More than 800 property transactions fall through daily, which can have repercussions both practically and financially, as agents fail to get their commission.
So, how can you avoid the pain and reduce the number of collapsed property transactions by closing more deals?
While some reasons why transactions fail, such as broken chains, financial problems, a major discovery in a property survey, or sudden changes of heart or circumstance, are to be expected, there are other occasions where a breakdown of a sale is entirely preventable.
“Fall-throughs are an inevitable part of our industry but a good estate agency will do everything they can to ensure these are kept to an absolute minimum,” said Clynton Nel, Director at JOHNS&CO.
Given the highly emotive nature of property transactions, agents are aware of the need to work hard to mitigate the risks and make sure the deal moves along smoothly, and for that to happen, effective communication is key.
Nel added: “Communication is king. Our job as agents is to carefully manage our clients’ expectations at all times. If communication breaks down, it puts the [sales progression] process at risk.”
Time is of the essence
Residential sales markets have been somewhat subdued over the past couple of years, owed largely to political and economic uncertainty, and subsequently, business has been rather tough for agents with many buyers treading cautiously.
“[Political and economic uncertainty] has resulted in heightened caution amongst buyers and unsurprisingly there is a clear lack of urgency,” said Giles Cook, head of residential agency at Best Gapp.
Cook stresses the importance of setting “realistic timeframes” for exchange and completion when negotiating an offer, so all parties know what is expected.
This is a view shared by Ed Corry-Reid, director, Aylesford International, who believes that ‘organisation is key’ to getting a deal over the line.
He said: “It is crucial to ensure that your client informs their solicitor at the outset of the sales process, so that they are ready to proceed the moment a buyer is found.
Corry-Reid added: “If a buyer can display that they are doing everything within their power to move the process along, then in my experience, sellers will continue to engage with them in a sincere manner.”
Unfortunately, more often than not, a slow sales progression is often a key contributing factor as to why the number of property sales falling through pre-completion is so high, with many agents recognising that speed and efficiency are of the essence in order to maximise the chances of a deal progressing safely to exchange and completion, without the buyer or seller withdrawing from the purchase.
Marc Schneiderman, managing director, Arlington Residential, commented: “Time is perhaps a seller’s biggest enemy once terms have been agreed.”
“Our recent research carried out on in excess of 70 sales, clearly demonstrated that taking weeks to get organised to sell, once a price has been agreed, will increase the likelihood of a sale not materialising by over 30%.”
“It allows the purchaser the opportunity to be offered other homes, or may just give them too much time to reconsider what they are doing. There may be related transactions and the delay can often have a ripple effect.”
Archaic house buying process
Clearly, the fewer delays that are built into a transaction, the better it is going to be for all parties. Momentum is everything.
“Speed is essential,” said Adam Feather of Robert Anthony Property. “The faster you can get your transaction to exchange the better, as the deal is legally binding at that point.”
But Feather believes that the existing house buying and selling system does not help as it is, in his view, ‘archaic and damaging’, making the buying and selling process ‘more stressful than it needs to be for all parties involved’.
The stress related to buying or selling a property in this country partly explains why around a quarter of property sales fall through before completion, according to Quick Move Now.
“This [fall through] figure can easily rise if additional external factors come into play,” said Danny Luke, managing director at Quick Move Now.
“For a property sale to be successful, a number of different parties have to work together. Estate agents, solicitors, surveyors, mortgage lenders; if any of these parties do not work quickly and efficiently, they increase the chances of the sale failing,” he added.
Trevor Abrahmsohn, managing director of Glentree International, who views the existing transactions process as a ‘thoroughly inadequate system’, advises that the time frame for the due diligence be kept ‘as tight as possible’ and that the agent, in their crucial role of ‘conductor of the orchestra’, always focus on keeping all parties, including the purchaser and seller, ‘in the loop as matters progress’.
He added: “The agent should ensure that both sets of solicitors are working towards a fixed time frame that allows enough time to process the mortgage offer and do the survey, but not enough for the matter to meander endlessly. When this happens patience goes out of the window and tempers get frayed.”
We all agree that effective lawyers are crucial to securing the transaction.
“A good lawyer will be proactive in moving this process along and instrumental in maintaining momentum, which is essential,” said Jamie Hope, head of sales at Maskells.
However, unfortunately the reality is that ‘the conveyancing process is often sluggish’, added Hope, who also points out that there are now more PropTech firms ‘trying to assist and speed up this process’.
Some argue that PropTech has revolutionised the way the property industry works, with some products helping estate agents get things done faster and more accurately, although there is plenty of room for improvement.
“There is a gap yet to be filled by the PropTech community in exploring how they can optimise conveyancing and improve customer experience,” said Lisa Simon, head of residential sales at Carter Jonas.
Simon firmly believes that PropTech could potentially help simplify the transactions process, which she thinks is, in its existing form, ‘an overcomplicated system that can significantly slow down a sale’.
