In part one I explained the relationship between UK estate agents and home sellers, today I’m going to explain how we work with buyers. The major difference in the way we operate is buyer/seller representation and how we balance getting them to agree deals. The UK doesn’t have an MLS of any note and therefore most listings an agent has are exclusively theirs for a contracted period (usually 16-20wks). There are occasions where ‘multi-listing’ is more prevalent, but multi-agency listings are still only available through two or three estate agents.
Estate agents are paid by and therefore only act on behalf of the seller. Anyone wanting to view a specific property has to go via the agent that listed it, who will arrange a viewing.
Representation via a buying agent is fairly rare and whilst its popularity is growing, in anything but a very buoyant market it’s largely considered the preserve of the wealthy.
I’m often asked if I think buyer representation will become more prevalent in the UK and whilst I can see it growing as the economy improves, I think the majority of UK house hunters actually enjoy the process of doing their own searching – they enjoy the hunt before the kill.
In fact over recent years estate agents are finding that buyers are having even less contact with them in their home search, simply calling them to arrange viewings on properties they have sourced themselves. Estate agents have to work much harder to build relationships with buyers because they are having more limited contact.
How do Buyers Search?
The Home Moving Trends Survey we recently carried out at the Property Academy, revealed that less than a quarter of buyers repeatedly rely on an agent, preferring to do their own searching via property portals and agents own web sites.
Buyers spend the majority of their search on one of the five main property portals, which are owned by three different companies. The leader by some considerable distance in terms of the number of available properties and visitor traffic is Rightmove.
Once a buyer has found a property they want to buy it is down to them to negotiate directly with the estate agent that is representing the seller in order to secure the property.
Once the deal is agreed the purchaser and seller engage solicitors to complete the legal work on their behalf and the buyer will also have to arrange finance and, if they choose, instruct a surveyor to inspect the property on their behalf.
Until contracts are exchanged, which as I said yesterday takes on average between 10-12 weeks, either party can withdraw from the sale without any consequences other than their own incurred costs. This has led to the rise of two practices which I’m not sure if you use these same terms, but you may experience similar practices.
Gazumping and Gazundering
In a sellers market, Gazumping takes place when a second buyer comes in with a higher offer than the first, during the period between sale agreed and exchange of contracts, and the seller accepts the new offer and pushes the first buyer out of the picture.
The challenge for estate agents is that they are legally obliged to put forward every offer made on a property, so regardless of any existing deals ongoing they have no choice but to communicate these offers to the seller and are often viewed as the villains in the process.
Gazundering is possibly an even worse tactic and takes place in a buyers market. This is when the buyer waits until the sale has progressed almost to the point of completion and all parties in the other connected purchases have incurred costs. They then lower their offer on the property with the threat that a chain of sales may collapse.
In both cases, the estate agent works hard to hold the deals together, but their obligation is always to act on behalf of the seller and in their best interests.
The decreasing reliance of home buyers on using an estate agent to assist them in finding the right estate agent, coupled with a long standing negative perception by the general public are two factors which are contributing to a change in the dynamics in our market.
Next I’ll complete this series by outlining my thoughts on the strengths and weaknesses of this model, our ability to change with the times and areas where I think the UK and US models might be converging.
Use the ‘Blemish Effect’ to skyrocket your sales
(MARKETING) The Blemish Effect dictates that small, adjacent flaws in a product can make it that much more interesting—is perfection out?
Presenting a product or service in its most immaculate, polished state has been the strategy for virtually all organizations, and overselling items with known flaws is a practice as old as time. According to marketing researchers, however, this approach may not be the only way to achieve optimal results due to something known as the “Blemish Effect.”
The Blemish Effect isn’t quite the inverse of the perfectionist product pitch; rather, it builds on the theory that small problems with a product or service can actually throw into relief its good qualities. For example, a small scratch on the back of an otherwise pristine iPhone might draw one’s eye to the glossy finish, while an objectively perfect housing might not be appreciated in the same way.
The same goes for mildly bad press or a customer’s pros and cons list. If someone has absolutely no complaints or desires for whatever you’re marketing, the end result can look flat and lacking in nuance. Having the slightest bit of longing associated with an aspect (or lack thereof) of your business means that you have room to grow, which can be tantalizing for the eager consumer.
A Stanford study indicates that small doses of mildly negative information may actually strengthen a consumer’s positive impression of a product or service. Interesting.
Another beneficial aspect of the Blemish Effect is that it helps consumers focus their negativity. “Too good to be true” often means exactly that, and we’re eager to criticize where possible. If your product or service has a noticeable flaw which doesn’t harm the item’s use, your audience might settle for lamenting the minor flaw and favoring the rest of the product rather than looking for problems which don’t exist.
