients are benefitting from a 20% reduction in fall throughs.”
“Where a fall through cannot be prevented the agent is much better placed to secure the vendor on the other side through better client engagement and communication.”
Neil Singer, CEO, clicktopurchase®
“The change in the residential market is clearly driving agents to identify solutions to increase their business efficiencies. As a result, interest in PropTech solutions has increased dramatically.”
“I have long considered the system of going ‘under offer’, with no legal or financial commitment from either seller or buyer, to be archaic.”
“This was part of our drive to develop the clicktopurchase® platform where an accepted online offer is a digital legal exchange. A proven technological solution, simple in concept, to reduce fall-through rates and of course increase business efficiency.”
“Rather than going “under offer”, when a verified buyer is ready they can submit an online legal offer to treat, conditional or otherwise, and prove serious intent. Acceptance results in an instant digital legal exchange.”
Now is the time for action
These are just three of the companies offering to improve fall-through rates and, as you can see, while their individual solutions are each unique unto themselves, they all agreed on what the problems are.
Using new PropTech innovations to create transparency and reduce best practice inefficiencies can radically improve sales and returns. Perhaps more importantly, it can help you to win the trust of the house buying public, negating much of their motivation for moving to an online alternative.
With 2018 projected to be a tough year for residential agents, I believe a simple look at improving fall-through rates by using innovative solutions is definitely worth the investment, in terms of both time and money.
*James Dearsley is a partner in PropTech Consult, digital transformation specialists for the real estate sector. To sign up to James’ Sunday PropTech Review, click here.
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Interesting article James, but I think you're missing the vital point.
Technology can simplify aspects of the process but, as Toby from Sprift points out, it's about transparency.
Until the main protagonists, ie the lawyers submit to this concept, then the people on the front line, ie the agents, have little control. The focus should be on lawyers giving information about their success rates and working together with agents to help improve times and rates.
Unfortunately this is undermined by the corruption that we see in the industry where consumers are being targeted and are suffering as a result.
We are shocked that we are the only law firm in the market that publishes it's completion rates. Indeed, we have taken your lead and using technology, make these figures available live and up to date.
Let's focus on getting the rest of the legal industry to follow...
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