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Reservation Agreements will win instructions for agents, says supplier

Agents should put as much emphasis on ensuring a house move actually happens as on winning the instruction to begin with, a supplier says.

Government estimates suggest a third of property transactions fall through before completion meaning that a typical month’s 100,000 sales will see well over 30,000 collapse - and that means lost commissions to agents as well as heartache for vendors and purchasers.

Now Gazeal says an agency that makes the use of reservation agreements part of its offer to vendors could have an advantage over the competition.

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"Understandably, an agent's focus is often getting the instruction and then launching the vendor's property on the market. However, more emphasis on getting people moved provides benefits for all parties" explains Bryan Mansell, co-founder of Gazeal and himself a former agent.

"Being able to tell vendors that you are the safest agency to sell with in the local area due to the processes you have in place is a powerful message that holds weight with consumers” he adds.

Mansell likens the advent of reservation agreements to the disruptive arrival of Uber in the taxi market.

He says that as Uber has convinced the public to book taxis from their phones and share rides with others, a rising need for security in the property selling process has created a new industry category for reservation agreements.

"This change in mindset from both agents and consumers has been demonstrated by many of our customers doing away with 'Sold Subject to Contract' boards and replacing them with 'Reserved' boards'" he explains.

Once a sale is agreed, a reservation agreement guarantees a meaningful financial commitment by each party, he says - an action which then protects consumers from gazumping or gazundering and safeguards the agent's commission.

"Agents currently have a range of products and services to help them complete transactions, including CRM software, prospecting, conveyancing partners, sales progression and so on.

"However, a reservation agreement is a new tool in their armoury that helps to progress sales securely, contributing towards faster exchanges and fewer fall-throughs.

"It's clear that consumers and agents are at the point where they want to try new things as the moving process is too slow, cumbersome and, in many ways, broken" he says.

He says the current market - with a huge number of transactions in the pipeline and no certainty buyers will not pull out if they miss the stamp duty holiday - shows how fragile the purchasing process is.

"If the market continues to thrive following a successful vaccine rollout, tools like reservation agreements can restore consumers’ faith in the moving process and mark the first step in creating a more effective system of buying and selling properties" he concludes.

Poll: Reservation Agreements - will they...

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  • Samantha Sullivan

    There is a local agent to me advertising they are the first in the area to offer reservation agreements. I have spoken to 2 buyers who have viewed with me already saying they won't view anything with that agent because they won't pay a reservation fee.

  • icon

    I am sure many buyers would not want to simply pay a fee without a clear understanding of the benefits. Be interesting if your two buyers still expect the seller to remove their property from the market for these buyers and show commitment when buyers continue to view and look at new and reduced properties on the portals. Also, I thought that estate agents worked for the seller??

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