Low-cost estate agencies seem to be popping up everywhere at the moment, following a trend seen elsewhere in the world. Are they a threat to the conventional real estate agency? Or are they just a passing fad?
One of the international business realities is that we will willing pay more for a superior service or product. That’s why we’re not all driving around in the cheapest car, or eating at the cheapest restaurant. If we find a product or service that meets our needs and provides sufficient value, then we are willing to part with our hard-earned funds.
The key is that the service or product needs to be superior and add value. If the benefits are all equal then we will select the option with the lowest cost – representing the best value.
When looking at the offering of some of these low-cost estate agencies, it may well be that the weaker estate agent is at risk of becoming obsolete. Why would a seller pay a higher commission for the same result? It simply wouldn’t make sense.
In my experience, what every seller wants is the maximum money for their property in their pocket, in the least time, with the minimum hassle. Both the sales result and the actual experience are important. In order to justify their fee, an agent must deliver on both.
So is the conventional estate agent still relevant then? Only if they can deliver to the seller a better net result “in their pocket”, whilst delivering a great experience. And that’s where the difference lies between a low-cost estate agent and a full-service estate agent.
There is only one condition under which a buyer will make their best offer for a property – and that’s when they are competing against other buyers for the property. This condition of “competition” is only possible when a comprehensive marketing plan is executed that finds all the buyers for that listing. Unfortunately, such a marketing plan costs money – and that’s not something offered by a low-cost agency. You can’t just rely on listing on the property portals and a For Sale board.
You need a marketing strategy that covers all aspects of marketing and is a proven method of attracting the best buyers and then placing them in a position of competition. Low-cost estate agencies don’t do this. But then neither do many conventional real estate agencies.
If you’re a seller you will want to ask the agents that you are interviewing how they are going to attract these buyers, and what strategies they are going to use. If they can’t demonstrate what they are going to do, then why would you list with them? Time and again we see irrefutable evidence that, when a skilled agent executes powerful marketing strategies, the seller get’s more for his property and enjoys a better client experience. But don’t just take someone’s word for it! Ask for evidence and get full value for your money.
Principal of Harcourts Platinum
Director of Harcourts South Africa