When I was recently looking for articles to read about new start ups and franchises focused around property sales and real estate. I came across a very interesting article about the cost of starting your own agency. These numbers may be a little out of date, but they are still quite scary and in hindsight I am glad that I had found another way to start my own overseas property business!
The article suggests that the average estate agent who sells 60 properties a year and turns over £120,000 is struggling to do any better than breaking even, as a result, agents must increase commission rates to survive.
Now, we all know that the current UK market will not allow agencies to increase commissions. We all know of instances where an instruction has been lost over just .25% and there is also the significant trend towards fixed price agency at around half that price to take into account as well.
To be honest I don’t think this article is that far out on costs:
Income for 60 properties sold to turn over £120,000
Salaries £75,000 minimum of two people and admin support
NI etc £8,000
Total cost £120,000
So, OK, you can always trim your costs a little but I don’t think the article was overestimating costs either; simply listing on Rightmove will take a large proportion of the £8,000 budget allocated for advertising for new agents.
I am also not convinced that in your first year as a new start-up you will achieve/win 60 instructions, never-mind complete on them. Likewise, some will have little choice but to compete on price to build market share.
When we were looking at opening our first office we decided there had to be a better way. Even more so when you consider the time spent completing valuations, viewings, chain chasing, creating property details and plans, website updates and price reductions/increase calls etc.
So I am pleased there is another way, we started a company that allows people to sell property; giving them the ability to focus 100% of their time on just selling property. Without having to do all of the other time consuming and non profit related stuff.
This also greatly reduces the start up costs, allowing more people with the dream of owning their own agency to do so without the large financial commitment and risk.