Cape Coastal Homes points to the future business model for estate agencies.
News > news - 21 Apr 2008
The rapidly changing property market has brought about a need to adjust the
way estate agents has been conducting their business from expensive offices
with high monthly fixed costs such as rentals & an administrative staff
component whom is restricted to the specific office or area.

In the Helderberg, several national property brands have during the last 6
months closed their satellite offices & have consolidated their operations
into one regional office. Several independent estate agencies have also
closed down due to the big contraction in sales volumes estimated at 30%
countrywide.

Maintaining an office for an estate agency is somewhat of an oxymoron as it
generates only about 3-4% of all property transactions – with the estate
agent’s circle of influence responsible for about 70% of all property
transactions. The continuation of a business model with such a
disproportional return on investment is only made possible on the back of
the member agents who is subsidizing it with 40 to 55% of their commission
earnings.

The technological advances in the tools available to estate agents has since
the advent of the cell phone & the internet abolished the need for a
physical office all together. Estate agents do not sell property. They sell
a service to their circle of influence which is based on their proven track
record and supported by a databank of information compiled by participating
member agents.

The quality of the service cannot be improved by a professional office site
in the same manner as a shop in a mall forms an integral part of the
shopping experience – especially when it comes to convenience for the
client. The window shopping element of “properties on display” has been
replaced by a much more informative & private tool - the website of the
estate agency. The buyer or seller can in this way avoid direct contact with
the average dependent (non entrepreneurial) estate agent who needs to
survive of unqualified & mostly “lukewarm” or “by chance” clients. Sellers &
buyers of property will rarely entrust the largest transaction they will
encounter during their lifespan to a stranger in an office just because the
office provides a professional environment for “an encounter by chance”.
The non tangible nature of an estate agent’s service, that is the relevant
information and knowledge the agent bring to the property transaction, fits
perfectly into the mould of a cost effective & professionally managed
virtual office. The quality level of the agent’s service is which set the
estate agents apart & not the venue from where their administration is
handled or the brand under which the office is functioning. The
abovementioned 70% of property transactions is a direct result of the
different service levels provided by the different estate agents creating a
system of referrals for the top 30% of estate agents which captures & will
keep on capturing the majority (70%) share of property transactions all over
the world.

The need for a physical venue only arrives at a fairly advance stage of the
transaction - when the buyer needs to make an offer. The offices of the CCH
legal panel of attorneys offers a perfect venue – especially should the
buyer need to clarify some legalities. The more relaxed (“shopattainment”)
alternative for a straight forward property transaction is a table at a
local cappuccino purveyor…..

Cape Coastal Homes (CCH) has introduced a virtual office concept to the
Helderberg real estate market. It provides top-notch real estate virtual
office assistants as well as real estate traveling assistants for member
estate agents – a cost effective solution to the inflexible & conventional
office based (bricks-and-mortar) way of marketing property. By staffing
either virtually via internet assistance or by way of a traveling assistant
to the agent’s home office, the agents can deliver the service levels
expected in the industry - but for between 250 to 625% less commission paid
by the agent to the broker owner or the office.

The more successful an agent becomes the higher his or her net commission
earnings will be as their costs are flexible according to their business’
needs. Their gross earnings of up to 92% of the commission is nearly double
the commission estate agents from the conventional agencies can generate
within the more restrictive & expensive business models of the office based
companies. The conventional estate agencies either charges the agent an
administrative or desk fee up to R4 000 per month, or take between 40 to 55%
of the gross commission earnings on each transaction.

CCH continues to grow at a rate of approximately 200 % per year (or
approximately 3 agents per month during the last 6 months) with no growth
reduction in sight.

They are all experienced & entrepreneurial estate agents who gained market
leadership with the biggest share of the Strand property market by
concluding 14 transactions in the area during April 2008 – quite a feat for
the present protracted state of the property market.
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