The Negative Impact of Setting Targets

In the following article, we discuss a controversial topic that goes on behind the scenes within the industry. Our intention is purely to provide clarity to you – the reader – to better understand the dynamics of the real estate market and how certain practices can have unintended consequences.

One such practice is when real estate agencies set targets for agents to sign mandates with property owners in order to expand their portfolio of properties to sell. This practice may seem logical on the surface, but it can actually have a negative impact on the overall property market. Here’s how.

Why Are Such Targets Set?

Let’s begin by addressing WHY real estate agencies would set such targets.

For most, it makes perfect sense. If you wish to grow your business, then you set clear objectives for yourself and your team. Such targets could very well include bringing in new mandates to the agency. It is certainly an accepted, mainstream approach by most real estate agencies. Agents are encouraged to sign a number of mandates per month with which their company can then measure how successful they are. In some agencies, if targets are met then the agent is rewarded financially or with other perks, although this does not appear to be common practice either (another topic for another article). As one can imagine, the target provided is usually a lofty figure – also known as a stretch goal, in other words very difficult to reach but realistic enough to believe it is possible.

What Are The Consequences?

Although the real estate agencies’ intentions may very well be good in theory, in practice the negative impacts are numerous on the property owners, the agents and the overall property market.

One of the primary concerns is that setting targets for agents to sign mandates can put pressure on them to close deals at any cost.

One outcome could be negotiating over-priced mandates with property owners. On one hand, more often than not, this can lead to a falsification of property prices on the market, as the prices being negotiated for the mandates are not reflective of the true market value. On the other hand, this can also create a tendency to mislead property owners into believing their properties are worth more than they actually are. Most, if not all owners, would love to hear that their property is worth more than what they had in mind. However, in the majority of cases, the real consequences of having an over-priced property on the market is it struggles to sell and owners become frustrated by being constantly advised to drop the price.

Another outcome could be the intense strain put on the relationship between agents and property owners. For instance, if an agent is perceived as being pushy or overly focused on meeting their own targets, they may forget their client’s priorities and have a harder time building trust and rapport with them.

Furthermore, another potential problem of setting targets for agents is that it can lead to unethical practices that damage the real estate industry. Real estate agents and agencies have a duty to discourage these types of practices and maintain the integrity of the profession.

What Can We Do?

We find it is counter-productive for real estate agencies to set unrealistic targets for agents to sign mandates with property owners in order to expand their portfolios, as it can ultimately lead to a distortion of property prices on the market and the use of harmful practices.

There is another way.

It takes time; it takes effort; it takes patience; but it’s the right way. Real estate agencies should alleviate their agents from such unnecessary pressure and instead provide a positive environment for them to focus on building trust and rapport with potential clients, understanding their projects and needs, listening to their thoughts and concerns and advise accordingly.

By ensuring such ethical practices, we provide an authentic service to our clients whilst growing our business in a sustainable way.

The Nice Homes Team
24th January 2023