One recent survey revealed that the percentage of sales that fell through in the first quarter of this year was a whopping 38.4 per cent.
Similarly, YouGov research released earlier this year found that 300,000 property deals were falling apart each year, at an average cost to vendors of £2,700. The cost to estate agents is, of course, much higher. They’ve done all the work to put the deal together and likely ended up with nothing as a result.
Given that we live in a country that is far behind others when it comes to the homebuying process – in the US or Australia, for example, one can’t simply decide not to proceed with a sale three months after making an offer and suffer no financial penalty – most agents have long accepted that it is a fact of life that a certain proportion of the deals they agree will not come to fruition. However, that’s not to say that more can’t be done to make that proportion lower.
One way to keep deals on track is by improved sales progression and the good news for agents juggling a busy diary full of valuations and viewings is that you don’t necessarily have to do this yourself. In fact, you might be better off not doing it yourself.
View My Chain, a well established data-driven property chain management tool, recently released figures that illustrate the financial benefits it has delivered to agents over the last 12 months.
Sohail Rashid, CEO, says that one example is Taylor Hill & Bond, with six offices in South Hampshire where View My Chain delivered faster completions and increased commissions:
- Completion – 28 days quicker than previously
- Increased stock turnover resulting in £1,807 additional revenue for Q1 2018
- Cash flow benefit – £30,400 commission delivered 28 days quicker
- Commission saved following a chain break – (27 properties in 2017)
- 2017 cash benefit of £129,109.50 based on one per cent commission – £32.2k per quarter.
Martin Taylor, Managing Director said, “The market has been steady for the year so far with new homes more active. May has been a strong month but we expect early summer to be slow (holiday period) with the second part of Q3 and early Q4 to be strong and not dissimilar to 2017.”
We have championed View My Chain and understood from the outset the benefits of transparency. Chain breaks are a powerful tool and we’ve benefited from improvements and efficiencies to our organisation. Martin Taylor, Taylor Hill & Bond.
“We have championed View My Chain and understood from the outset the benefits of transparency. Chain breaks are a powerful tool and we have benefited from improvements and efficiencies to our organisation. 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.”
CUT THE FALL–THROUGH RATE
At Assured Sale and Progression (ASAP), Managing Director Richard Megson says their fall through rate is less than 10 per cent. Sue Ralston, Director at rival firm Complete My Sale, says the number of deals that fall apart under her watch is less than 1 in 7, while at Sales Pro, Managing Director George Smith says it’s about 12 per cent.
We just deal with sales progression, we are focussed on conveyancing and the legal end of the transaction. It is our core skill and we have the experience. Sue Ralston, Complete My Sale.
Assuming your numbers are closer to the average, getting them down to those numbers could represent a huge difference in your income. So how do these firms get their number of successful transactions so high? For a start, they aren’t juggling a busy diary full of valuations and viewings, they’re focusing on one thing and one thing only: getting the sale through to exchange.
The most important part is the introductory call to each client, we treat it as an interview, using the information gained to manage expectations. George Smith MD, Sales Pro.
“Because we just deal with sales progression, we are just focused on the conveyancing and the legal end of the transaction, there is always somebody there to take the call from the buyer or seller, someone who is knowledgeable about that transaction. It is our core skill and we have that experience there which not every estate agent would have,” says Ralston.
Smith has a similar view, but adds that, “credit does also have to go to the agents, as they are not just chucking anything together and hoping it doesn’t fall through”.
He says for Sales Pro, the key is getting everything clear early on. “The most important part of our process you would think would be exchange of contracts, but that’s the end result. The most important part of the process for me is the introductory call to each client. That call we almost treat as an interview, so we get as much information out of each client as we possibly can, along with the information that the agent has passed across. We use that information to manage expectations as people’s goals are set out from the very start and we relay that to the chain.”
Sales progressors also do a fair bit of handholding of buyers, particular nervous first-time buyers who may balk at anything slightly negative on a survey.
BEAT THE COMPETITION
Lack of visibility and poor communication creates stress across the length of the property chain, says tmgroup, which specialises in streamlining the transaction process. It also wastes a lot of time, as estate agents juggle phone calls, emails and multiple databases to piece together the information needed to progress the sale.
Allen & Harris uses tmgroup’s sales progression tool called mio, which has been carefully developed to speed up transactions and reduce fall-throughs.
Jamie Wallace says, “Before using mio, it was very time-consuming to gather the information I needed about each property chain. Particularly when I needed to find out something specific, such as whether the buyer further up the chain had ordered their searches, and would have to make phone calls, leave voicemails and wait to hear back.”
