Estate Agents – fishing in the right pond?
Posted by markharrison on October 3, 2006
A long time ago in a Galaxy far far away…
OK – not _that_ long ago, and actually close to home, but here is a true story.
The year is 1994. A young landlord (for this is what Property Investors used to be called) is looking for his first property. He has thought about rental demand, and knows what he is looking for, so he goes into several estate agents on the High Street.
He pays just under forty thousand pound. A tenant moves in immediately. In the first year, the property just about washes its face (covers its costs), but then next year our hero puts up the rent, and it starts to bring in cash.
Ten years later, the property is worth well over one hundred thousand pound, and is generating three hundred pounds per month in positive cashflow.
Now the same story, twelve years later. A young property investor for this is what Landlords now call themselves) is keen to find some rental property. She too has thought about rental demand, and knows what she is looking for, and decides that estate agents are not the answer, but instead she should print out about ten thousand leaflets, and get them distributed locally.
She has been on many training courses, and learnt that “estate agents cause problems, buy the best properties for themselves, and add costs for investors.”
Now, make no mistake. All these things she believes are sometimes true. Some estate agents do, indeed, snap up the best properties for themselves. Some do tell buyers not to accept low offers. Some do treat potential buyers as if they were some irritation… and these are not estate agents worth dealing with.
However, there are estate agents out there who will allow the good below market value deals to go to investors without betraying their clients.
A good estate agent will know they have a motivated vendor and seek the best terms, in money, speed and security for them, and not
focus on the single dimension of price. Obviously, over ninety per cent of vendors just want to focus on price, and the estate agent will do this for them – it is the others that make the investor their money.
Please, do not mistake me here. I am not saying that you should abandon your leaflets and local adverts, and personal contacts, and word-of-mouth referral fees…
… but I am saying that, as an investor you should not cut yourself off from any potential source of deals.
So yes, I do continue to build relationships with estate agents, and
I do continue to leaflet. I would no more consider dropping one than
dropping the other.
This came very clear to me a couple of weeks ago, when I went on a
one-day training course given by Glenn Armstrong. He is one of the
two people I consider to be the UKs leaders on leafletting. (The
other is, of course, Parmdeep Vadesha.)
However, Glenn said, even on that course, that some of his leads
come from estate agents.
Once you have a process in place to give good service to motivated
vendors you find, and are able to solve their problems in a way that
leaves you a profit, then does it really matter where the leads