My ARO Journey: Where it all Started…
I founded Choices Estate Agents 32 years ago. We quickly became (and remain) a truly successful business (for which I’m eternally grateful). Looking back though; it wasn’t always that way. The truth is, there was a point, 6 years in, where I nearly gave up (although giving up is not how I would have seen it; more accepting reality I suppose).
You see, 1989 marked the start of the worst housing recession since the war; and it didn’t really recover until 1995. But there was one pivotal event that happened in 1995, which not only rescued the business, my career (and my ego); it led (even if indirectly) to the creation of the ARO.
The Event that Shaped the Future…
The pivotal event was a special offer I came up with for lettings. It doesn’t seem all that special now (definitely not revolutionary). But at the time, it opened a floodgate of landlord leads that was so great, it almost overwhelmed the business (and propelled us out of the doldrums and towards a successful and dynamic future). The Special offer was very simple:
5% plus Vat Full Management
For the first Six Months
Why Pay More?
Whatever you think about it now; the results spoke for themselves, taking us from 90 properties under management to over 2000 in a few short years. Of course, it was a local offer – and with hindsight, if I’d been more switched on, I could have taken it national (but to be honest I was just relieved to get back on the right track).
The Birth of the Primary Tenancy…
By 2008, the beginning of the next crash; the competition had finally caught up – and I needed something else to attract landlords that other agencies couldn’t offer. At the time I was thinking about offering a no-strings-attached rent guarantee (without the need for complicated insurance). It occurred to me that if we became the tenant, then we could offer that kind of guarantee. And so The Primary Tenancy was born.
The Primary Tenancy turned out to be (and remains) a much better business model for everyone. Tenants get a professional landlord and a rent guarantee of their own, giving them up to a years rent free if they go off sick or have an accident. Landlords are relieved of all their regulatory obligations (as well as maintaining anonymity) – and as an agency, if anything goes wrong; things can get sorted out more quickly and more efficiently.
The Beginning of Something New: ARO!
Despite the advantages of the Primary Tenancy; it didn’t have any decisive marketing potential in my mind. It was just (and is) a better business model for lettings. So as the lettings market became increasingly swamped with competition, I began once again looking for that killer point of differentiation that would significantly improve our own proposition – and reopen that floodgate of enquiries… which is how the ARO came into being.
I remember talking to another agent about what we could offer landlords as a real incentive to choose us over other agents, when the idea of upfront rent came up. Interestingly, this other agent thought it was a great idea to offer upfront rent. But there was a big hurdle: you couldn’t pay out rent unless you were the tenant, and therefore, even if they had the cash to do it; a regular agent would have to start by changing their entire business model.
It suddenly struck me that the Primary Tenancy (which had taken years to develop and refine) would be perfect for this concept: a classic, simple, attractive idea that’s much harder to copy than it seems. But despite the perfect fit (and the simplicity of the proposition); it took over 3 years to get the formula right, and come up with the most effective ways to get the message across and attract enquiries.
Developing The Advanced Rent Option and Overcoming the Hurdles…
This time around; we have a national audience. The real challenge now will be funding the ARO (and ensuring we can deliver a first-class service to a much larger client base). A lot of time over the last 3 years has been spent putting systems in place, creating technology – and making sure we are ready to become an overnight success!
Even as I am writing, the ARO is a work in progress. We are way past the start-up phase, having completed hundreds of deals with the growing number of ARO licensed agents who are simultaneously spreading the word (whilst massively benefiting from the unique proposition that the partnership affords). Below I have included the current messaging which I believe sums up the ARO perfectly – and positions us as a next generation Property Manager. You can’t say no to the ARO 🙂
The Advanced Rent Option – First Class Property Management + Guaranteed Full Market Rent, Paid a Year in Advance, at No Extra Cost