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Letting agents .. Why cheap fees don't work.

Ok, some whippersnapper agent has just come into town and is offering cheap fee deals .... trust me, cheap fee deals ... they don’t work (remember the story I told 4 months ago of the agent who spent £13,000 over four months advertising ridiculously cheap fees in the newspaper, only to get four landlords .. link here

Lowering your fee is a one way street to lettings hell. Either it's cheaper or it's not.

At first, the process of lowering your fee involves smart efficiencies. It forces hard choices that lead to better outcomes, but as the sands of time pass though, in a competitive market, the quest for the bottom leads to some interesting choices as a business owner, cutting your costs, cutting your staff, cutting your salary.. there will always be another agent willing to go a penny lower than you are, and to compete, your choices get ever more limited.

The problem with the race to the bottom is that you might win. Even worse, you might come in second. To reduce your fee from 10% to 8% managed, or to cut to let only fee from 8% to 5% .. then down to 2% you have to slash the way things are done, cutting corners or the way people are trained or how properties inspected. You will have to scrimp on the culture, on how people are treated. You have to be willing to be less caring than the other guy.

Every great brand (even those with low prices) is known for something other than how cheap they are. You might think RyanAir earned their early success by using the ideas of cheap fees  and cut back service in a magnificent race to the most efficient airline in the world. We all know of the £15.99 return flights to Bratislava, Brno, Rzeszow or Osijek (where ever they are), but book air tickets to places you really want to go to, and they are £300 each.

Also, let’s think of cars.. why can Audi charge £20k for an A3, VW £18k  for a Golf, Seat £15k for Leon, Skoda £13k for Rapid .... they are the basically the same car with different badges on all made by the same firm .. and I bet they all come out of the same factory. Some want the cheapest, but the VW/Audi group  know that people don't actually want the cheapest car. They want a car they could be proud of, they want a car that is a bit safer, a bit more stylish and has a few more toys on it .. and depending how many toys or how you perceive the brands, is where you buy your car.

In the long run, to be the cheapest is a refuge for lettings agents who don't have the flair to have a lettings service that is something worth paying for, who don't have the guts to point to their service and say, "we aren’t the cheapest, but we are worth it."

So Mr(s) Letting agent .. are you worth it?