How to escape the rat-race... - Edition 7
There are 20.4% more Estate Agency businesses today than there were 5 years ago... 24,965 in 2023 compared to 20,720 in 2018.
So, in order to sustain that increase in Estate Agencies, there must be a similar increase in property transactions, right?
...Right!?
Wrong.
The Problem:
In fact, total transaction numbers in 2023 were down 14% from 2018 levels.
That means the average number of transactions per estate agency has gone down 28.7%.
So a typical Estate Agents 'slice of the pie' is 28.7% smaller today than it was 5 years ago.
And of course, the laws of supply and demand take effect here: there is an increase in supply of estate agents, all fighting over the same transactions, so naturally the 'price' of that service reduces, i.e., average fees go down.
So, less business, at lower fee levels... not great! So whats the solution?
Well I'm sure there are lots of options, but the best strategy I have seen is to turn that situation on its head: to move to a market where fees are high, volumes (and therefore overheads and stress) are low, and where the competition is the most sparse.
The Solution:
The premium market is not only where house prices are highest, obviously, but its where average fees are highest as well: last years 'Voice of the Agent Survey' showed the average fee for a £1m property was 1.6%. The fee for an average property (£250k-£300k) was 1.3%.
In real terms, that is the difference between a £16,000 fee and a £3,575 fee. Of course, the marketing cost and acquisition cost of a £1m listing is higher...but its not 347% higher (the difference in those two fees).
And, back to 'supply and demand' - in your area, where are the vast majority of agents focussing? The residential market, or the premium market? So, which one feels more like the rat race to you? And which market are you in?...Which race are you in?
But, How?:
There is of course no silver bullet to winning traction in the premium market, its more about excellence and consistency in marketing, service, and differentiation for your clients.
However, there is a wealth of insight, strategies and tips from some of the very best in the business on our podcast, focussed on the premium market, Property-Porn Stars. You can find all our episodes on YouTube, Spotify and Apple to make best use of your next car journey or dog walk.
And of course, By Design was built to deliver agents the branding, marketing, differentiation, training and technology to succeed in the premium market - its all we do! To find out what the premium market is worth where you are, who is taking those £16,000 fees off of you, and how By Design can help, click here to book a 30 minute Zoom where we can explain all of this.
David Lindley.