Here’s an age-old dilemma. You want more instructions, there aren’t enough around, vendors know they’re in a position of power and they start to play the agents off against each other. “So-and-so down the road will do it for 1.5%; will you beat that?” or “You are my favourite agent but I know my property is really saleable and everybody else is offering to reduce their fees”. Et cetera, et cetera, et cetera.
I hated reducing fees. It was never a level I got out of bed to compete on, and I used to get really narked when anyone asked me to drop my commission (although I kept it all inside). The reality is that every now and again, and maybe more again than we’d wish, vendors will ask for a discount and you’ll have to make a choice. That choice may cost you dearly, or it may turn out to be a winner, or you may end up with an instruction at a fee you begrudge that takes the gloss off the deal when you send out the invoice.
One way of not feeling so bad about reducing your fees, is to put them up. If you’re more expensive than the other agents, you will find yourself oddly alluring to vendors and landlords, particularly if you back your extra charges with some extra level of service. There are lots of options to choose from that, per instruction, cost far less than that extra quarter or half percent you charge; a bit more advertising, professional photos, floor plans, EPCs… By offering more, you justify your higher fees and begin to compete on a higher level. And you give yourself some flexibility if you need to negotiate. I’d much rather negotiate down from 2% than 1.5%. In fact, the last high street estate agent I worked in, we charged 2.25% and our competitors were generally around 1.5%. We certainly provided more than the other agents – including having our own, jazzy and well-written magazine delivered to many thousands of addresses – but the extra expenditure was more than compensated for by charging 50% more than the other estate agents. And it was easier to win instructions. Being better is absolutely totally and unequivocally more fun than being cheaper, assuming you’re going after decent property.
Actually, scrap that. ANY vendor in ANY type of property ultimately wants to use the best agent to get their property sold, or let. So whether it’s fancypants mansions in Hampstead or down-at-heel council flats in Romford, everyone has the same needs and desires. I think that going round to someone’s property certain in the knowledge that you are the best person and company for them to use is a wonderful, lifting feeling. How marvellous to be revered in whatever marketplace you choose to work. And how great to know that you don’t have to accept a pay cut every time you take on another property.
So my answer is no, reducing your fee does not necessarily make you more competitive. I think reducing fees comes from a standpoint of scarcity, from thinking that you’ll only get so much of the cake and, in order to get it, you need to be cheaper. Well, you can have as much cake as you choose. I say go for a bigger slice. Don’t argue or compete on anything but your own terms. Compete where you want to compete and do whatever is necessary to do well in it. It might be extraordinarily beautiful extra marketing materials with the most wonderful copywriting ever committed to paper for an estate agent; it might be an image change and new graphics; it might be simply doing exactly what you’re already doing with a few minor tweaks; jazzing up your Facebook posts; sending expert tweets on a particular subject, etc. Social media for estate agents is a massively under-utilised medium right now, and the chances are that you’re the only one in your town seriously considering doing something interesting with it. A head start beckons.
You know what works for your business, you know what makes you feel good, and you know how you want to spend your time.
There is no reason to have it any other way.