White Paper by Richard Rawlings. 2024.

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Buyer Representation for regular estate agents??

Read on - this is not what you think! 

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Estate Agents are used to failure, on three levels. A typical estate agency branch, with say 5% market share, knows this, as 95% of their local sellers prefer to use a competing estate agency. That’s the first failure and it’s a hard fact to swallow. So the agency throws money at marketing, leading to the second failure: 99% of marketing spend fails to directly deliver instructions.

 

The third failure is buyers. Most of my estate agency clients tell me that they sell a property to about 5% of their buyer database. So 95% of their buyers are either not buying, or buying elsewhere. That’s a fail!

 

Most estate agency owners and managers have been trying to fix the first two issues for years, on the basis that marketing leads to instructions leads to sales. That’s not unreasonable, but it hasn’t worked, with market share remaining more or less stagnant for many agencies.

 

But I suggest that we might have been approaching this from the wrong end. We have assumed that we can only do more sales if we have more instructions. We have ignored a massive, largely untapped, resource – our vast pool of buyers. We generally assign these buyers a low commercial status because there is only a 5% chance that they will buy through us. If we have a property for them, then they might buy it. The more properties we offer them, the greater the chance that they will buy one of them; so we focus on acquiring stock.

 

But what if we could convert, into paying clients, just 5% of the 95% of those buyers who don’t buy through us, then we will have effectively doubled our revenues. That’s why I believe that Buyer Representation (or my own version of what you might think it to be) is the next chapter in British estate agency, and it’s long overdue. And the great thing about the bold claim of doubling our revenues, is that this is additional revenue into our industry - we are not simply redistributing it between agents.  

 

It works like this: we know that a hot buyer needs to see about seven properties, before they decide to buy one of them. This is the “magic number” that supports the decision-making process. (If they are waiting for “the right property” to come onto the market, then they are not hot buyers). The problem is most agents are unlikely to have seven suitable properties on their books at the time, so the buyer is lost to another agent who happens to have the right property. This is frustrating for the buyer because they have to register with several agents, all of whom are trying to sell the buyer one of their instructions.

 

So why not offer to help the buyer buy one of your competitor’s instructions? They’ll probably buy it anyway, so why not be involved? Chances are that you have a good relationship with the buyer and they would ideally like to buy through you, so offering the Buyer Representation service to them is a natural extension up-sell for any switched-on negotiator.

 

In fact, we’ve been lying to buyers for too long when we say, “we’ll find you your dream home”. Nonsense! What we mean is “we’ll try to sell you one of our limited stock of instructions, where we act for the seller, and our role is to negotiate the highest price out of you.” Mainstream estate agents have never acted for the buyer – the one person who actually needs representing, possibly even more than the seller does! Until now.

 

This is not for any and every buyer - just 5% of them. A typical client is time-poor, is probably from out of the area, is not necessarily familiar with the sales process or negotiation tactics. They may be frustrated by choice, or lack of it, or have had a bad experience in the past. Maybe they haven’t moved in a while and just want a helping hand from someone they can trust. These are the sort of people who employ an accountant, rather than doing their own tax return. They call a plumber to fix a leaking tap. They employ interior designers or landscapers. They take their car to main dealers for a service. This is your 5%.

 

Once signed up under a Buyer Client Agreement, things get interesting, because you can now offer every property on the market, not just your own stock, as well as a few off-market too. But it’s important to recognise that, at least under my system of Buyer Representation LiteTM, this is NOT a search/relocation service. It is more like having a friend or relative who is there to help the buyer move, possibly to a new area, who just happens to be a local estate agent. This means that you do not have to introduce, or be the effective cause of sale, in order to earn your fee. Your fee is earned through your guidance, advice, reassurance, expertise and negotiation skills.

 

An obvious question is how can you possibly access your competitors’ instructions? Easy – ask them for a viewing! They still get their fee from the seller, and you get yours from the buyer. And if the other agent doesn’t want to cooperate (which would be foolish as well as negligent to their client) then you are perfectly entitled to knock on the seller’s door and explain the difficulty you have had with their appointed agent and may you bring your client round please – no fee required!

 

What about fees? Those estate agents who have done my course on this subject typically charge 20-25% of the difference between the asking price and the negotiated sale price (with a minimum fee of at least 1%). Most of the time the fee is about the same as, if not greater than, a regular instruction.

 

Even though the fees are exciting, and earned faster (as a hot buyer buys within days, whereas a seller could take months), the cost of delivering this service is far less than a traditional instruction. Yet it also attracts regular instructions, as you may be able to claim “Sell your House for Free” if you have a buyer client for it, who is paying your fees. There is never a conflict of interests. You can even potentially advertise your competitors’ stock – one agent I know currently features over 800 on their website.

 

There are many other direct and indirect advantages of offering Buyer Representation, which is mainstream in many other countries, yet the one country that needs it most is the UK as we do not have a multi listing service (MLS) (with the possible exception of LonRes). Our time has now come, and it seems that the solution to poor agency performance has been staring us in the face all along.

 

You’ll no doubt have loads of questions. But if this sounds interesting, I offer a half-day online or face-to-face seminar to that shows you exactly how to implement this service, easily, into your existing estate agency. It comes complete with extensive dialogues, FAQs and all the legal documents you’ll need. Importantly “What NOT to do” as many agents starting out on this trip themselves up at the outset. You can find details HERE.

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©2024 Richard Rawlings and ​​Property Industry Eye