An American franchise operation which launched in the UK just over a year ago says it is performing ahead of expectations.
Donald Morris, who has the UK master franchise for Keller Williams, says that there are now three “market centres” and 90 self-employed agents in London and a further 16 in Leeds.
Between them, they currently have just over 300 properties available for sale or rent at a market worth of £350m.
He says: “Our business plan was to launch two to three new centres a year and recruit agents at the rate of two a month. In ract, we have been recruiting at the rate of seven to ten.
“We also have a strong pipeline of both agents and franchisees wanting to join us.”
Keller Williams’ current market centres are in Victoria and Mayfair, London, and in Leeds, with new market centres likely to open in south east London and Manchester.
The market centres have no shop fronts – which Morris describes as unnecessary.
He says: “The traditional estate agency model of a branch in the high street is outmoded.
“Footfall has been declining at the rate of 7%-9% each year for the past six years.
“Footfall to high street banks has been going down at the rate of 6%-7% over the same period. This is not an industry thing, but a behavioural thing.”
He says that the market centres provide “professional” space which clients can visit and where, he said, they are more comfortable than being in a visible street-level shop.
Morris also emphasises that Keller Williams is really a coaching and training company – “one that just happens to be in estate agency, but we are the number one training company in the world”.
Agents have to commit to its training, which has the reputation of being loud and shouty even by American standards but which has apparently been toned down over here.
So far, a number of American franchise operations have tried to crack the UK market but there successes have been – let’s say – understated. (Of course, you could say exactly the same of the British agents that have tried to crack the American market and have come back with their tails between their legs.)
But why would Keller Williams be any different? “We are focused on agents rather than our brokers [the franchisees who run the market centres],” Morris says.
“We do not lose sight of the fact that we make our money when our agents sell properties.”
Agents are, bluntly, chosen (“We award franchisees, not sell them”) for their entrepreneurial qualities and desire to enhance their own personal wealth.
Typically, Morris claims, they will earn two to three times what an employed agent would.
They do not pay much upfront – £1,200 – but must be prepared to hand over a chunk of their annual earnings.
In London, he says this is up to £60,000 and in Leeds, the sum is capped at £30,000.
The sums do seem a bit more than this, though. Morris cites a typical agent’s earnings in London at £216,000. They would keep £140,000 of this, with £16,000 going to the UK franchisor, and £60,000 to the international head office.
Morris says that underpinning the UK operation is that “this is a global franchise but very much a British business”.
Could anything go wrong?
Morris concedes that of all Keller Williams’ markets, the UK estate agency sector is the “toughest in the world”.
He also says that one challenge agents are currently facing is the number of “over-priced properties in London which are not moving”. He says this applies to both sales and rental properties.
With yet another US franchise starting up in the UK, in the form of Coldwell Banker Real Estate, it will be interesting to see just how much of a challenge these American operations mount.
This is complete and utter nonsense. They have no properties in Leeds and further no website listed on Rightmove for Leeds, let alone 16 self employed agents, if they have the poor things must be starving to death.
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I would urge any estate agent thinking of going this route to look at the KW training programme, BOLD, on YouTube.
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Are you a money magnet was the YouTube video to which I was referring.
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That’s 3.33 properties per agent.
Let’s be polite shall we and say that the average sale price is the UK market average – £250k (because it’s too early to check the exact price).
Let’s be polite and say that there average fee is 1.25% – I’m on the south coast and I don’t know anyone getting away with an average fee better than this.
That’s £3,125 per transaction.
There’s always a fall through rate and an agent never, ever agrees sales on 100% of the property they take on.
That’s 3.333 properties * 75% (number of properties sold compared to instructions) * 66% (taking into account fall throughs) * £3,125 = £5,156
That’s just over £5k – now I imagine that there average instruction to commission timeline will be the same as everyone else’s – lets say 16 weeks.
Which means that assuming all of the above is roughly true then the average agent in the business is likely to be earning £16,757 a year.
I think you’d be better off as a junior neg in almost any other agency in the country.
Certainly in the south east.
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Hehehe I love how some people just take numbers, mix them with some other numbers and get some mind fixed number,
average property price in London is £525k last I checked and if I remember right, average commission is 1,9% and if you sell one property a month (£525,000 x .019 = £9,975 x 12 = £119,700.00 for a year in commission of that I know the agent gets 65% at keller williams and 50% at remax, I would think that’s better than most salary based agents in London 😉
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Almost certainly true, but London represents only 16% (or thereabouts) of the population of England or 13% (or so) of the whole UK population.
I think the reality is that maybe one or two very lucky (talented/ ruthless/ whatever?) individuals could make that kind of money.
The rest won’t even come close.
The earnings of people in this type of enterprise will follow a standard bell distribution curve – as do nearly all salaries in nearly all industries.
I’m a statistician as well as an estate agent – I love just taking numbers, mixing them with some other numbers and get some mind fixed number at the end.
Knowing your market (by numbers) is much better than guessing it and crossing your fingers.
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The Realtor model in the US is vastly different in the US to here. The average realtor does 10 properties per year, but commission rates are 5-7%.
And 80% of realtors fail in their first 5 years. It’s TOUGH in the US.
It’s high pressure, high burn rate. But the likes of Keller Williams, Re-Max and Century 21 are the best of the bunch.
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Wow, 80% fail in 5 years – that is tough.
The English estate agency business model has repeatedly failed in the US.
Foxtons were considered a “discount” brand!
Now there’s something to behold!
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Can anyone tell me if there has ever been a successful overseas franchise that has really taken off in the UK?
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McDonalds
End of. ;o)
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Haha! Very good
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“We make our money when our agents sell homes”
” We are a training company”
The latter is a steady source of income if you can attract unqualified recruits and charge them for training. Question is: how good is the training. Being the biggest, doesn’t make it best, but no doubt many will fall under the spell of greed is good.
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Morris… says: “The traditional estate agency model of a branch in the high street is outmoded… Footfall has been declining at the rate of 7%-9% each year for the past six years.”
And Morris knows this how, precisely? As far as I can make out, he’s never spent a day working in Agency in his life.
Spouting ******** isn’t a good way to impress, Mr Morris. It comes back and, to use your American puppeteers’ phraseology, will bite ya right on yo’ sorry ass
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