Letting Agents vs Estate Agents now doing Lettings

We started the business already aware that Cheltenham was a little "top heavy" with letting agents but our growth as a relatively new business has shown that you can do it even with a lot of competition. Last year I counted 28 or so competitors, now we are in the upper forties.

Estate agents who previously had no interest in lettings have now become letting agents owing to the current state of the property selling market and I daresay our market share has had a knock.

Now, I run a business and in lean times you have to do what you have to do. I dont really have anything against the owner/directors of these estate agents clearly taking the initiative in keeping their business going by diversifying and going into lettings but we all know as soon as the sales market picks up again (as it invariably will) lettings will be the last thing they will want to do. This may be a bit of a long "get it off my chest" session so please bear with me........

Letting agents make nowhere near the kind of money in letting properties that estate agents do in selling them. Simple example.
250K house at 1% plus VAT to sell it is £2500 fee to an estate agent.
That same house, assuming an average 4 bed at £995pcm to rent.
I cant speak for the national market but tenant finder services locally are between 50% and 80% of the first months rent and managed tenancy services are 10% of the monthly rent plus a set up fee of £150 upwards.
You do the sums and you will see you need to let a fair number of similar properties to make the kind of money you do selling them. The sums are less the lower the rent of course.

My issue is this:
I challenge all you estate agents now doing lettings to tell me how you can honestly look at your landlords in the eyes and tell them you are dedicated and COMMITTED to lettings. I believe you are not and you have to do a lot to convince me otherwise. Sorry, but that's the way it is. You are doing lettings because you cant sell houses. If you are dedicated to lettings, why have you not done it all these years? Why? See the example above on our beloved £250K property. BECAUSE YOU MADE MORE MONEY SELLING THEM!

Furthermore, Letting and Property Management is not easy. There is a hell of a lot to this business and unless you're in it you dont know just how much. For those who think its a doddle, it isnt!

We have already been approached by a local agent who wants to sell up. Only this week an estate agent now also a letting agent has shut up shop and offerred us their managed portfolio. After a year or so of doing lettings want to know how many managed properties they had? 9! 9 properties after a year being a letting agent. Not easy is it?

Lettings is hard work, yes there are rewards once you have a good managed portfolio under your belt but its getting the properties under that belt which requires hard work and effort! Its not easy to get landlord instructions and all these "become a letting agent from the comfort of your own home"packages widely available on the internet mislead people into thinking it is. (I will do a separate blog/rant on this topic).

Our rightmove rep told us not to worry about the estate agents doing lettings. She said they are only trying to help their sellers by renting out properties they cant sell. Maybe that's true but when i read the competition's website launching their new letting service I just feel uneasy that its something they are not really doing out of passion and a love of the job like we do, it just a reactive need to a very difficult economic climate and property market.

Every day I hear complaints and stories about our competition. I have said in my profile/intro that I will never criticise the competition and I never will but I cannot deny feeling like I want to do even better when a landlord phones up and wants to use us because they are dissatisfied with their letting agent. We dont get it right all the time but we are dedicated to what we do and we try and do the best we can. One motivational factor for me is having seen our business grow from something we started in a spare room and that gives you a sense of achievement, pride and it really is like watching something grow and be nurtured. Its a good feeling.

Now, we can't do anything about these estate agents doing lettings but what I do say to our prospective tenants is to be very careful who they are letting from. Even if you dont take what we have shown you, make sure you rent from a dedicated letting agent. Dedicated letting agents will more than likely have long term investment property on their books not stuff they cant sell. I warn tenants to do their checks as the last thing they want is to be served notice and a for sale board put up the second the property market recovers.

To landlords I will not criticise anyone but I will tell them the truth as I see it, and I'm pleased to say it is rare that we do not get instructed when I go see a landlord so clearly being honest is what its all about.

To you estate agents out there here is my solution......
Cheltenham is full of dedicated letting agents. Why are you not approaching us to work with you? Why are you not looking at partnerships with the letting agents or even better getting paid to refer your landlords to us? You will get paid for doing nothing leaving your landlord to work with a committed dedicated agent who knows what their doing, who are in it for the long haul, who will look after your customers leaving you and us looking good and everyone is happy.

On the plus side, hopefully we may be in a position to buy up these unwanted lettings portfolios when the sales market picks up and estate agents decide to start making "easy" money again.

Posted via web from thelettingagent's posterous