This concept also applies to expectation management. Absent an obvious blemish, it can be all to easy for consumers to envision your product or service on an unattainable level.
When they’re invariably disappointed that their unrealistic expectations weren’t fulfilled, your reputation might take a hit, or consumers might lose interest after the initial wave.
The takeaway is that consumers trust transparency, so in describing your offering, tossing in a negative boosts the perception that you’re being honest and transparent, so a graphic artist could note that while their skills are superior and their pricing reasonable, they take their time with intricate projects. The time expectation is a potentially negative aspect of their service, but expressing anything negative improves sales as it builds trust.
It should be noted that the Blemish Effect applies to minor impairments in cosmetic or adjacent qualities, not in the product or service itself. Delivering an item which is inherently flawed won’t make anyone happy.
In an age where less truly is more, the Blemish Effect stands to dictate a new wave of honesty in marketing.
Google Chrome will no longer allow premium extensions
(MARKETING) In banning extension payments through their own platform, Google addresses a compelling, if self-created, issue on Chrome.
Google has cracked down on various practices over the past couple of years, but their most recent target—the Google Chrome extensions store—has a few folks scratching their heads.
Over the span of the next few months, Google will phase out paid extensions completely, thus ending a bizarre and relatively negligible corner of internet economy.
This decision comes on the heels of a “temporary” ban on the publication of new premium extensions back in March. According to Engadget, all aspects of paid extension use—including free trials and in-app purchases—will be gone come February 2021.
To be clear, Google’s decision won’t prohibit extension developers from charging customers to use their products; instead, extension developers will be required to find alternative methods of requesting payment. We’ve seen this model work on a donation basis with extensions like AdBlock. But shifting to something similar on a comprehensive scale will be something else entirely.
Interestingly, Google’s angle appears to be in increasing user safety. The Verge reports that their initial suspension of paid extensions was put into place as a response to products that included “fraudulent transactions”, and Google’s subsequent responses since then have comprised more user-facing actions such as removing extensions published by different parties that accomplish replica tasks.
Review manipulation, use of hefty notifications as a part of an extension’s operation, and generally spammy techniques were also eyeballed by Google as problem points in their ongoing suspension leading up to the ban.
In banning extension payments through their own platform, Google addresses a compelling, if self-created, issue. The extension store was a relatively free market in a sense—something that, given the number of parameters being enforced as of now, is less true for the time being.
Similarly, one can only wonder about which avenues vendors will choose when seeking payment for their services in the future. It’s entirely possible that, after Google Chrome shuts down payments in February, the paid section of the extension market will crumble into oblivion, the side effects of which we can’t necessarily picture.
For now, it’s probably best to hold off on buying any premium extensions; after all, there’s at least a fighting chance that they’ll all be free come February—if we make it that far.
Bite-sized retail: Macy’s plans to move out of malls
(BUSINESS MARKETING) While Macy’s shares have recently climbed, the department store chain is making a change in regards to big retail shopping malls.
I was recently listening to a podcast on Barstool Sports, and was surprised to hear that their presenting sponsor was Macy’s. This struck me as odd considering the demographic for the show is women in their twenties to thirties, and Macy’s typically doesn’t cater to that crowd. Furthermore, department retail stores are becoming a bit antiquated as is.
The sponsorship made more sense once I learned that Macy’s is restructuring their operation, and now allowing their brand to go the way of the ghost. They feel that while malls will remain in operation, only the best (AKA the malls with the most foot traffic) will stand the test of changes in the shopping experience.
As we’ve seen a gigantic rise this year in online shopping, stores like Macy’s and JC Penney are working hard to keep themselves afloat. There is so much changing in brick and mortar retail that major shifts need to be made.
So, what is Macy’s proposing to do?
The upscale department store chain is going to be testing smaller stores in locations outside of major shopping malls. Bloomingdale’s stores will be doing the same. “We continue to believe that the best malls in the country will thrive,” CEO Jeff Gennette told CNBC analysts. “However, we also know that Macy’s and Bloomingdale’s have high potential [off]-mall and in smaller formats.”
While the pandemic assuredly plays a role in this, the need for change came even before the hit in March. Macy’s had announced in February their plans to close 125 stores in the next three years. This is in conjunction with Macy’s expansion of Macy’s Backstage, which offers more affordable options.
Gennette also stated that while those original plans are still in place, Macy’s has been closely monitoring the competition in the event that they need to adjust the store closure timeline. At the end of the second quarter, Macy’s had 771 stores, including Bloomingdale’s and Bluemercury.
Last week, Macy’s shares climbed 3 percent, after the retailer reported a more narrow loss than originally expected, along with stronger sales due to an uptick in their online business. So they’re already doing well in that regard. But will smaller stores be the change they need to survive?
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