Diversify or Dwindle Your Property Market Profits
“The key focus is to invest in your people. Focus on continual skills development, as well as a total customer centric experience for the consumers. “
The current economy in South Africa faces slow growth and the knock-on effect of this, is the banks’ stricter lending policy towards potential buyers looking for their dream home. What does this mean for estate agents and agencies? It means that if you want to do more than just survive in the current economy, you need to diversify and ensure that whatever you do, you do it expertly. There are a host of buyers’ needs that you can diversify to meet and in the process ensure your company thrives.
“The Bank’s economic growth forecast for 2014 has been revised down significantly to 2.1%, and the first quarter growth outcome is anticipated to be the lowest quarterly growth rate since the recession in 2009. Although growth in the second quarter is expected to improve somewhat, the risks to the 2014 growth forecast are strongly on the downside, with developments in the mining sector an ongoing cause for concern. The demand side of the economy is also weakening: Household consumption expenditure growth continues to moderate amid slower credit extension to households, high levels of consumer debt levels and moderate job growth.”
-Gill Marcus, Governor of the Reserve Bank
The Economy’s Effect on Property
While the interest rate has remained unchanged for now, the reality is that people face higher costs, and with levels of debt in South Africa remaining high, banks are tightening lending criteria and without home loans few people can afford to invest in the property market. Where does this leave the property market? While there has been an improvement, conditions still remain challenging to estate agents and agencies alike. Dr Andrew Golding, chief executive officer of Pam Golding Property Group, says: “The backdrop of the current South African economy is the fact that the market fell precipitously in 2007 and there has only been a gradual recovery, probably only to some 50% of the 2006 highs.” The first question you need to ask yourself as an estate agent or property professional is: Can I afford not to diversify my business to increase profit? Diversifying is no longer just an option, it is a necessity in a market in which it is becoming harder to see the same profits as years past.
Diversifying your Property Business- The Beginning
Well, if you are an estate agency owner, the first place you need to start is with your staff.
“The key focus is to invest in your people. Focus on continual skills development, as well as a total customer centric experience for the consumers. Eighty six percent of consumers say that they will do business with the specific same agents once the transaction is concluded, but only 28% actually do. This is where agents need to have a long-term relationship with their past clients, so as to build rapport and be relevant to such an extent that the agent will be the obvious choice when that specific consumer wants to use the services of a real estate agent again.”
-Jeanne van Jaarsveldt, Mational President of Institute of Estate Agents of South Africa (IEASA)
Become the Topic of Conversation
In any business, you are only as good as your reputation, and leaving customers happy will make you an obvious choice when they buy or sell another property. The other positive is the word of mouth effect. All the advertising in the world cannot make up for word of mouth; people trust those closest to them and when you get a good recommendation from family or friends on which company to use, generally that’s the one you will use. Imagine how word of mouth can increase your business with just a few people telling their friends and family and so on, and best of all, it’s completely free.
Add to Your Current Services
Another way you can create a business that is recession proof is by adding to the services you already offer. Asrin’s commercial director, Shiraaz Hassan, says: “Examples of this would be long term rentals and short-term rental administration as well as training and registering as auctioneers. There seems to be an opportunity within this sphere at present.” Michael Bauer, general manager of IHFM property management company, takes this one step further: “You can offer more services that are all property related that feed into each division. For example, a sales division might create landlords, which would then create the need for a rental division to manage the rental properties.
There could also be a holiday/short-term letting division, which offers comprehensive holiday services. If you are selling sectional title properties, it makes sense to have a property management service to offer the bodies corporate of the schemes sold. Then you could have your own bond origination division as this then keeps the application of bonds and following up of finance in-house.” By keeping all the services that go along with purchasing, selling and letting property in-house, you are offering your clients a one-stop property shop, you can increase your actual revenue through the additional services and you leave clients satisfied as they don’t need to go through two or three companies to buy, sell or rent property. This also becomes a key selling point to attract new business to your company; why go anywhere else when your company can meet all their needs?
“You can create a business that is recession proof by adding to the services you already offer.”
“If you choose to do only one or two things, then you need to do them exceptionally. This also extends to the customer service you offer. One simple way to improve on what you are already doing could just be extending your area of buying and selling. “
“Society is moving more towards online presence and this allows agencies to reach a broader client base and market. “
Get into Digital
Diversification is not the answer for everyone and if you feel that it’s not the answer for you, then take a look at your core services. How can you improve them? If you choose to do only one or two things, then you need to do them exceptionally. This also extends to the customer service you offer. One simple way to improve on what you are already doing could just be extending your area of buying and selling. Look at which areas will bring in more revenue and will add that extra something to your company. Callie Roberts, director of the Property Podium, says: “Be in a position where one agent can sell a cheap house and/or an expensive one. Link areas and markets to protect against highs and lows in the various markets.”
If you don’t want to add extra services to your company, why not partner with a company that already offers those services and can give clients you refer to them a preferential rate? The more you give to your clients, the more you stand out from other companies in the same sector. In a stringent economic climate, it’s about offering value to people looking to use your company. What do you offer that other companies don’t? How can you make their experience the best one in property?
In a modern society, people are going more and more digital. While the actual process of buying or selling will always involve people, when it comes to an initial search, people are no longer using traditional methods. Social media and digital technology have forever changed the way we live, the way we shop, the way we choose where we want to live and how we find the perfect home. Bryan Biehler, managing director of Huizemark, says: “Society is moving more towards online presence and this allows agencies to reach a broader client base and market. Clients can access more properties and services from the comfort of their own homes, they can be more selective, save themselves time and apply for specific products online or from their mobile phones, for example, bond calculators, bond finance, advice on buying and selling, etc.”
Online Reputation Management
Before people even decide which property company to use, they will do research online. If someone recommends your company, most people will take a look at your company website and decide from there whether they will use you or not. You cannot afford not to have a strong digital presence and a website that will give a potential client the best user experience possible. Jeanne van Jaarsveld says:
“Consumers are more and more inclined to research their requirements online before even talking to an estate agent. The usage of technology like iPad applications has become imperative for agents to remain competitive and relevant. Those who do not have access to these types of technology will find it more and more difficult to remain in real estate.”
There is no denying that times are a bit tough, and this is not likely to change anytime in the near future. But it’s far from doom and gloom; there are many ways to increase your current business and make sure that as an estate agent or agency you don’t just do better, but thrive. Take a thorough look at your business and your staff; sometimes all it takes is a few simple steps or new services to ensure your company comes out on top and your estate agents bring in more clients.
“In a stringent economic climate, it’s about offering value to people looking to use your company. What do you offer that other companies don’t? How can you make their experience the best one in property?”
Words: Angelique Redmond