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That seems extraordinary. Might I ask who this agent is? As I say, we're not exactly setting the world alight when it comes to making money, indeed, most agents would have gone out of business were it not for the fact that we have been able to support the business. You agent must be either saving costs or charging in other areas or else they simply couldn't stay afloat. Our overheads include shop rent, advertising, wages, employee training and we don't even advertise on Rightmove because we can't afford it (this saves us £600 a month!). I'd love to know their business model - perhaps we're missing something!! BTW, all the prices quoted are excluding VAT because we're not VAT registered.
Hi Rob, I am not an agent but I did have access to rightmove when a company I part owned had access.
From memory, this was a few years ago now, The top 3-4 agents in town often the big names did very well the next 3-4 did ok, and the next 20 or so just about managed some of this 20 would have been people effectively working out of their garage or spare room and still earning about if not less than minimum wage.
The truth seemed to me to be that a town like the one we operated in (200,000 population) could only really sustain 5-6 agents and the rest were wasting everyones time.Sadly you may (and probably do) fall into the category of too small and inefficient to succeed.I came quickly to this conclusion in the letting agents I had invested in and divested just one month after startup I lost some money but not a lot those who remained continued for about a year and closed shop after that. When a business does not work the best advice is to close it as soon as possible rather than waste good money chasing bad moneySimply put any tom dick or harry can become a letting agent or an estate agent, the costs are low and the entry is easy so its far too competitive a market and the bottom half of the market would be better off closing and calling it a day. Many small agents in our town survived just off tenant fees their only model was to offer landlords a no fee tenant finding service and this was of course unsustainable.Without tenant fees the market is going to shrink, those that remain will have more properties and landlords on their books but simply put if you are not in the top 5 agents in town you are not going to make much of a success of the rental/sales agent business.
Personally I would go further and cap both tenant and landlord fees. The sector will exist just the market will contract. Even if the fees were caped to zero for tenants and 10 days rent + VAT for landlords on a tenant finding basis the sector will exist. It might mean a town going from 5 busy agents and 15-20 time wasters (sorry) to 4/5 busy agents.
Rob the problem is you are too small, managing 70 properties is not a business. If you charge 10% that is equivalent to having 7 properties working for you.
7 properties can not pay for 1 office, 1 Rob West, 1 Rob-West-Wife, 1 of the ladies that work for you, 1 rightmove account (100% necessary imo), 1 everything else
I am not sure I have any advise you will like to hear but we started a letting agent with already 72 properties on the books which grew by about 2 properties a week. For me it was clearly unviable so I divested in the first month. The other person continued for about a year and then closed down themselves having put more money into it and not make anything for their one year time.
Compare what you are earning to what you could be earning doing something else and have a hard think about what the tenant fees will do to your business. I currently pay 2 weeks for tenant finding if my agent tried to up it to 3 weeks I would probably stop using them and move to one of the other big local agents that kept to the 2 weeks or if they all increased prices I would likely advertise myself on rightmove and elsewhere. Beyond 2 weeks rent as payment for tenant finding I dont see value.
The changes today mean the sector is going to contract. You will either have to close up and others will take your clients/properties or you will have to merge. In your shoes I would look around the other small agents in town with 20-100 properties and knock on their door and sit down in the pub with them and have a sober discussion. Merging 4-5 such small agents so you have one office rather than 4-5, one rightmove account rather than 4-5, etc might mean you can salave an ok business going forward. Although getting 4-5 chiefs together and telling them its going to be 1 chief and 4 Indians is not going to be easy. Another alternative is perhaps to go to one of the top 3 agents and tell them you are a good worker and have experience and if they hire you on a full time position you will bring 70 properties to their books. Im not sure what agents pay but I assume in the ballpark of £25k a year with full employment protections and benefits if that is the case its better than Just About Managing on your own venture.
Either way good luck it cant be easy I;ve had a few business failures and its always tough while in the middle of it
I fear you might be right! I'm not sure what you mean by 'time wasters'. Who is wasting who's time? Am I wasting my own time?
To clarify, I don't actually work in the business anymore, my wife is the brains behind the operation these days. With regard growing, it does seem to be accelerating as landlords recommend other landlords and we are seeing a snowball effect. We can only hope that this continues! I have had many discussions with my wife about shutting the business down but, despite the hard work and challenges, she gets an awful lot of job satisfaction and I guess while that is the case (and we're not actually losing money) we might as well see where it takes us.
The life of a letting agent is certainly not for me and. I'm much more of a risk taker and spend my time finding 'secret' plots (plots without planning that people don't realise are plots). This is what has allowed me to prop up Micawber Lettings is the first three years.
You make a good argument and paint a very bleak picture but despite all that, we will sit tight and see what happens with the tenant fees. Do you know what happened in Scotland when they got rid of tenant fees?
When I said time waster I was not talking about you I cant talk about you as I dont know you. But in general I find people in business can be their worse enemies. Perhaps the greatest skill in business is knowing when to quit. Like I mentioned we tried a letting agency once and within the first month I had learnt enough about the local market and business to conclude it would fail so I exited in less than a month. I sat my venture partner down and went through everything I thought and advised that he also quit rather than pour more money and time in. He did not listen and limped on for a year and lost more money and time. He was a 'time waster' wasting his own resources and time and my comment is a general one there are lots and lots of business people who are wasting their time and resources when the best thing would be to fold and move on.
I am not sure if that is the case with your business only you will know. I will however say the average (median) full time wage is about £35k a year so if a businessmen/women is making less than £35k net they should really consider closing up and get an average full time job instead as they will work fewer hours have less stress and have a better life.
Many people who are self employed or run micro businesses would probably be better off in full time employment.
In your shoes I would seriously look at the options. Closing a business is not failure. People often get stuck in a routine and its hard to break but people owe it to themselves to try and attain a better standard of living which often means earning more and in some cases it means closing down a non viable or semi viable business.
I wish you success but its going to be hard for the letting industry for a number of years while some agents are shaken out so those that remain can earn a living on lower fees but more customers
My agents do advertise on Rightmove - https://www.rightmove.co.uk/estate-agents...72851.html They have been in business for over 20 years.
I have just rang 4 High St Agents three of them RICS and not one knew anything about this issue
I have a good working relation with EA and spend quite a bit of my time in there offices
Since S24 was announced all I have seen is smug looks from staff who don't understand S24 or don't want to understand S24
They have not stood with us against S24 and they should have in my opinion
Now this has slapped them in the face and I'm quite pleased to be honest
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Totally agree, utterly clueless about S24 and I'm not at all surprised they're clueless about this
Chancellor says "Landlords appoints letting agents and landlords should pay fees." ... Letting Agent Fees are to be banned.
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________
I think what he is saying when I EA finds a Tenant who wants your property to rent You will have to pay all the costs for vetting even if they don't take the property
I have done loads of self management and I think I will be doing more in the future this is a killer for estate agents
But when you think about this You as a Mortgage Broker only get paid on the result of an offer of Mortgage
so if agents want to be paid they will have to do it on results too no Tenancy no fee
at present the EA makes money from the Tenant even if the tenant fails to take the property