The property crash has dealt a body blow to the estate agency business, but some agents are managing to adapt to the new market
IT IS a fairly safe assumption that few of the students sitting the Leaving Certificate examination this week will be planning a career in the estate agency business. The full-blown property crash and the banking crisis have put paid to job prospects and dealt a devastating blow to an industry which had grown and prospered for the best part of two decades.
Like virtually everyone else in the property industry, the estate agents did not foresee a full-scale crash and assumed that at worst there would be a slowdown followed by a slight correction in property prices. The marginal slippage thought to be on the cards has been wide of the mark, in particular in many provincial towns where development sites have fallen in value by between 60 and 80 per cent.
The whole episode has had drastic repercussions on the estate agency business. For one thing it has set the industry back at least a decade and left many firms struggling to stay in business. Most companies have laid off staff, a vast number of offices have closed altogether and some of the large commercial property firms are only managing to stay in business because the partners have volunteered to forgo their salaries until the business recovers. In a number of cases directors are ponying up on a monthly basis to keep the offices open. The beleaguered industry could eventually see one or two firms going to the wall because of the collapse in fee income.
Some of the bigger commercial firms are managing to keep their heads above water by concentrating on valuation work for the banks and Nama. The State-run asset manager will be looking for hundreds of valuations over the coming months and as this is the only show in town, valuers are having to compete for the work. By all accounts, it is by no means easy money as Nama is insisting on a comprehensive and detailed evaluation which must be realistic even in the present uncertain market.
All this is a far cry from the boom years when many estate agents expanded their role to become asset managers and advisers to investment groups as they scoured the country for development sites and looked overseas for bigger and better investment opportunities. The world was their oyster. That aberration is well and truly over and it is now back to basics as we wait in hope that the lending institutions will get back to business.
Mark FitzGerald, managing director of the Sherry FitzGerald group, is convinced the estate agency business has returned to being more personal, “which is no bad thing”.
It is definitely more customer focused now, with people researching their decisions more thoroughly, he says. People are now buying homes, not products. In the commercial market, occupiers are understandably very cost conscious in line with their customers’ sentiments. “People now have more time for each other and are generally more understanding,” he asserts. “While consumers naturally wish to do the best property deal for themselves when they are buying or selling, the unnecessarily ruthless edge often evident in the Celtic Tiger years is, thankfully, less evident.”
FitzGerald says it is in the long-term interests of the estate agency industry that as the economy recovers, our prosperity is managed and we retain our competitiveness, particularly in the property market.
An even more fundamental change on the way for the estate agency business is the State regulation to be implemented by the Property Services Regulatory Authority. Alan Cooke, CEO of the Irish Auctioneers and Valuers’ Institute, says this will eventually produce a competitive agency market that will provide a guarantee to the public that each agency will have only properly qualified personnel, each with his or her own practitioner’s licence. All staff will undertake lifelong learning, all agencies will have professional indemnity insurance in place, all client funds will be fully protected and greater clarity will be created in agency contracts, resulting in fewer disputes over whether a fee has been earned. Cooke says this should produce a win-win situation for the public and the industry alike.
Stephen Manek, a partner in Douglas Newman Good, says the industry has adapted quite quickly to the changing conditions but some firms and individual agents have adapted much better than others. “Agencies such as ourselves have embraced the changing market and have essentially changed the way we do business. Our agents are experienced and continuously trained, updating and reviewing their sales techniques. They can draw on the experience of many of our team who have worked in similar markets in the past.”
Manek says significantly more time is now spent assisting buyers with any issues they may have, including helping them with mortgage finance. “Of course we primarily work for the seller, to whom we are contracted, but agents need to take a balanced approach to match buyers’ and sellers’ expectations.”
