Who’s in Charge?! – Different Kinds of Estate Agents

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 Broadly speaking, there are three kinds of Estate Agents – corporate agents, franchises and independent agents.  While the business structures behind each kind of agency might not seem relevant, a few considerations will show how these factors can affect you.

The headline question, ‘who’s in charge?’ is very significant.  Does the manager of the office have a direct involvement in setting company policy?  Will they have the authority to create a specific, personal service for you… or are they a salaried middle-manager who will expect you to work to their structure?

Are you – one single client among many – sufficiently important to the business that you will get the best attention of all the staff?  Or will you just be another number on a commission board?  Proportionally, how important is your business to a small agent, compared to a bigger chain?

If there is a problem, who will solve it for you?  If need be, can you speak to the Managing Director?

Corporate Agencies

The ‘corporates’ are large, national or international corporations, which often own many different brand names and companies.  The corporate agents usually own other, related companies, too, like mortgage brokers and lenders, insurance companies, surveyors and conveyancing companies.  Many large regional chains, that were once independent agencies, have been bought by corporations, but continue to operate under their original names.

Corporate agents are pretty much guaranteed to provide acceptable service at a certain level. It may not be the cheapest or the best, but it’s unlikely to be the worst, and it can be all be done in one place.

There are many very good agents working for these corporate giants, and, like McDonald’s or Lidl, you don’t get to be a big player without a successful formula for turning out happy customers.  At the same time, these firms are invariably run according to structures that are supposed to apply across the corporation, and which are intended to be as applicable in Westminster as in Exminster.  You should at least know whether the targets and practices are written in Devon or London, and whether the agency will be cross-selling services from its sister companies.

Because corporate agents are owned by big businesses, it’s almost inevitable that everyone you deal with will be an employee – even up to senior management level – rather than a Director, or someone with a major stake in the overall success of the business. Corporate agents sometimes make a virtue of their size, although it would be unusual for agents in one office to be greatly affected by, or pay much attention to, what happens in another office in a different town.

Corporate agents have good training programmes, and indeed many of the owners and staff at independent agencies first learned their skills in a corporate environment. The formula for selling has been honed by a very broad experience over time and across the country, and pure number-crunching shows it can provide a very successful model for running an agency business. There can be advantages in having every other service ‘in house’, although the need to refer buyers and sellers to the corporation’s own mortgage and legal services does mean those referrals are based on obligation, rather than on the merits of the service on offer.

Corporate agents are able to implement national directives on service levels and quality. At the same time, though, they are tied to the policies set nationally, and aren’t always as responsive to local matters as their smaller, specialised competitors. Price structures tend to be less flexible and perhaps a little higher than average, because there are so many fixed costs associated with the business. As with other businesses, a national corporation probably offers a minimum standard that can protect you against the worst of the industry, but may not have the same freedom to excel in quite the same way a locally-run owner-managed business can.

The choice might be comparable to, say, where to get tyres fitted – KwikFit or a local garage – or where to go for a new central heating system – British Gas or a local Plumber. Corporate agents are pretty much guaranteed to provide acceptable service at a certain level, and will invariably encourage you to use their sister companies for everything else. It may not be the cheapest or the best, but it’s unlikely to be the worst, and it can all be done in the one place.

Independent Agents.

In any given market, there are almost always a number of independent agents to choose from. This, in itself, suggests that estate agency is too much of a localised, specialised practice for corporations to dominate completely. Independents, by definition, are privately owned, and can vary from single-office, owner-managed businesses, to multi-office family concerns that have been around for generations.They vary in size, from large regional companies, to the one person, office-less individuals that occasionally dot their names on signboards.

Some independents like Bradley’s and Haarts operate on such as scale that they are effectively ‘corporate’ agents in all but ownership, both because of the size and structure needed to run many offices in different towns, and because they have created and own subsidiary companies for support services.

The independence of the smaller businesses is their greatest asset. The owners are rarely far from the front desk, and so independent agents can adapt and adopt policies and practices which are very specific and tailored to their own community. In many cases, the owners will work, day to day, in their own business, which means their commitment to success is very strong. Often, it’s not just a job, but a livelihood, even a way of life, to the people who own and run their own agency. It’s not unusual to find that the owners of independent agencies are actively involved in the communities on which they depend for their livelihood.

When referring to mortgage brokers, lawyers and surveyors, an independent can pick and choose where to direct their clients. True, some independent firms may be paid referral commissions, although the rates are fairly standard across the board, so in broad terms you can expect independents to recommend service providers that have proven to be efficient and effective in the past. After all, the independent knows they will have to deal with that broker or lawyer throughout the sales process, and will actively want the client to use someone good. The corporate agent has no choice where to refer clients!

