thebarn1 said
Well PaulBarrett very novel – any feedback is gratefully appreciated.  However, if I was to do that, you yourself can personally come and make my staff redundant, plus you personally can call in the Administrators or Official Receiver when my business goes bankrupt!  No, I am not joking either – the job is yours, because I wont want to do it.

With regard to businesses like BRPL, I am aware of them of coiurse, but every business model is different – for a start, we dont operate from a home address and we have 50 plus staff – all of them contributing to the ecomomy by spending their wages and of course we contributeto the welfare state by paying NI and tax payments.  We also own our business premises, which means we have also contributed to paying mortgages etc – all of which is more money in the economy.

Tell you what, I will put my fees down to the level you suggested, and you can come and see me go bankrupt and see 50 plus employees lose their liveliehoods so that landlords can have our services cheaply.  You can even stand and cheer to see a LA go down the drain.  As an aside, yes we are looking at the business model – you must move with the times, but Iif  am afraid using Tesco as an example is a bit lame – even they sell higher priced goods in their Finest range – you pays your money, you takes your choice.

I dont think we are in your area though, so that's a bit of a shame, isn't it.

Yes I absolutely agree with you that my requirements would effectively put you out of business or drastically change your method of delivering your service.

Of course as you are a presumably a sane person; I would NOT expect you to price your services that would be acceptable to me.

This means you would lose out possibly of £2500.00

This you deem business NOT worth having; which is fine.

I would suggest that your business model is stuck where it is.

You will miss out on the small LL who are increasingly the major part of the LL industry.

How do you attract the lots of LL like me at a price we are willing to pay and which you can make money from!?

A 10% level is unviable for small LL who make up 75% of the LL in the UK.

It would seem that if  you do NOT wish to reduce your income per LL to the levels I suggest LL would be prepared to pay; rather than them managing things, then they will NOT choose to use your services.

It seems you are very successful with your existing business model which is fine; I just don't wish my income to be 'wasted' on paying wages of LA etc.

I am NOT the slightest bit interested in the contribution that LA make to the UK economy.

Just because it does is no particular reason for an existing business model to survive.

I would conjecture that you will continue to thrive and prosper; but it won't be with my assistance and LA in my area also won't get my business.

 I have; however instructed a couple of LA who are desperate for property that I am happy for them to source possible tenants for me via footfall or other marketing situations; but NOT including use of the web, I do that.

I require that I will carry out ALL DD on their prospect.

I would ignore ANY referencing they may carry out.

ONLY my referencing is acceptable.

If their tenant prospect is acceptable to me I will pay the LA on signature of an AST.

The LA are perfectly happy with that.

I use them for marketing via exposure that I cannot obtain.

They have an expensive office and have footfall and other marketing facilities which if successful I am happy to pay for.

Generally this is 50 % of 1 month's rent.

If they want more I say don't bother then.

95 % of tenant queries come via the web.

If LA I have instructed NOT to market my properties online then ALL queries via the online service I use are free without any payment being required to the LA.

Of course if I source a tenant I have the courtesy of advising those LA that the property has now gone.

This is an arrangement they are perfectly happy with.

Of course I would NEVER stitch up the LA by taking the tenant and NOT paying the LA; that would be just plain silly.

The last thing a LL would wish to do is wind up a good LA.

A LL NEVER knows when he might need that LA for a full management service!!?

And LA talk to eachother!!

So I think your originally posed question, is that small LL are very price sensitive and will not if they can possibly avoid it pay 10% of their rental income to a LA.

On that basis you might aswell ignore that business as you are not prepared to offer your services as sucha low level, which is fine.

So I suppose that is the answer to your question; the price is everything, but only from good LA.

If I was offered a fantastically cheap price by a LA who did not conform to all the bodies you do, then I wouldn't use them.

So have no fear we LL won't go to your down and dirty cheap LA competitors; we will just manage ourselves.

I for one recognise the efficacy of the services you provide; I am just NOT prepared to pay your price point.

Am I someone you might like to take on!?

At the price I am prepared to pay; probably NOT!

But perhaps you might like to brainstorm how you could persuade the many  LL like me to use the services of a good LA.

I'll leave that to you; as that is your field of expertise!!

thebarn1 said
Also, when said tenant is in arrears, the poor letting agent has to work for nothing to collect that rent when under full management, unless the landlord has RGI.  We give it as standard for first six to twelve months, and if you want to renew it afterwards we charge and if you decide its not worth paying for then well more fool you!  If we do manage to get the rent, most landlords want us to pass over to them without us taking our fee!!!!!!  We arent a charity.  Agree something needs to be done regarding tenants going into arrears without penalty.  Makes my blood boil as well.

Regarding our portfolio - well Mr Barrett, please dont make assumptions.  We manage a portfolio of several hundred properties and believe or not, about 90% of them are the small landlord you describe. We have quite a few landlords with portfolios, and the biggest of them has 11 properties we manage, and has been with us 15 years or so.  Most of our new trade are these small landlords - its the more savvy portfolio or more experienced landlords who want to beat us down on fees, not the single investment property owner believe it or not!

Oh yes, Letting Agents talk to one another and believe me we do dis-instruct landlords because we cannot deal with their demands any longer - I do this about once or twice a year when my staff get sick to death of some of the prima donnas we deal with.  Cant say I enjoy telling a client to leave us,  but I wont have my employees put up with abuse, aggression and unreasonable demands - please read your terms of business, it does not include shouting at your letting agent for any reason whatsoever, unless they have screwed up.