In a small branch you’ll have negotiators that do a bit of sales progession, but it’s not really what the agency wants to focus on. Richard Megson, Assured Sale and Progression (ASAP).
Richard Megson adds that in recent times, the difficult market has also been a factor. “It is clearly a tough market at the moment so the benefit of outsourcing sales progression is it does release a lot of time to focus on sales.
“Typically in a small branch you’ll have negotiators that do a bit of sales progression, but it is not really what the agency wants to focus on. I think it is probably a function of a tough market that agents are trying to defend what they have currently got and try and grow it, but that comes down to resource, time and cost.”
As Smith points out, like any other form of outsourcing, sales progression is a variable cost whereas employees are a fixed cost. “The busier they are the more it is costing them, but they can afford to use it then. When they are quiet they are not paying for it. That is a big reason why agents are outsourcing sales progression now.”
In actual fact, though, the cost is quite minimal with both Sales Pro and ASAP as both work on a referral model whereby they provide the sales progression service for free if agents refer clients to their panel of solicitors. In some cases, if they refer enough business they may end up being paid to use the service, although if an estate agent was already receiving a referral fee from its existing arrangement with other solicitors, they may be losing that income so it might not work out to be without cost per se.
Complete My Sale works differently and charges agents a set fee for each sale that exchanges. Ralston says she believes the referral model complicates things. “We could get the referrals but the referrals would give us almost a bias and it wouldn’t particularly be helpful if one of the referring solicitors who was paying us was also failing the client because where do we go, who do we put pressure on?
That relationship is probably questionable as to whether it is benefiting the transaction, which could be worth about £5,000 to the agent. If via that referral you are getting say £200, is it worth risking that £5,000 transaction? I don’t think it is. I think the solicitors need to be picked on their own merits.”
Megson takes a different view, however, saying, “If our solicitors are not involved then we lose that degree of control.”
CONTROL THE PROCESS
Referral model or otherwise, control is a key factor in whether or not agents outsource their sales progression. For those unwilling to, there are other services that can help keep sales on track.
Take Gazeal, for example, the proptech firm that offers reservation agreements and pre-sales contract packs — something of a mini version of the Home Information Packs (HIPs) that were scrapped back in 2010 after proving spectacularly unpopular with home sellers and estate agents.
Gazeal’s version, Gazeal Xpress, has taken on board the lessons of the failed HIPs, says Sales Director, Steve Dawkins, “The Home Information Pack was executed really badly. It was a relatively good idea at the time but one of the major issues was that the vendor had to pay upfront for a survey that was included in the pack and that was a massive barrier to entry. So what we’ve done is strip out the survey and we’ve created everything on a digital platform and are using technology to deliver the searches in a much more efficient manner.”
The fact that vendors pay only £250 for the product – and only upon completion of a sale – is also likely a factor in its finding a greater reception than HIPs.
The company’s Gazeal Seal product allows agents to set up a binding agreement between buyer and seller at an early stage, subject to a couple of get-outs related to valuation and good title. At present, however, it is only available for chain-free deals.
The company’s relative youth and the lack of awareness among the general public — typically it has so far been sold to vendors and buyers mostly via agents — is also allowing some estate agents to use it to their advantage by creating a USP in their area.
Tom Barry, in Keller Williams’ Mayfair office, says it has helped him win instructions. “We’ve got a lot of buy to let landlords disposing of their portfolios. There is one client who has got 12 properties he has given me, for which I utilise Gazeal. I pay for that for the buyer and the seller, the fees are all bound in within the fee that I charge to the seller. With that seller I did a demonstration on the laptop and he thought it was brilliant and it was one of the reasons I won the instructions.”
He says it has also helped him avoid aborted sales. “From an actual sales progression point of view it’s a no-brainer. One of the aspects I have found really useful is that the buyer is seeing all the documents at such an early stage. Last week we had someone at the point where they were about to make an offer. They were a nervous first time buyer and they actually looked through the paperwork and there was something in there that they were uncomfortable with and they said they were not going to proceed any further. While we all want to be agreeing sales, at the same time that’s only sales that are going to go through and this was a great help just in terms of not wasting anyone’s time and money.”
Time and money are both precious commodities and failed transactions are a serious drag on both. Any agent with fall through stats around the current average of between 30-40 per cent might want to take a close look at their sales progression tactics or they may find they are wasting almost as much time and money on sales that don’t complete as those that do.