Recently, I gave a talk at a regional ARLA meeting to 120 letting agents at the beautiful Lansdowne Club in London. As part of the talk, I asked the agents to raise their hand if they conducted their inventories in house. My experience of letting agents in Manchester and elsewhere in the country suggested I could expect about 60% of the agents to still conduct inventories in house. However, not one of the 120 agents there raised their hand. They all outsourced this function.
I discussed this with a few of the agents afterwards and they all expressed surprise that any letting agent would still conduct inventories in house. They firmly believed that it made better financial sense to outsource the work to a professional inventory provider.
What’s the real cost of conducting inventories in house?
So, if 100% of those ARLA letting agents in London are outsourcing their inventory requirement, we asked ourselves why are the majority of agents in other parts of the UK still using in-house staff. Clearly, the answer is that even though there are clear advantages in outsourcing, they must believe it is cheaper and therefore more profitable to perform the function in-house.
Our financial director Justin and I sat on the train on the way back and calculated what the real cost of using in house staff to do inventories actually was. We assumed that the letting agency would normally rent around 15 properties a month and took into account, salary, overhead, petrol, parking, professional indemnity insurance, the extra time for an inexperienced person to carry out the inventory and, importantly, the opportunity cost of having an agent conducting inventories rather than their core function of finding tenants.
Our results showed that for a typical agency it was likely to be costing them about 50% more to conduct each inventory than it would to use our service – and without any of the advantages.
Clearly, if an agency’s staff are being underutilised then it can seem sensible to use them to perform non-core activities. However, consider this: are you really giving your landlord clients the service they deserve by letting untrained staff perform what for the landlord is a very important task? It could conceivably lead to him losing hundreds or thousands of pounds if he doesn’t have an inventory that satisfies the adjudicators. In a market where every letting agent is looking for more landlords is an in-house service likely to give you a competitive edge and enhance your reputation?
The Property Listings Outsourcing Solution
In essence, outsourcing can reduce costs, minimize risks and ensure you are using the best qualified people for any given task. In addition to our award wining video inventory service, we can now offer EPCs, floorplans, and video tours and will be adding further services very shortly, thus providing a one stop solution for your property listings requirements.
Phone us on 0845 230 5197 or email enquiries@videoinventoryagency.co.uk for more information.
usually preferred by landlords and whilst time is spent negotiating rent increases and AST renewals during long-term lets, the matter of keeping inventories updated and performing interim inspections is often neglected. During the course of a longer tenancy, improvements may be made, various items replaced and without formally updating the inventory, there is no proof as to the standard of work carried out or, for example, the existence or condition of the replacement item. Tenants who know how to work the system could well take advantage of this when the tenancy comes to an end, and without proper evidence they may be able to get away with leaving the property closer to its original rather than improved condition, which will hit landlords in their pockets.
appointments have been made a TVIA directory will accompany the franchisee to the meetings and help close the deals.