Penny Wise, Pound Foolish: Why Estate Agents Should Compete on Service, Not Low Fees
June 27, 2024 11:03 am
In the world of UK property, the old adage “penny wise, pound foolish” is particularly pertinent. Both estate agents and clients must navigate the complex and often tumultuous housing market, and focusing on low fees can lead to suboptimal outcomes for all parties involved, with clients risking losing tens of thousands of pounds, due to poor marketing, just to save a few hundred pounds on fees.
Instead, choosing an agent on service levels and prioritising quality service can ensure better results and a smoother journey from valuation to completion.
The Perils of Competing on Low Fees
For estate agents, slashing fees to attract clients might seem like a straightforward strategy. However, this approach often comes with significant downsides for the client:
1. Compromised Quality: Lower fees can lead to reduced resources for staffing, marketing, professional development, and other crucial services. This can result in a diminished ability to deal effectively with enquiries, viewings and negotiations.
2. Unsustainable Business Practices: Constantly undercutting competitors on price can lead to unsustainable business models. Agents may find themselves unable to invest in the tools and technologies that enhance service quality.
3. Client Disillusionment: Clients who choose agents based on the lowest fees often end up dissatisfied due to poor service, delayed transactions, or subpar property valuations. “Over promising and under delivering” is a phrase we hear a lot in relation to a number of our competitors.
What Clients Should Look For
As a client, selecting an estate agent based solely on their fees can be a risky move and will often end in disappointment. Instead, consider these critical factors to ensure you receive the best possible service:
1. Market Share: An agent with a significant market share likely has extensive experience and a strong understanding of the local property market. They can provide valuable insights and a competitive edge.
2. Reviews and Testimonials: Online reviews and client testimonials offer a glimpse into the experiences of past clients. Look for agents with consistently high ratings and positive feedback. (Hint – just like us!)
3. Performance Statistics: Assessing an agent’s performance stats, such as average sale prices, time on market, and successful transaction rates, can help you gauge their effectiveness.
4. Reduction Rates: Be wary of agents who frequently reduce the asking price of properties. High reduction rates indicate initial overpricing or a lack of effective marketing strategies.
The Importance of Competing on Service
Estate agents who focus on delivering exceptional service are more likely to achieve long-term success. Here’s why:
1. Enhanced Client Experience: Providing top-notch service ensures clients feel valued and supported throughout the transaction process. This builds trust and loyalty.
2. Better Market Positioning: Agents who are known for their excellent service don’t have to negotiate on fees. Clients know that, as in many cases, you get what you pay for, a seamless and professional service.
3. Sustainable Growth: A service-oriented approach encourages repeat business and referrals, leading to sustained growth and stability.
In the competitive world of estate agency, being penny wise and pound foolish can lead to regrettable outcomes. Estate agents should focus on delivering superior service rather than competing on low fees.
For clients, prioritising market share, reviews, performance statistics, and reduction rates over fees can lead to more successful and satisfying property transactions. By making informed choices, both agents and clients can enjoy the benefits of a more professional and effective experience.