To read Part 1 of Adam Walker’s survival guide, CLICK HERE.
Well, hallelujah, you are now allowed to open your office, your bank balance is looking good and your business has survived the virus. Or has it? Unfortunately, it is still too soon to say.
Let’s consider this example of a small business that usually banks £480,000 per year, half from sales and half from lettings. This example, right, shows how easy it is for agents to be lulled into a false sense of security but the hard bit is about to start.
After two months of saving money, it is now essential that you start bringing staff back from furlough and get them back to the job of selling and letting houses. The first person to bring back should be whoever does your sales progressing. UK estate agents currently have around £1 billion of fees stuck in their sales pipeline. John Doe will have around £80,000. The skill with which this is managed over the next two or three months will determine how much of it is banked and how much of it is lost.
Convert instructions now
The next priority will be converting your instructions into sales. In an uncertain market, this too is a highly skilled job. Some vendors might be considering taking their property off the market and will need to be convinced not to. Some firms have been mounting very aggressive touting campaigns over the last eight weeks to persuade vendors to switch agents as soon as the lockdown is over. You may need to work hard to save some of these instructions. Some vendors will still be very frightened about catching the virus and you will need to reassure them that viewings can be done safely.
The buyers will need to be persuaded that now is a good time to buy and you will need to persuade the bargain hunters that prices have remained stable. These are conversations that take time and skill and you will need your best and most experienced negotiators to come back to work immediately in order to do this effectively. You may also need to spend some money on training your less experienced staff and reminding your older staff on how to succeed in a more balanced housing market. It is after all ten years since we last had one.
Use your lettings expertise
On the lettings side of the business there is also work that needs to be done by experienced staff. You will probably have a number of empty properties that you have not been able to let due to the virus. These landlords will be getting extremely impatient and unless you can find them a new tenant quickly there is a real danger, they will instruct one of your competitors to do so.
You may also have a backlog of new tenancies that have been agreed that have not yet started. Some agents have had terrible trouble finding Gas Safety engineers, inventory clerks and cleaners. Unless you can persuade your regular contractors to undertake this work soon there is a danger that your landlords will give their properties to another letting agent who can.
Many agents also have a backlog of urgent repairs which can cause who damage to your relationship with both your landlords and tenants. Persuading the contractors to put your jobs at the head of the queue requires someone with experience and determination.
Communicate with tenants
Finally, most agents who have tenants who are behind with their rent. The way to deal with this is to telephone every tenant that is in arrears in order to establish which of them genuinely cannot pay and which of them are just taking advantage of the current situation. Again, this is a job that has to be done by a person with experience and empathy.
Start marketing – now!
For both sales and lettings agents the most important and expensive issue, however, will be to restart your marketing campaign in order to ensure that you have new instructions to sell in six to twelve months’ time. The importance of this was demonstrated beyond question during the recovery in the housing market that occurred during 2009 to 2010. Forward thinking and well-funded firms got their foot back on the gas just as soon as they saw the first green shoots of recovery and by doing this, they were able to take a huge amount of market share from their less nimble and less well-funded competitors.
The buyers will need to be persuaded that now is a good time to buy and you will need to persuade the bargain hunters that prices remain stable.
In next month’s article, I will look in detail at various ways to do this but it is not too soon to start doing some of the early work now.
You could start by getting your best sales people to phone through your database of valuations that never came to the market, withdrawn instructions, past purchasers who may be ready to move again and past vendors who have stayed in the area. This sort of contact must be made by telephone rather than by email. It is also so important that it needs to be done by one of your very best people.
Your objective must be to ensure that your business doesn’t just survive the virus but prospers from it and emerges as a stronger, more profitable business than it ever was before.