Elite Agent - - CONTENTS - Mark McLeod

As mar­kets across the coun­try start to take a dif­fer­ent form, ev­ery real es­tate agency will need to turn its fo­cus to stock man­age­ment. Many be­lieve that days on mar­ket and clear­ance rates are what the mar­ket serves up to them, but when of­fices don’t have solid stock man­age­ment struc­tures the mar­ket pro­vides a great scape­goat for why per­for­mance is de­clin­ing. Mark McLeod ex­plains how you might ap­proach the chang­ing mar­ket.

Our re­search shows that quite a large per­cent­age of agents who joined our in­dus­try, say in the last five years, have never faced a chang­ing mar­ket. In my world, stock man­age­ment is one of the six di­vi­sions that you need to build process and struc­ture around, to en­sure that re­gard­less of cy­cle your turnover re­mains con­sis­tent.

Con­trol­ling days on mar­ket is without doubt the most im­por­tant cri­te­ria in a real es­tate busi­ness; few peo­ple un­der­stand the im­pact of this statis­tic, firstly on the en­ergy of the team and se­condly on the ef­fec­tive turnover. Days on mar­ket and clear­ance are like a see­saw: days on mar­ket go up and clear­ance rates go down.

Very few peo­ple un­der­stand that an ex­tra 10 days on mar­ket can af­fect turnover by up to 30 per cent (to ex­plain this takes longer than the space I am given in this ar­ti­cle), yet so of­ten I hear agents say­ing, ‘It’s just tak­ing a bit longer to sell, that’s OK’. No, it’s not OK.

So how do you con­trol days on mar­ket? Hard work, dis­ci­pline and fo­cus on the ob­vi­ous. How­ever, un­der­stand­ing cer­tainly goes a long way on help­ing. Ask your­self a few ques­tions. How many prop­er­ties, when the mar­ket was boom­ing, sold for more than you thought? Most agents are wrong on price when the mar­ket is boom­ing, and will equally be wrong when the mar­ket is de­clin­ing. Ac­cept the po­si­tion that we were wrong on the way up and we will be wrong on the way down. In say­ing that, it’s our sacred obli­ga­tion to max­imise price for our own­ers re­gard­less of cy­cle.

Over the years the best of­fices have al­ways ap­plied a sim­ple process called the se­quence of sale, which is sim­ply: traf­fic, plat­form, re­po­si­tion and sell. When the mar­ket starts to slow, the first thing we see is a de­cline in traf­fic; traf­fic through our opens and en­quiry from the por­tals. This de­cline of­ten forces the agent to try to sell the prop­erty quickly, long be­fore the ven­dor is ready. The first sign of a chang­ing mar­ket is that many of­fices will have great of­fers they be­lieve the ven­dor should have taken. Re­mem­ber, to cre­ate a sale both par­ties have to be ready.

When the mar­ket was boom­ing, quite of­ten it al­lowed us not to do too much work on the ven­dor com­po­nent of the process. Which leads to the plat­form; if an owner is go­ing to ad­just their ex­pec­ta­tion they re­quire de­tailed in­for­ma­tion. Our re­search shows across a num­ber of years now that de­tailed, qual­ity ven­dor re­port­ing and of­fers will al­ways be the great­est as­set in this process. Own­ers will of­ten ac­cept mar­ket value when they be­lieve all the work is done and they are fully in­formed.

Which brings us to re­po­si­tion. Re­po­si­tion­ing is not al­ways about price. It can take the form of method, such as switch­ing from pri­vate treaty to auc­tion. This shows the in­tent of the owner to sell and also shows the mar­ket­place, by the way of chang­ing method, that the own­ers are keen to se­cure a sale.

The fi­nal step in the se­quence is sell. This is the most ob­vi­ous stage, but one of the pit­falls of a chang­ing mar­ket is that many agents will try to sell the home be­fore the owner is ready. Some­times you may have to ro­tate through the first three steps a num­ber of times be­fore you can move into the sales arena.

Of­ten I hear agents say­ing, ‘It’s just tak­ing a bit longer to sell, that’s OK’. No, it’s not OK.

This may seem a funny state­ment based upon my ear­lier ob­ser­va­tion on days on mar­ket, but in a chang­ing mar­ket speed kills. Be pa­tient, be un­der­stand­ing and, last but not least, be em­pa­thetic to the owner’s sit­u­a­tion; af­ter all, they have given us the gift of their great­est as­set.

Mark McLeod is the Ray White Group’s Chief Ex­ec­u­tive of Growth. He works along­side both agents and busi­nesses across Aus­tralia, help­ing them reach their ul­ti­mate po­ten­tial to achieve suc­cess.

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