With the advent of the internet and digital technology, there is now no particular advantage in using a bigger company for marketing. A single-office independent can list a home online and put it in front of exactly the same number of potential buyers as a huge corporation. Digital photography and full colour printing are as affordable to the small company as they are to the national chain. In practical terms, there’s nothing to choose between the resources available to all the agencies in any given town – although, of course, each business has their own decisions to make as to which of those channels they use.

Independent agents range from the very best, imaginative and service-driven local entrepreneurs, to the worst agents in town.

The biggest down-side to independent agencies is their variability. Again, as with locally-run garages or central heating engineers, the quality ranges from absolutely superb to downright shoddy. There is no formal licence requirement to be an estate agent, so anyone can put a sign on a shop-door and start trading. Moreover, the overheads for an owner-run business can be pretty low, so it doesn’t take many sales just to tick along in business. Whereas, in a corporate business, those who are unsuccessful are quickly weeded out, there’s no such guarantee of that in the independent sector. On the flipside, though, an individual who excels in a corporate agency, but has greater ambition than the corporate ladder allows, or who wants to be more responsive to local client needs than is possible under the corporate system, may very well leave to set up their own independent business. That, in a nutshell, expresses the position of independent agents, ranging from the very best, imaginative and service-driven entrepreneurs, to the very worst untrained and unprofessional agents in town.

Franchise Businesses.

A franchise is a halfway house between an independent business owner and a corporate structure. The franchisee buys into a system and brand owned and operated by a larger company. The parent company ‘brand’ sets the working methods and business strategy for the group as a whole, but the individual owner takes responsibility both for the local management – with more or less freedom – and for the financial affairs of the specific offices in the franchise. Most franchise holders pay an amount for the right to use the name, brand and system across a specified geographical territory – this can vary from a fixed monthly fee, to a percentage of annual turnover.

A franchise office can offer many of the advantages of a corporate office in terms of guaranteed levels of service and quality, but can also have the freedom to act on a very local level, just like an independent – provided the balance of control is well managed. If it goes awry, however, the opposite can be true… an inexperienced and poor agent can buy the bureaucracy and strictures of a corporation, but without the control and expertise to implement the systems effectively. While the franchise owner-manager may have sufficient confidence to put a significant amount of money behind their own business, at the same time a franchise owner may not have quite enough confidence to ‘go it alone’. In sum, and as with all aspects of the business, there can be both very good and very bad franchise offices!

In general, though, the franchise office will reflect the spirit and values of the parent company. Remember that the franchise owner has chosen to buy into that particular brand from a very broad choice of available franchises, so it’s fair to expect each franchise office to reflect the overall operation of the parent company, because that is what the franchise owner aspired to in the first place. It’s interesting to note that many companies run a mixture of both company-owned offices and franchises, in tandem. As a customer, it’s sometimes impossible to know which is which. That is true in lots of businesses… for example, international corporations like McDonald’s, Pizza Hut and Subway operate as franchises. Across Exeter, there are three Subway shops, owned by two different franchisees…  but as a customer, you’d be very hard pushed to know which two share the same owner, and which is the odd one out. The Pizza Hut at Exe Bridges is owned by the parent company, but the delivery outlet on Sidwell Street is a franchise…  and so on.

Team Agents

Contrary to a common misconception, ‘Team’ is not a corporate estate agent. In fact, Team is not an estate agent at all. It is a collaborative marketing organisation, which independent agents can subscribe to and become a part of. Team agents pay a significant fee in order to use the Team name and brand, alongside their own business identity. In return, as a part of the Team network, the receive a number of benefits.

In financial terms, Team agents use their collective strength to buy services at better prices. It’s not uncommon, for example, that Team agents get cheaper rates on newspaper advertising, simply because they command so many pages in the local property section. Team agents also get ‘quazi-corporate’ support in a number of areas, from training and financial services, to website design and exclusive listing on the Team property website. Team agents can also market and sell one another’s properties for a split commission. In practice this is a minority of any Team member’s business, as the agent which won the initial instruction already has the relationship, but it does mean that all Team members can share in a combined roster when the market is quiet, and it can be of great advantage to start-up businesses who otherwise begin with no houses to sell.

The businesses themselves are independent, and all operate under their own name. In Devon, most Team agents operate single offices, or at most two or three, although there are larger companies within the Team umbrella. The organisation was created to offer independents a comparable collective strength to the corporations, although in some measure the move away from the newspapers and onto the internet has lessened the importance of collective bargaining. There are many independents happy to stay with the Team brand, and just as many who choose not to subscribe…  what works for some does not for others. But those businesses who do share the Team name are very much independent from one another, and again the quality varies from one Team agent to the next.

Summary – Make an informed choice

The kind of agency that you choose should be the one which best suits your inclinations.  Do you want a national chain that works to a proven formula, or would you prefer the more personal care of a smaller business run by its owners?  Who will give you the kind of service that your situation demands?

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