Everyone in the property industry is looking for a way to speed up transactions, reduce abortive work, improve their compliance risk profiles, have happier clients and customers and, ultimately, make more money.
Differentiation is key to winning business and trust is possibly the key element in any worthwhile relationship so why do the majority of agents and others see compliance as a restraint on business rather than an enabler?
They are actually two sides of the same coin.
The two words – Compliant and Complaint – are remarkably close to each other in many respects – the difference is where you focus your i’s (or eyes!)
Your business mindset when it comes to compliance is key.
Is it seen as an added administrative burden or as providing positive benefits?
Is it built seamlessly into your systems and business model?
If you are going to operate legally you have no alternative but to comply with legislation such as Money Laundering Regs, Consumer Protection Regs and GDPR, alongside many other elements around things such as contracts and business terms.
So whether you fully embrace compliance and use it to both win and successfully manage more business, or you try and skim over the surface and are only interested in covering your backside, you have to comply.
I can assure you that your business will be better for the former rather than the latter.
Whatever area of business you are involved in, your most successful business is with the people you know best and where you have developed trust.
Under Money Laundering Regs we are required to carry out CDD (Customer Due Diligence) – the legal profession and others call this KYC (Know Your Customer) – the latter is a much better description in terms of mindset and approach.
Under Consumer Protection Regulations the need to provide material information in a timely fashion is, in my opinion, a huge benefit. Handled well it helps identify issues ahead of them becoming mission critical, it enables people to make informed decisions before any heartbreak and cost really hurts and there is a wonderful opportunity for agents to work closely with conveyancing partners to create win, win, win scenarios. A win for the customer, a win for the agent and a win for the conveyancer.
Nearly twenty five years ago I was a Director at Connells and was involved in setting up their conveyancing business. We realised that agents were (and still are) the catalysts for the home buying and selling process and we got the majority of our sellers to instruct a conveyancer at the point of marketing.
In all honesty, we saw this as a revenue generating opportunity (and it was very successful) but there was an even more important by-product and that was a shortening of transaction times.
At the time sales took around 13 weeks from sale agreed to completion and so we “turned our sales pipeline” four times a year. By getting the conveyancers involved earlier we reduced that timeframe to around 11 weeks thereby turning our pipeline closer to five times a year – take a look at your business and do the maths!
We also reduced our abort rates and, along with some other business measures, increased our profitability from the same number of transactions year on year by a factor of around 400%.
Transactions now take closer to 23 weeks, despite the investment and greater use of technology. Yes there are more elements to cover (compliance being one) but it is hardly progress is it?
Two other elements made the conveyancing so successful. The fees were fixed (not cheap but very transparent) and conveyancing operated, as we did as agents, on a no move, no fee basis and so clients were happy to commit.
That alignment of interests worked powerfully for all concerned.
Lettings and Management deals with dozens of different legislative requirements on behalf of clients and this is now the biggest single reason why a landlord will use you to manage their property. They want the peace of mind of dealing with someone who will save them time and keep them out of the sticky stuff!
The proposed Renters Reform Bill is currently causing concern yet there are, in my opinion, as many potential business opportunities as there are threats. Certainly for those who take the time to review, plan and implement appropriate changes.
I spend a large part of my business life working with agents and others across the industry on improving performance and profitability through better processes, training and commerciality.
I also sit on the Home Buying and Selling Group and I’m keen to see a more “joined up” approach that will see all of the compliance aspects more seamlessly integrated within the process. Mandatory change however takes time but there are many things that agents and other parties can be doing now to bring about improvement.
My overriding view is that you should take the opportunity of reviewing your compliance, how your approach is integrated within your processes and systems and actioned within your business. There are certainly some commercial opportunities to be taken as well as the benefits of improved transactional outcomes.
Educating and training staff, using a carrot rather than stick approach will all reinforce and facilitate a successful approach and paradigm shift.
Don’t wait for Government, the legal profession, lenders, redress schemes, technology providers, professional bodies or the public to drive change – agents (working with others) should be doing it for themselves!
Michael S Day MBA FRICS FNAEA FARLA