Agents urged to avoid rush to cut fees in challenging property market

Agents will need to articulate their worth in the new challenging property market but shouldn’t rush to drop fees, industry trainer Tony Morris claims.

Speak on The Guild of Property Professionals’ podcast, The Home Stretch, Morris said agents will have to up their game in the new market next year, with demand predicted to decline and the prospect of a deep recession.

He said there will also be reasons people have to move so it is important for agents to focus on the positives and show their value to vendors, adding: “In an easy market, you get order takers, salespeople who get enquiries from the portals or their own marketing efforts and book a viewing off the back of that with relative ease. 

“However, when I look at the best agents I have worked with, they are order makers. These are agents who have the ability to question properly, listen effectively, and turn an enquiry or opportunity into actual business.

“So, I see the current market as challenging, but in challenging markets, agencies can develop their teams, upskilling agents to be able to succeed in these kinds of markets.”

Morris said this strategy will be beneficial when the market changes again, adding: “The business has the advantage of a developed workforce with the ability to thrive in any market. Agents who have been complacent will have up their game or unfortunately go the other way.”

He adds that in the past 18 months there has been little need for negotiators to negotiate, however, in a challenging environment agents will need to be able to articulate their worth. 

Morris said: “In a competitive market some agents might be inclined to drop their fee from say 2% to 1.5% without much negotiation. 

“However, agents should be negotiating and perhaps suggesting 1.8% with three conditions, such as a video testimonial once the client has seen how good the agent is, an introduction to a few potential connections who might need the services of an estate agent, and if they have a rental portfolio, a rent review of the portfolio. 

“A lot of agents don’t negotiate, they just drop their fee, which shows they don’t believe in the fee they are commanding.

“If an agent went to vendor and explained why they charged 2%, and then after a bit of pressure from the vendor, they dropped to 1.5%, that would give the message that the agent doesn’t believe their service was worth the 2% and were just trying their luck, which would no doubt upset the vendor.”

He notes that if an agent receives a lot of business through recommendations, which they should, dropping their fee will make it harder to get a higher fee with the recommended client because the precedent has already been set.

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