I want more leads! Is a common cry in estate agency. Once you are in the door, it is all about your awesome conversion rate. More leads + High conversation rate = great life. Right?...Wrong! Here is why…
I know so many great Estate Agents. They don’t all work the same way, they don’t all work in the same markets, they don’t even all agree on how it should be done but if I were to open an estate agency, I would love all of them on my team.
But there is one thing that I personally have found to be an incredible factor in my own business life and am 100% sure that should be happening more in estate agency, but I do not currently know of many agents that do it.
This one, ‘super factor’ is not a stand alone magic wand to make your business more profitable as there are many contributing factors to that but instead is just one thing that estate agency is yet to truly adopt and from my own experience I feel it should do more of and that one thing is turning away listings.
I know what you are thinking, oh this is all about getting the right fee etc but no not this time. This is about why, even if someone likes you and has agreed that your fee is fair, you should still potentially turn that business away! Crazy right? So let me explain.
For as far back as any of us can remember estate agency and sales in most other business have been about throwing as much s£*t at the wall as possible in order to hope that some of it sticks. So to have gone to all of the marketing effort to get called out on a valuation and to have gone through your whole pitch only to turn that business down is a very alien idea to the majority of business owned. I would have also placed myself in that bracket of skeptics at one point in my business life. But strangely the more you look into this concept the more you will start to see that there is a direct correlation between those 5% of top performing business and those 5% of odd balls that turn away business.
So what is it all about? The principle of the idea is that not every lead is actually a good lead. Thus in Estate Agency terms not every potential instruction is a good instruction. The way in which companies, like mine, have managed to find this out is through being able to analyse lots of data around the business. For estate agency this is very hard to do, due to the type of systems they currently use. But bare with me.
For most of the good agents I know they want to get called out on more valuations (generally, perhaps not right at this moment) and then once there, they want their conversion rate from valuation to instruction to be as high as possible. Whilst that theory is broadly true there is one key factor of the equation missing. Is the lead actually any good?
You see whilst most agents are unable to use their systems to gain much insight into their true cost of sale it only takes some simple calculations to start to see how a bad listing can start to have a huge impact on your profit.
First up, there is the time and money spent doing the actual take on. Even if you are doing that work in-house there is time and effort and therefore money involved. If you are outsourcing it and not charging the seller for it then the cost is obvious to see.
Then there is the time to create the marketing material. Considered negligible in many peoples eyes but in truth from start to finish hours of someone’s time.
Then the qualification of the enquiries again, hours of peoples time, stopping them from performing other tasks and ultimately requiring a bigger headcount and salary bill.
Then there are the viewings.
Then the vendor feedback.
Potentially if it gets this far you then have all of the sales progression time.
And then at some point, that seller decides…Actually, now is not the right time for them to sell after all.
Or you are just unable to find the balance between what the seller wants and what anyone is willing to pay.
But hey, at least you managed to get a board up for a while eh?
It is seriously, just not worth it. When you add all of those costs together and get realistic at how much it costs your business to do this, plus just how many of your listings turn out this way, you will be shocked at how much it is costing you.
Estate Agents (all sales people actually) love to talk about how they have 80% conversion rates and how they sell everything they take on but this is just bulls$*t for 99% of people and the reason they say this is because they do not have the data to hand to see for themselves.
So how can you know if a new potential listing is going to go all the way to completion or not? In truth you can never know for sure, but they way to start figuring this out is by asking very specific qualification questions when on your valuations, every single time.
Not just, pointless questions like ‘are you serious about selling?’ but more indicators of things that over time will give you some insight when compared against your listing to completion stats.
Perhaps things like:
Have you arranged the mortgage for your forward purchase yet?
Reason for moving?
Have you ever tried to sell this property before?
How urgently on a scale of 1-10 are you looking to move?
From this I am not saying that you should immediately be able to make a judgement call. But, over time, using these and your own qualification questions, you will be able to spot the trends that help you identify where to spend your hard-earned effort and money and where to say thanks but no thanks.
After all, if you're going to work for free, it had better be worth it in the end!