In his latest column Jonathan Rolande explains how those working in the property can best navigate the challenges the market is continuing to throw up.
Right now, the property market is giving all of us some challenges that are taking some time to get used to. The boom that followed the feared ‘bust’ of Covid was unexpected by any of us.
Perhaps we shouldn’t feel too bad about that, after all it even caught The Bank of England by surprise so how were we supposed to know?
We all lurched from closed offices and bounce-back loans to boom times, recruitment issues, salary increases and expansion. To coin a phrase, we’d never had it so good. And unlike previous booms, this one lasted.
But a year ago that all came to an abrupt halt.
Our business models, almost overnight, became outdated. We were so focused on attracting sellers, we’d forgotten about the buyer, and what they needed. Let's be honest, they became nothing more than a commodity. If they didn’t want to pay the price or had some reservations move on to the next o ne, they’d pay the price. Job done.
Well now things are different. But the big question is, have we made changes to our businesses that are as fundamental as the change in the fortunes of the property market?
I’d argue no.
As humans we are usually optimistic. So whilst we can hope for a recovery soon and focus on a mortgage rate war, election and ‘people have to live somewhere’ mentality, we also need to be planning for a situation where things don’t miraculously get better.
Ask yourself, if your office income stays at this level for a year, can you cope? If it drops 10%, 20% even how will you manage? With prices and sales volumes both down even worse is possible, even likely.
If you haven’t already, now is the time to examine cash flow. Too many good businesses have failed not because of a lack of sales, but because they completed too slowly and the bills kept rolling in.
So on the income side, look at add-ons, and what have you been doing for free that you could charge for? How can you reduce the fall-through rate and speed up your sales pipeline? Are there other services to offer?
Those not already letting should look into it as a matter of urgency. Those already with a small portfolio should throw their efforts into expanding it as quickly as they can. The regular income, whilst small, is reliable and may well end up paying the office bills over the winter.
I’d rather earn £500 by letting 10 properties than not earn £5000 not selling one. The business is there for the taking, many who can’t sell, or won’t at the current value will let. If they go to a competitor to do it, you’ll likely lose them as a client altogether.
Many estate agents also let and with rents predicted to grow 25% in a few years it’s a booming, if competitive sector.
Where can you cut costs without losing value? Can you renegotiate your office rent, advertising contracts, print costs or subscriptions? Are you carrying weak staff? Can you outsource part of the business that eats up your time for small rewards? Justify, if you can, every single pound you spend. Just because you’ve always done something like leafleting or sponsoring local events, doesn’t mean it makes sense now.
Step back from the day-to-day business and ask yourself this question. “If I was starting this business today, is this exactly how I would do things?”
Anything that isn’t, needs to go.
There is a long, cold winter ahead of us. The quicker we prepare for it, the stronger we’ll be in the Spring, ready for better times and for the challenges and opportunities that will no doubt come.
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I disagree that now is a good time for an inexperienced agent to go into lettings, better off staying focussed on the knitting
I agree that judicious cost-cutting and cash-flow management are prerequisites for survival in today's market (one which looKs likely to continue on its downward trend for another 12-18 months because in my experience these phases in the housing cycle don't rectify themselves quickly).
I've had no experience of lettings, so I can't be sure of my ground, but I'm of the opinion that they might be a lot of hassle for a modest return.
If you don't know your stuff you could end up in serious trouble. That includes the 100's of thousands of private landlords out there who've 'winged it' for decades. Many of these self-managed landlord's are sleep walking in to a space where they wont be able to obtain possession of their property. One compliance error is all it will take.
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