Is a lack of stock tempting Agents to cut their set-up charges?

In a waiting Lettings Market, some Agents are reportedly lowering their fees in order to win new instructions.  Whilst slashing fees is not a viable long-term option for the majority of reputable Agents, taking steps to reduce the cost of initial set-up charges to encourage instructions may, in some instances, prove tempting.  Kate Maddison, Key Accounts Manager of the Live Letting Exchange, highlights the potential pitfalls of reducing initial set-up fees by short cutting Inventory services.

“In this competitive market where demand is outstripping supply, it is clearly vital for Agents to win new instructions.  Unfortunately, as the market becomes more and more diluted with new Lettings businesses, the pressure to reduce fees in order to attract and retain Landlords increases.

Last week, I visited one of our Clients whom operates within a competitive area of the country and we discussed in detail the pressure to reduce not only management fees but also set-up charges.  What was refreshing however, was that they had actually spent time looking at the issue in detail, and had not only compared their charges to that of their competitors, but also calculated the true cost of reducing the charges and the knock on affect that it would have to the services that they could provide going forward.  Of course, they had considered bringing their Inventories in-house, as at first glance this would seem by many as an easy way to lower charges.  However, after a detailed investigation as to the cost of ‘losing’ a member of staff out of the office to undertake visits and type up reports, it soon became apparent to them that there was in fact no real cost saving as there was far more value in having staff available to conduct viewings, negotiate and undertake market appraisals.

As any successful lettings business will know, retaining Landlords by re-letting property is extremely important.  Even if a property has been managed to the highest possible standard during a tenancy, a difficult deposit release can more than dent the relationship between Landlord and Agent, and the opportunity to re-let the property may be lost.  Whilst deposit disputes can never be completely avoided, professionally compiled Inventories, Check-In and Check-Out Reports really do assist to help iron out any disputes and keep what can be an emotive subject as factual and impartial as possible.    

There will, of course, always be Landlords who are more concerned with achieving the best financial deal, rather than the best quality of service when selecting a Letting Agent.  Unfortunately, it will not be until a severe issue arises that the ‘deal seeking Landlord’ will realise that paying an extra £50, for example, at the commencement of the let, or an additional  few percent  a month, would have been wiser. 

From my experience, Letting Agents whom have taken the time to invest in their staff and business, know that their professionalism is what separates them from their drastically fee undercutting competitors, and actually use this point to their advantage when undertaking market appraisals to win new instructions.  Perhaps there is a need for some Agents to review their charges and maybe take a view on the amount which they receive from ‘administration fees’, however, I believe that taking the decision to reduce costs purely by eliminating professional Inventory services, may not only be damaging to the Agents reputation and day-to-day operations, but may also severely impact its long-term business growth.  In an Industry which has worked hard for many years, to gain the respect it deserves and been seen as a profession in its own right, I am confident that reputable Letting Agents will win in the long-term, as they have the dedication and knowledge to know that cutting charges for short-term gain, simply offers no long-term benefit”.

The Live Letting Exchange is a nationwide Inventory provider.  To find out how your business could benefit from their services, please contact Kate Maddison, Key Accounts Manager, 07736517459 or kate.maddison@live-lx.com