The beginning of any month usually tends to bring with it a flurry of housing market statistics and generally a bit of conflicting information as to which direction property prices, sales and confidence levels are actually heading.
June’s early flood of surveys seemed to agree that there was a degree of positivity returning to the industry. Propertyfinder.com’s May survey of confidence in the housing market suggests that public confidence in the housing market is higher than at any point since September 2007 and the Northern Rock bail out.
Recent figures from Nationwide illustrate a recorded 1.2% rise in house prices in May, whilst reports from the Halifax suggests that house prices rose by 2.6% in over the same period. However, conflicting data from Hometrack shows that house prices remained unchanged in May, making it the first time in 20 months that a monthly fall in prices has not been recorded. But Hometrack says that despite prices remaining flat house prices are expected to fall in the coming months given the weak outlook for the economy. It also added that demand continues to outweigh supply with 6% more buyers registering with estate agents compared with April but the number of properties available falling by 0.2%. Sellers appear to be pricing more realistically with 90.3% of asking prices being achieved in May, up from the 89.6% recorded in April. Properties are also spending slightly less time on the market, going from 10.4 weeks in April to 9.9 weeks in May.
Confusing data
If this succession of data can appear somewhat confusing to those working within the industry, the question is how does this appear to the consumer? I think we all know the answer to that but what is also apparent is that the very British mentality of wanting to own property has not dwindled despite current LTV and pricing issues. Without delving into the why’s and why not’s regarding the availability of mortgage deals, it is fair to say that there remains large numbers of potential buyers out there on the sidelines waiting for the right price/deal combination before they pounce.
So, it appears that there are buyers out there and whilst I don’t expect the housing market to take off anytime soon there is certainly appears to be a renewed sense of stability at the moment and estate agents are reporting increasing interest as the summer months embrace the market. Essentially this means it is important that brokers are fully evaluating their positions and asking themselves what more can be done to attract new business, and vitally, what more can be done to convert this business. Obviously this has to be done in a cost effective manner which is why technology can play such an important role for intermediary firms of all sizes and all budgets provided they choose the right options.
Back to basics
Firstly, stripping it back to basics we need to realise that potential buyers are viewing the market in a number of different ways. I have read recently that the number of house hunters using the internet to source a property has climbed back up to pre-recession levels and as online property websites become an increasingly popular research tool, people are also starting to utilise online mortgage sourcing engines.
Having a strong online presence is a way to target a different market of the ever-growing numbers of web-savvy consumers. By offering a range of service propositions whether it be online only, fully offline or a combination of the two will allow the client to decide on the level of interaction. Having these options available enables firms to help those clients that may not necessarily want to be ‘sold’ to, but will still enable firms to hold the hands for those that want them held. Make no mistake if they have not already done so, at some stage, intermediaries should be looking at the viability of a fee charging model. The Financial Services Authority has already stated that it's looking at proc fees and whether applying the Retail Distribution Review to the mortgage market could benefit consumers. Speaking at the recent Financial Services Authority’s Mortgage Conference, Dan Waters, director of retail policy and conduct risk at the FSA, admitted that the regulator is looking at introducing adviser charging to replace the mortgage proc fee. By offering a range of service levels this could be one way of introducing a range of fees that simply reflect the level of advice that is being offered.
Maximise clients
In a slow market it is imperative that brokers do all they can to really maximise their client interaction in terms of service and efficiency. Such a facility provides more options for the client ensuring brokers maintain a real edge which enables them to improve referral and retention rates. The system also provides access to direct to lender offerings to attract those consumers that might previously have used this information elsewhere. Integrating these facilities will help brokers to place this business which as a result opens up opportunities for life and protection business plus the referrals and future business.
However, having a website with a market leading sourcing engine is not quite enough. A small amount of business may naturally find its way to an intermediary’s door but marketing is a vital element in maximising its potential. To bring some scale to this, according to the Internet Advertising Bureau, there are now just shy of 30 million people with access to online connections. By embedding certain key words into the text, with search engine optimisation in mind, a website can improve its flow of traffic resulting in a higher enquiry level than may previously have been the case.
Affiliate marketing
One example of a potential cost effective solution is affiliate marketing. To put this in basic terms this is where a firm will instruct an agency to manage online advertising/marketing activity with an agreement in place whereby the firm in question will pay the agency a fee when this activity results in a website visitor performing pre-agreed actions. These actions are negotiable and could be anything from the leaving of contact details through to a closing of a deal. Obviously the fee will depend on the result but in essence it is a performance related structure with no up-front fees.
These fees may also be determined by the quality and usability of the individual websites and other variables. As a rule of thumb the weaker the website/conversion rate/traffic volumes the more money the affiliate marketing agency will have to invest in generating traffic to prompt the desired actions, therefore they may request higher fee rates. Conversely a strongly branded site with a high quality sourcing engine and application process already in place should lower the agency’s demands.
Potential clients
The web can provide a great resource for attracting potential new clients which may not previously have been on an intermediary’s radar. There is no need to be intimidated by its potential, far from it. Depending on the size and ambition of the business there are a number of avenues available. Smaller brokers can also use a professional white-labeled sourcing engine to attract a number of local introducers and strategic affiliations. Speak to local estate agents, solicitors and accountants for example and show them the merits of the mortgage sourcing engine. Incorporating a top quality engine into a firm’s website can really highlight its professional nature which is consistent with the service received from the other professional organisations who may refer clients to your site on the back of this relationship. This relationship should of course work both ways which means it may be possible to share marketing, future search optimisation costs and affiliate marketing costs.
In terms of general marketing by having a system where potential clients can enter their email details easily – and remember by having a branded website it will not be an unknown entity who will then contact them – the broker can act swiftly. It is common sense to realise that the quicker the contact is established to an initial enquiry, the higher the chances of conversion. By building these details into a client database brokers can then easily update these parties with new products, product withdrawals etc to keep them regularly updated during their search therefore helping to build a relationship. This could also be pertinent if people are existing homeowners looking for remortgage deals.
Online really is the future. However, when you bandy terms such as search optimisation around it is easy for an intermediary to be intimidated by this jargon but the fact is that there is support and cost effective help out there to really help firms get the most out of the internet. Firms simply need to do a little homework and talk to the technology specialist. We all need to work a little harder in the current market, business will not come flooding through the door. It is increasingly evident that firms have to start knocking on doors and target areas they may not necessarily have targeted before to survive and prosper.
