Letting Agents: Why You Should NEVER Cut Fees

by | Apr 4, 2016 | Strategy

Imagine the scene: you are walking around Harrods department store, and you see the most beautiful upholstered Victorian chair, with a rich red velvet fabric and dark wood trim.  You tentatively look at the price tag almost scared to look… what sort of price tag would you expect?

Now imagine that exact same chair but the first time you saw it was in a run of the mill retail store, such as Debenhams, how much would you expect to pay now?

And this time, how much would you expect to pay for it, if you saw the same chair at the local village antiques fair, which tends to resemble a jumble sale on a good day…

You probably came out with 3 VERY different figures, and YET you were talking about the same chair!

So the question is, what sort of figure does your BRAND command?

Consider why you were prepared to pay probably 1000% more for a chair from Harrods than you were from the local fair. What was it? Expectation? Glamourous surroundings? The assumption that it must be a better chair because it’s from Harrods?

All of this is BRANDING. It’s all about image.

So when did you last consider the image or brand of your letting agency?

Take a moment to think about where you sit in the marketplace:

  • Are you basement Budget?
  • Perhaps you’re middle of the road
  • Or even top class

Which are you and more importantly, is this where you want to be?

Imagine walking past a letting agents premises, with tall glass windows, funky chairs, exceptional lighting and super smart staff, and then walking past one with stickers all over the windows, shabby shop frontage and miserable scruffy staff, with paperwork and files everywhere…

First impressions last a lifetime and what you would expect to pay at either agency is set right from the beginning.

There is in theory a place for all levels of agent in the market, but before you decide where you want to sit, it might be worth considering the following, very important question…

What level of service do you want to give?

You see, just like the chair, if you are to sell something for £3000-£4000 then it needs to stand the test of time. The chair needs to be well made, robust and do the job well and so does your service if you want to command the highest price…

But can you really afford to offer the same high level of service you set out to offer if you only charge budget prices?

The answer is NO.

Unfortunately the COSTS are the same to run a budget letting agency as a high end agency, around the delivery of service, so be prepared if you are going to aim at the cheaper end of the market to be cutting on service.

You will just have to, to make it work in the long run as you won’t be able to employ the staff you need, re-invest into the systems or training and keep costs to a minimum, and for many that is just NOT the business they set out to run in the first place.

If you also consider that most agents operate on a 25% profit margin, if you are therefore more than 25% cheaper than you competition, it’s just profit you are giving away, OR it’s got to be a reduction in service.

But we can’t all afford top end shop premises, and glitzy glamorous furnishings, does that mean we are stuck with the budget end?

Not at all… The shop front and image is just one way of giving the impression of quality, the other way is in YOU, your actions, what you say, how you’re staff behave, how good they are at responding, solving problems and getting results too.

If all you can afford is a dreadful shop front, I would rather you take office premises and spend your time and money on building YOUR profile, building your expertise in the market through PR, online and offline engagement and educating your local market.

This will do SO much more for you than a small less than attractive shop front premises, offices are also easier to run and less expensive, so you have more time and more money to do this too.

As a brand we have always focused on the latter, service, expertise and getting results, rather than glitzy shopfronts, in fact all our branches started from offices, but then when they got successful, they wanted to move into shop front premises, which is a great way to do it, because by then you have income, staff, reputation and customers, and a great shopfront can only add more exposure to an already awesome brand.

To make sure you are on the right track, work through a business plan, for the next 5 years, and see what staff, costs expenses you would need and then look at what income you will build on the current fee structure and a full fee structure, and you will be amazed at the results, a small increase can means £100,000’s increase in revenue.

Let me know how you get on…