Simon says that she would like to see the PropTech community “develop a technology that allows buyers and sellers control and transparency over the status and timings of a sale to better suit their individual circumstances”.
She added: “Given the scale and complexities of purchasing a home, the process of buying a house will never operate at the rate of a retailer – and is not expected to – but agents are recognising these changing behaviours and should be open to partnering with PropTech companies that show promise of streamlining this process for their clients.”
Jon Horton, product director for mio, a tmgroup sales progression and communication tool, unsurprisingly agrees that many of the problems that slow down the house buying process can be overcome with today’s PropTech solutions, if only agents and conveyancers would use them.
Adapting to change
Nothing is forever. To achieve long-term survival, a business must develop and adapt to a changing world.
But a big part of the problem, according to Horton, is that, in his view, the property industry has been historically slow to adapt and adopt new technology.
He said: “Compared to some other sectors, the estate agency world has failed to embrace new services and new technology, aside from listing properties online, such as on the main portals.”
“There are plenty of products available that are designed to help estate agents, but many agents are struggling to rethink the way that they do things.”
He continued: “Because agents work in bubbles you might be great at SP but no one can see it so we are forced to resort to emails and phone calls and leaving messages and waiting for call backs that inevitably don’t always materialise.”
Horton feels that a consumer-facing app like mio, for example, designed to increase transparency between various parties, can help speed up transactions, reduce fall-through rates, and enable agents win more business.
He commented: “As things stand, there is far too much duplication. You might have three estate agents and they have each got their own CRM systems focussed on their own sales progression.
“But a product like mio, designed for estate agents by estate agents, ensuring the platform is simple and straightforward to use, offers greater transparency by providing key information for all parties, including the buyer and seller, to view every step of the way.”
“Agents using mio, which is currently available on a free six month trial, can log-in to get a shared view of how the transaction is progressing across the chain.”
Based on a pilot that took place in Cardiff last year, agents that used the mio platform as part of the transaction process saw their fall-through rate drop to 20%, compared with a national average of 33% to 35%, according to internal research by the firm.
Customers’ receiving notification to their smartphone has helped reduce the fall-though rate, says Horton, who acknowledges that apps are a growing part of many estate agencies’ ongoing investment in its digital services.
Given that many mobile phone users personalise their phones with entertainment and social networking apps, mio provides an app for people to download, designed to enhance the user’s relationship with your agency, providing a real value-added service, and ultimately helping to speed up the transaction process.
Horton continued: “It [the information uploaded on to the mio platform] feeds through to the app in order to tell the customer key events that have happened.”
“Whether it is a newly booked survey appointment, mortgage offer letter, messaging between the agent and customer, whatever information is uploaded on to the mio platform, it is fed through to the app in order to tell the customer key events that have happened.”
“mio offers a completely different selling experience, adding strength to an agent’s proposal to gain new property instructions by providing them with modern tools that are designed to help up their game, set new standards, and ultimately win more business by helping them stand out from the crowd.”
Room for growth
Around 500 estate agency branches currently use mio, and this number is growing by the day, according to Horton.
“Shareholders, Connells, Countrywide and LSL, are rolling out the mio product across many of their offices, and we expect other companies to follow suit,” he added.
As both consumers and estate agents become increasingly tech-savvy, more tools are likely to materialise that help improve the home buying and selling process.
But there are already some other products and propositions that already exist, designed to minimise the risk of fall-throughs.
View My Chain is a data-driven property chain management tool, that works similarly to mio. According to View My Chain, agents using the platform could reap financial benefits.
Key results for Taylor Hill & Bond in South Hampshire, for example, found that View My Chain helped to deliver faster completion of 28 days and increased commissions of £30,400.
“We have championed View My Chain and understood from the outset the benefits of transparency,” said Martin Taylor, managing director of Taylor Hill & Bond.
He added: “We have always been process-driven, so using View My Chain makes sense, it makes things clearer. Being able to effectively record conversations, date stamps on notes, it’s being diligent.”
Other firms, such as Michael Anthony estate agents in Aylesbury, have also embedded View My Chain across the business.
“We use it to at market appraisals to help us win new instruction.” He said. “Our staff like using the tool, as it’s simple to use and better than other sales progressions systems they have seen.”
Ultimately, transparency of information is crucial and PropTech start-ups, which use various technologies to transform the property market in different ways, are making everyone’s lives a lot easier.
But whatever platforms your agency opts to use, it is crucial that you sift through your options and understand what will make an immediate difference to your business and get stalling deals over the finish line.
- Best Gapp
- Aylesford International
- Arlington Residential
- Robert Anthony Property
- Quick Move Now
- Glentree International
- Carter Jonas
- View My Chain
- Taylor Hill & Bond
- Michael Anthony
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor and Editor of Landlord Today. You can follow him on Twitter @propertyjourno