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How can Foxtons charge £12,500 but easyProperty £475?

‘£89 a month for Sky Sports and Movies .. you must be made of money’, as I nearly split my pint, after my friend told me what he spent with the Sky.

In this world we live in, in life, all of us create limitations for what something is worth. Let me explain, I think my friend is daft because he spends £89 a month on his Sky package, with Sky Sports and Sky Movies .. he thinks it’s worth it. You might buy the latest 4k 60 inch TV for £2,500 … and you only bought that 40inch HD TV 14 months ago … I think you are stupid – but you don’t – because you think it’s worth it. I like certain types of glass antiques, so you might think me paying a couple of hundred quid on a glass bottle stupid .. but I think it’s worth it

A freshly squeezed cup of orange juice at a farmers market on the streets of Palma in Majorca in costs a euro (70p ish), and it's wonderful. The same freshly squeezed juice in groovie Chelsea smoothie bar would be seen as a bargain at £4 .. nearly five times as much money. Obviously, I am not discussing the ability to pay nor am I bearing in mind the absolute value of a glass of juice... because in both locations, it’s still only a glass of freshly squeezed orange juice.

… but in one location, the seller sells their juice at 70p and another ...
£4 .. and in both locations people pay, because they think it is worth it (because no one ever buys anything they don’t think is worth buying).

Something is worth what someone is prepared to pay for it … because THEY  (the someone) thinks it’s worth it. .. worth it to them.

So look at property, what is the difference between a call centre / online / cheap as chips agent charging £795 fixed fee or another charging 1.5% on the same £300,000 house .. just like the juice .. it’s just the same with our agency services .. they are both being employed to sell the vendors property (or find a tenant for our lettings colleagues).

Still thinking I am talking rubbish … if we are all estate and letting agents and we are all, in a roundabout way employed to do EXACTLY the same thing (sell the house or find a tenant) …. Foxtons charges 2.5% + VAT sole agency (don’t believe me – look at their website) or likes of Savills and Knight Frank charging 1.5%+ sales commissions on £5m/£10m/£20m properties … whilst easyProperty charge £475 or eMoov at £595. (looks impressive if you look at at a typical £500,000 London flat where the boys in green from FoxyFoxton’s would charge £12.5k plus Vodka And Tonic

Using the average London rent (according to Zoopla) of £2,958 pcm, how can Foxtons charge 17% + VAT (again check their website) managed on lettings, meaning the landlord would pay £6,034 + VAT in fees, whilst uPad would charge £499 + VAT for the same service.

If tenant find is your bag, its £99+ VAT for tenant find and you do the paperwork with uPad for a very reasonable £189 + VAT if you want them to do the paperwork as well … back to London’s ‘favourite’ agent and their tenant find service is a very reasonable 11%+ VAT of the annual rent, meaning the landlord would be charged £3,904 + VAT.

all for the privilege .. I mean, come on, especially on tenant find … whack it on Rightmove with some decent pics and it will sort itself out!  (harsh but you know it’s true)

… but people use Foxtons and pay them handsomely, and they pay top dollar for Savills, Knight Frank, Kinleigh Folk’s and Hampton’s for both sales and lettings .. and people pay them .. because they think they are worth it.

Estate Agents …  the number of property transactions is at an all time low .. so you need to start earning more per transaction, not dropping your fees. So, if you want to charge more .. you have to create value, to make your estate agency and lettings agency service worth it.

All you need to do is find homeowners and landlords that do in fact value what you do, who do think you are worth it.

So how do you do that?

Well what is worth and value? Well there are subtle differences between the two … They are comprehensive terms that incorporate emotion as well as cost. For example, while that old, chipped vase handed down to you by your Grandma might only, in reality, be worth a fiver, to you it might be invaluable and therefore has low worth but high value. Value can also be used to describe items that don't necessarily have a pound note value attached to them, like the value of your time.

The magic word here is emotion.

You need people to engage with you, your brand and your company, so they can tell themselves you are worth it, you are valuable to them.

The outside personification of your estate / lettings agency is your estate/lettings brand.  Your estate agency or lettings brand is the set of expectations, reminiscences, stories and relationships that, taken together, account for a landlord’s or potential property sellers decision to choose one agent over another. If the landlord /property seller doesn’t pay a premium, chose your agency or spread the word, then you have brand value ..meaning your brand is worth nothing

 So how do you get inside the head of all these landlords and potential house sellers, so you can create those good expectations, reminiscences, stories and relationships?

Easy, just get those people to pay attention to you and then be interesting (it’s just same in any aspect of life from trying to woo someone, pitching to a client, posting on social media.. so how do you do that?