By the way, 50% of the first months rent is pretty ok as a charge for a tenant find only. However, if you tried to dictate the terms to us in the manner you describe, you would soon find yourself without a Letting Agent - its a two way relationship, and our RGI is just as good as yours, and you wont be paying for it. 

Well I have dictated the terms as I see fit and the LA are perfectly happy with the arrangement.

They know if they send a tenant suitable with my requirements they will get paid.

What is dictatorial about that!?

Surely money however a LA gets it from a LL is acceptable 

No LA has ever had an issue with my diktats.

They have always been paid by me when appropriate.

As a LL I will NOT be dictated to by any LA; if the LA doesn't like it i will go elsewhere.

It is in either parties control to take a business decision NOT to do business with the other party.

NO LA has EVER turned my money away!!

Clearly if a LA can make a persuasive argument for a LA to take over management from a small LL then that is great.

My concern is that you are not seeing all the LL who you could pitch for business.

I think fees levels area big put off for small LL.

I appreciate you are very successful.

My point is I think you could be even more so!

But to do that you have to attract the likes of me.

You WON'T get me with your existing fee levels!

Perhaps a more streamlined service for such as me but at a cheaper and to me a more acceptable cost.

Perhaps I am a minority; in which case you won't need to concern yourself with the likes of more independent managing LL like me!

But I am sure there are quite a lot like me!!

Surely I am an untapped resource as far as your business is concerned!?

But I accept my price sensitivity will preclude me from being accepted as a client of yours!!!

thebarn1 said
Oh dear Mr Barrett you are extremely entertaining, and I mean that in a very kind way.  Its horses for courses and I dont think you would probably end up being a client of ours, as it has to be a two way relationship.  I would add we dont dictate to our landlords as they are 'landlord clients', but there are ways and means of not taking on the business of a very demanding client lets just say.

We have to agree to disagree me thinks!

Yep absolutely agree with you;

I would never be a client of yours because of your price point; which was your original query, which I have endeavoured to answer.

Yours was the question; it is irrelevant whether you like the answer or NOT.

It is just food for thought as you wanted to know why some  LL are resistant to the charms of most LA!

You were astute to recognise in your posing the query that indeed pricing is everything for struggling LL which is why you won't achieve the business you might obtain if your price point was more acceptable.

You just have to accept that your services are just NOT worth what you think they are worth!

Just a reality I'm afraid.

This doesn't seem to affect you as there are still LL out there prepared to meet your price point; which is fair enough.

I would conjecture that there are a lot of LL out there who you could attract if you lowered your prices.

That however would be YOUR business decison!!

Base on your success todate it would seem you don't want or need that sort of business; which again is fine!

But just imagine me multiplied by 50; that would be £125000.00 per year based on my figures for my particular situation.

Your pricing would bring in £285000.00 per year.

Is £125000.00 something you would not wish to receive!?

You have an untapped market out there caused by your price point.

You just have to accept that at the prices you charge; you just aren't worth it!!

Which is why I will keep £5700 of my money in my bank account rather than yours!

How entertaining is that!!!??

Just accept it 10 % is way too much!

Skintlettingagent said
A lot of smaller agents who have minimal overheads can certainly afford to offer a low management fee, lets face it, majority of properties don't require a great deal of work. 

However, as the saying goes, you get what you pay for. By offering landlords 5% fully managed fee, LA would have to explain WHY they are so cheap. Otherwise they'd lose business from the landlord who thinks "why are you so cheap"? 

I charge 8% with no vat and 50% for a tenant find only. This works for me, and is low enough for portfolio landlords & single unit Landlords.

if asked for a large enough portfolio or an "easy" single unit a couple of minutes away, I would accept 5%. 

Yep I think flexibilty is the key here.

Being prescriptive is no way to achieve additional customers who are NOT prepared to pay your charges.

I think to have a conversation with LL is the key here.

Based on local assessment the LA could easily have a business case for charging different fees.

I think tailoring a solution rather than the 10 % take it or leave it attitude is a sensible approach.

You just don't know what LL you might be missing out on!!

Clearly not all LA have the same costs.

If other LA can provide the same service in EVERY way and for less then why would you use the more expensive LA!?

Crikey how hard can it be to put up a free ad on the net and do your own RGI check for £10.

OK I do my own viewings; but who would pay 10% of the annual rent!?

Mostly it is LL who don't have a viable alternative; effectively they are hostages to fortune and should have built in LA costings when the carried out DD on the property viability.

How many seem to just forget that little problem!

Doing so would have a dramatic effect on yield and may well cause them to source property nearer to themselves for management by them!

I think LA are just have to get used to the idea of charging less.

I have saved fortunes in LA fees over the past 6 years.

I'm afraid the internet has upset the LA standard business model.

Some seem stuck in the old mindset; and seem to be doing OK, others have looked at using the new methods of delivery, realising the returns can be the same or better than a traditional LA model.

I think there are now multiple ways of delivering good LA services and these are being variously explored by free thinking LA's.

BPRL being one of them!!

PRICE however is a major factor for a LL to consider whether to use a LA services.

LA just have to realise their charges are too much.

What is the point in charging 10% when this reduces the LL uptake; charge 2% and get loads!

It doesn't help that you have rogue LA out there unfairly competing with good LA.

This is clearly a price pressure on good LA.

Get rid of the rogues and I believe good LA would lower their prices as they wouldn't have anymore unfair competition!

Most 'normal' solicitors tend to charge the same sorts of prices because there is a level playing field.

This is NOT the case for the poor old good LA at present.

Regualtion would solve the issues.