All that glitters …
The property rental sector is weathering some challenging conditions. Survival in the face of the fees ban and increased legislation has seen agents taking a serious look at their business models. Naturally, they’re looking for sources of income to plug the shortfall, and crucially, ones that won’t alienate their landlords or upset tenants. They’re looking for savings on input costs, efficiencies in their operation and technologies that will streamline their admin.
So, they should. But agents are operating in a market that’s increasingly competitive for both themselves and their suppliers. In my opinion, there are businesses in this sector now, which are resorting to worrying methods. The adage tells us that all that glitters is not gold, but a few companies are dangling some very sparkly carrots in an attempt to gain extra business.
The “unbeatable” reference
One of the shiny offers is a tenant reference at a rock-bottom price. In the short-term, a cheap reference might seem to be okay. As a one-off, it may not result in any problems for the landlord – after all, it’s only a proportion of tenancies that become troublesome. But when you keep trusting to luck, sooner or later it runs out.
A cheap reference is cheap because less work has gone into it. The digging and delving that reveals the subsurface risk factors hasn’t been completed. And the problem with trying to save a few pounds on a reference is that the long-term costs can run into thousands for your landlord. Your saving could cost you a landlord with a single property. it could lose you a portfolio that represents a significant portion of your income.
The unrealistic promises
Besides the sparkly carrot of a ‘bargain’ reference, other tempting offers are being made. I’ve seen figures quoted for commission payments that, frankly, don’t stand up. And I’m prepared to explain why to any agent who cares to get in touch. If someone is telling you that you could be earning £200 or £350 on each tenancy, I’m the bearer of bad news. You’ll find more realistic figures are up to £100.
It’s understandable that agents are looking for a great deal from all their suppliers, but there’s more to a great deal than price or an over-inflated lead conversion rate. A great deal includes factors which I believe are business essentials: quality, honesty, respect and trust. You could sum it up as service, but in many ways, it’s more than that. It’s about knowledge, experience and going the extra mile. It’s about building relationships with your customers where you don’t promise commission payments that will never materialise. It’s about remembering that landlords are people we should be doing our best to look after, rather than jeopardising their financial security.
If someone is promising five or ten times the commission earnings that others predict, ask yourself why. If they offer a reference at a bargain price, consider the time and attention you’re getting for your money. If you’re happy with slapdash, go ahead and face the consequences.
The problem with these flashy headline offers is that there’s nothing to support them. No long-term strategy and no commitment, nothing on which to build a successful and ultimately profitable trading relationship. Times may be challenging, but it still makes more sense to deal with the reality in a way that is sustainable.
In short, if a deal looks too good to be true, it probably is.