Well, before I tell you exactly how do it, let me tell you how not to do it. As an agent, you have one  of the most interesting subjects in the world to the British in your armoury… the property market. After the weather, it’s the thing the Brits love to talk about most… and what do you agents go and talk about?

Look at our new branded cars – aren’t they ace
Look at our RightMove stats – we are No.1 – aren’t we the dogs
Look at what we have sold – aren’t we wonderful
Look at how we have broken our office record last month – aren’t we worthy
Look at this ESTA award we have won – aren’t we brilliant
Look at our network of offices – aren’t we big and important
Look at our recent awards ceremony – aren’t we good

Have you ever been to a party and someone constantly talks about themselves? Dull isnt it? .. but that is what you are doing if you constantly chuck out messages like the ones above with no variation.

Get landlords and homeowners to pay attention to you by talking about something they are interested in …. themselves.

Talk about what their house is worth, how much it has gone up in value, what is happening to rents and yields, how their town’s property market compares to the neighbouring town’s.  Add in the personal element and tell stories on how you help people, how you helped a tenant with a spare TV as their poorly child only responded to C-Beebies, how you have helped landlords buy more BTL property, how you superhero like, ran from one part of town to the other with an important document to ensure the chain completed on a Friday at 5 minutes to CHAPS deadline time.   

Thereby you are growing the perceived value instead of lowering the fee. To be the No.1 agent in your town you don't need every house seller and every landlord in your town to use your agency. In fact, if some vendors and landlords start saying  "your fees are too expensive", it is essentially a valuable reminder that you have priced your fees appropriately for the rest of your clients.

Over time, as movers and shakers within the town start to take to their heart the higher worth, the higher value (and higher fee) then the culture starts to change. When landlords and vendors start to pay more for something like that, it becomes natural (and even critical) for other landlords and vendors to pay top dollar for you?

So, if all you offer is the same vanilla service that every other agent offers, then the onslaught of the cheap as chips on-line agents will eventually catch you up .. as people realise that your homogenised, cookie cutter and apathetic vanilla grey grey estate agency service isn’t worth the 1% fee and see the light of the eMoov’s, uPads and PB’s of this world with their inexpensive sales fees ..

.. or you could change?

You could start to say something people, people like local landlords and local homeowners, want to listen to .. because if you want to succeed as an agent, the first thing you need is to get those landlords and homeowners attention, get them to pay attention to you …(otherwise you are just another dull dull grey agent, no different to the rest) … and how do you do that? Easy … tell them a story…

A story that local landlords and local home owners want to listen to.

… and if you do .. you will have newspaper editors ringing you up every week, begging you for comment and thoughts. You could have landlords ringing you up because you haven’t sent them your latest marketing material (weird I know but read this story of one agent who had 30 landlords (landlords with other letting agents) ring him up in one day because they were worried they would receive the next piece of marketing material 

 You will be constantly stopped in the street by people wanting to talk to you about the property market. You will learn to love the job of estate agency again, you will turn the constant battle of low stock and low fees to decent listings and decent fees, you will be able pay your staff more, hire more staff, go on those holidays, buy the nice house and car ..

… but that requires change .. and people don’t like change. Don’t worry, you aren’t alone in feeling this way. In fact, here is a story of an agent in Derby who felt just the same way.  This agent grew his agency in the good old days of 2000’s, growing his agency in 10 years from zero  to 900 managed properties by 2010. However, once the corporates jumped onto lettings after the property crash in 2008/9, he felt like he was banging his head against a brick wall between 2010 and 2014. Growth was like pulling teeth and it was a constant battle. Loosing a few, adding a few .. but the end result was treading water. He was doing more hours and his work / life balance was starting to be affected…. and over the those four years (between 2010 and 2014, the net growth had taken those managed portfolio from the 900 to 950 .. or 12 a year).

… until something changed in early 2014, he started to adopt the principles set out in this article .. he started talking about the local Derby Property market to the local Derby people .. and 21 months later, after 4 years of pulling teeth, his managed stock has grown to 1,150 and he employs more staff, and his work/life balance is much better.

This is Daren’s story .. it is a very detailed 41-minute TV interview, as he talks about his journey from starting his own agency back in 2000, the hopes, the fears, the dreams he had at the start. We then move forward to the lean years of 2010 to 2014 and how the reality didn’t match those early hopes and dreams and finally, when he started to change the way he portrayed himself and his firm in Derby in early 2014. He tells you exactly what he did to get those extra 200 managed properties on his books in 21 months …. so you can follow what he did (.. and continues to do so).