Starting with a little good news, there has been less in the press about a property crash and mortgage rates reduced and stabilised, however it’s pretty plain for us to see that transaction levels are significantly lower than in 2022.
There are fewer people moving home in 2023 and unfortunately the knock on effect to this will be that Estate Agents will be earning less.
2022 was a struggle for agents in many different ways. Demand was high, with buyers desperate to get on the ladder or make their next move, but agents were struggling with supply. Add to this, the delays with conveyancing caused a large backlog in their pipeline, with agents waiting months to get paid on a sold property. Unfortunately when they have these struggles, the bills don’t stop leaving agents struggling with their cash flow.
In times like these agents become trapped between needing to raise their fees to increase turnover and keeping their commissions low to attract more property instructions. What may be a glimmer of hope for traditional agents, as Purple Bricks has shown, is that low fees aren’t always the driving force for vendors. Everyone wants a good deal, but they want to know that they’re getting a great all round service when selling their largest asset, and people are still looking to the high street for this.
We’re all tightening the purse strings, but agents more than ever need to be savvy with their spending. One thing agents may decide to do is to reduce their marketing in a bid to save money, but this is unlikely to benefit them in the long term and may lead to a downward spiral that leads to them shutting up shop.
We have seen a huge number of agents update their advertising on netanagent.com over the past few months. In part this is agents having more time in the branch and being able to review their processes and marketing. It is also due to the fact that there are no upfront costs, unlike canvassing an area with leaflets etc, which is a significant bonus if you’re trying to cut back on spending.
Unfortunately, the reality is that some agents won’t survive this contraction in instruction levels, but as always, the market will recover and those agents who are proactive will benefit from the changes they have implemented during this slower period.