I recently took part in a webinar hosted by ICG (The Innovation Collaboration Group) – titled ‘New estate agency revenue streams to boost your post-boom income’ – which brought together various property experts, from agents to suppliers, to discuss how agents can continue to thrive when the pandemic-related boom starts to ease.
Chaired by the evergreen Chris Watkin, and including names such as Nick Lyons from No Letting Go, William Boltwood from Dorset Property, Hayley Ridal from iamsold and Kevin Ellis from the Land & New Homes Network, it was a fascinating hour-long discussion about how agents can diversify, adapt, evolve and protect their revenue as the stamp duty holiday ends and a potentially less buoyant market starts to appear after nearly 18 months of exceptional demand, activity and price growth.
The webinar was designed to help agents learn how to increase their earning power without adding to their workload – the dream scenario for any business, property or otherwise.
Since the market reopened in mid-May 2020, it has been unprecedently busy and rewarding for estate agents, despite the challenges of the pandemic and the extra workload created by the stamp duty holiday boom.
While the market’s still buzzing, there are early signs that suggest we’ll see a slowdown in the months to come. Karen Noye, mortgage expert at Quilter, earlier this week warned that HMRC’s latest figures could point towards a slump for the housing market after many months of boom.
She warned that transactions and prices will fall without the stimulus of the stamp duty holiday: “With the stamp duty holiday now completely off the table there is likely to be a deflation in house prices.”
“You can see how effective the holiday has been in attracting buyers to market at an economically turbulent time. While the massive changes to our working lives will have played a role in people’s decision to up sticks, the stamp duty holiday really gave people the impetus to make the move.
“Without the holiday many might have adopted a wait and see approach. However, the consequence of so many people choosing to take advantage of the holiday is that house prices have skyrocketed,” she said.
Whether you agree with her forecast or not, the boom can’t go on indefinitely. And, with that in mind, agents need to explore new revenue streams.
Fortunately, whether you specialise in sales or lettings (or both), there are numerous ways in which you can boost your income, which was the main topic of discussion in the ICG webinar.
From my viewpoint, and as I stated when asked about this in the webinar, agents need to increase other revenue streams to protect their business as an overall. My general advice is that lettings should be your biggest income, followed by sales, and then additional services. In most cases, additional services will be single digit percentage points, which means many agents are missing a trick here.
When moving from the corporate life to the independent world, I was shocked at how many agents don’t even think about ancillary or additional services.
It comes down to the needs of customers, ultimately. If you provide the services your customers are asking for, you’ll make plenty of money. But don’t approach it as going out to make money from customers, approach it as solving their problems and the money will then come after. That’s the best way to tackle it.
Generally speaking, most agents are only generating 1-5% in ancillary income from additional services.
I talked in the webinar about the need for agents to be more entrepreneurial. Most agents are more worried about what their competitors look at – they focus on a transactional process, rather than a lifestyle one. They focus too much on listing a property, rather than helping someone to move, completing their journey and beyond.
Equally important as generating new revenue, of course, is preserving existing revenue streams. This is arguably more important as the market subsides somewhat.
The best way of protecting your main source of revenue from a sales perspective – namely the sales fee – is by preventing fall-throughs from occurring. Even in normal times, notwithstanding the stamp duty holiday and Covid pressures, the fall-through rate remains stubbornly and worryingly high, but that’s where things like reservation agreements and more upfront information is worth its weight in gold.
Tech providers like Gazeal, which aims to transform the way people buy and sell home by slashing the time between offer and exchange, and make the system faster, safer and more transparent, are on hand to help agencies preserve existing income in a seamless fashion.
In turn, this gives agencies more time to focus on additional revenue to safeguard and futureproof their business, so they are not purely reliant on one or two main forms of revenue.
*Bryan Mansell is co-founder of digital platform Gazeal