Here at 99.co, we see a lot of property change hands. And while the rest of the market may not recognise it, we know a lot of these transactions come down to the work of a property agent. To prevent new property agents from getting caught off guard (and then swearing off the property market forever), we want to prepare the newbie agent for some pitfalls you’ll face. Be prepared for…
Clients who drag commission payments, or just don’t pay them
Sometimes, clients just don’t pay your commission. Once the deal is done, they stop answering your calls, they don’t answer your emails, and they’ve never heard of you before.
If you think no one is thick-skinned enough to behave this way, then welcome to the one industry that will correct that perception. Because this really does happen, to the point where most real estate agencies have debt collection services on call.
We don’t know how those debt collection services work, but sadly for you, they’re about as vicious as a fluffy chihuahua. We think their main tactic is like, a strongly worded email or something (there are rules about how far they can go).
The point is, it can take a long time to chase down that one or two per cent commission. It’s unfair, but it does happen – and that’s why you don’t want to be too optimistic with your financial planning. Always plan for the off chance that a commission doesn’t get paid, or gets paid late; even if you close the deal. That means don’t splurge on a big dinner, or start charging things to your credit card, until the money is in the bank.
You also want to make it a point to save more than the usual person (a good idea for self-employed people of all stripes anyway). At the very least, try to maintain six months’ worth of expenses in the bank.
Last minute home fixes, and having to become a handyman
Question: you are about to conduct a viewing of a house tomorrow, in 12 hours’ time. If a tap is about burst, or the air-conditioner is about to fail, when will it occur during this 12-hour period?
If your answer was anything besides “five minutes before the viewing”, you must be new to this.
In all seriousness, one of the pitfalls you face as a property agent is that houses – especially old houses – have a lot of maintenance issues. Often, those issues will show themselves just before an important viewing. There will be situations when you need to quickly rectify the issue; either with your own handyman skills, or by having someone on speed dial. Be ready to take off your coat, and unclog a toilet. This is the not-so-glamorous part of job they don’t tell you about.
The worst part is, not all clients will appreciate it. Some of the lousier ones will notice you swept the whole house, cleaned the air-conditioner, straightened a crooked window pane, and they won’t even ask if you had to call a handyman in.
If you want compensation from them, ask for it. Be sure the produce the necessary receipts and invoices. Some homeowners operate on a “don’t ask, don’t get” policy.
There are clients who will cut you off, after you’ve done most of the work
You service a client for many weeks, getting the paperwork in order and ferrying them around. Suddenly, at the last minute, you’re told they don’t like what you’re doing – they’ll make up some rubbish excuse to dismiss you. The colour of your shoelaces is unacceptable, or something equally stupid.
Then the carry on the deal without you the property agent, and conveniently not have to pay your commission.
Again, if you think no one is brazen enough to do this, you’re very wrong. This really is a problem that rears its ugly head from time to time; and you may want to take a stand and turn it into a legal issue.
We can’t advise you on that (we’re not lawyers), but we can tell you to prepare to set aside time for it. There are going to be frequent visits to a magistrate, which takes away time for prospecting, and conducting viewings. Some agents even shrug and let it go, because it requires too much effort to chase down the client’s commission.
(And if the commission is small, the client may bet on you deciding it’s not worth the effort to take them to court).
The customer acquisition costs are skyhigh
The main cost to new property agents lie in customer acquisition. You need to pay for listings (which we can totally help you with by the way, at a better rate), you need to pay for advertising materials, you may need to pay for roadshows and transport – the list goes on.
It would be a very good idea, if you’re a new property agent, to track the costs of your various prospecting methods. Some of them are just inefficient – you might find that using Facebook ads for example, gets you a new lead at half the cost of printing and distributing flyers. Take our word for it: if you don’t do this early, you’re going to end up wasting a lot of money.
You’re also going to find that advertising is a weird thing, and what works for someone else just may not work for you. The bad news is, it could be a couple of thousand dollars before you learn that (unless, of course you, track the costs of your prospecting methods).
The biggest pitfall to watch for, however, are the “free” advertising tools. Writing content, pushing it out on Facebook, launching your own Twitter campaigns, etc. These are effective, don’t get us wrong – but you’re going to be stunned at how expensive these “free” tools are.
The free methods make you trade time for money. You don’t see it, but you really end up becoming a free content producer for Instagram, Facebook, Pinterest, etc. And believe us, the time taken to market content this way will swallow most of your week.
We’re not saying don’t use them (you probably have no choice), we’re just alerting you to the fact that free advertising is anything but.
Don’t be discouraged though – there are plenty of ways for new property agents agents to get ahead
The two keys are persistence, and preparation. Always have an eye on the worst problems that can happen – if they don’t, that’s great. If they do, being prepared means you won’t be startled and can stay calm. Notice how veteran agents behave as if everything is always under control? This is how they do it.
Interested to learn more about how you can up your game in the property market? Check out our articles on 5 easy hacks for property agents and the benefits of engaging a property agent (great stuff to forward to your clients!).