The Red, Amber, Green Approach: How Estate Agents Can Manage Their For-Sale Stock More Effectively

Staying on top of your for-sale stock can be a real challenge. With properties coming and going, it’s crucial to have a clear idea of how each property is performing and what actions need to be taken to ensure they sell. One method that estate agents can use to monitor and manage their listings is the “Red, Amber, Green” (RAG) system. This simple yet effective approach helps to categorise your properties, giving you a clear indication of which ones are likely to sell, which need adjustments, and which are currently stagnating. By implementing this system, you can streamline your sales process and ultimately improve your success rate.

The RAG system involves creating three distinct lists: Red, Amber, and Green. Each property you have on the market will fall into one of these categories, making it easier to identify where you should focus your efforts. Let’s break down each category to understand how it works and how it can be applied to your estate agency business.

Green properties are those that you are confident will sell in the short term. These homes are generating interest, perhaps having lots of viewings or even second viewings scheduled, and there’s a strong indication that an offer is just around the corner. Typically, a property will fall into this category if it’s only been on the market for a short period, and the response has been positive. However, if a property has been listed for more than a couple of weeks without any signs of a sale, it’s time to consider whether it should still be classified as “Green.”

Next up, we have the Amber properties. These homes have the potential to sell, but something is holding them back from crossing the finish line. It could be that the marketing isn’t quite right, or, more often than not, the price might need adjusting. Amber properties are the ones that will sell with the right changes, but it’s crucial to identify exactly what those changes should be. For most estate agents, this is where the bulk of their properties tend to sit, waiting for a push to move them into the Green category. When reviewing your Amber properties, take a detailed look at each one and identify what adjustments are necessary to generate more interest or secure offers. This could mean updating the marketing materials, enhancing the property’s online presence, or revisiting the price. By keeping track of these adjustments and implementing them, you’ll start to see more of your Amber properties transitioning to Green.

Lastly, there are the Red properties – the listings that are struggling to attract any interest or offers. These properties are often overpriced or have some other issue that’s preventing them from selling. You may have even had conversations with the owners about adjusting the price, but they’re not willing to budge. Alternatively, the property might be in an area with low demand, making it difficult to generate interest. The goal with Red properties is to move them into the Amber category by identifying the barriers to a sale and working with the seller to make the necessary changes. This may involve having some tough conversations about pricing or making recommendations for improvements to the property itself. Whatever the case, addressing the issues that are keeping a property in the Red category is essential if you want to see it eventually move towards a sale.

The first step in using the RAG system is to categorise all your current for-sale stock into Red, Amber, and Green lists. This process can be an eye-opener for many estate agents, as it quickly highlights how few properties are actually in the Green category. However, this exercise is vital for understanding the true state of your portfolio and identifying where your efforts should be focused. Once you’ve categorised your stock, the next task is to take a closer look at your Amber properties. Write down what needs to happen to help sell each one, whether it’s adjusting the price, improving the marketing materials, or addressing any issues that might be putting off potential buyers. It’s important to be honest and realistic during this process. If you’ve been doing a good job of gathering feedback from viewings, you should already have a good idea of what adjustments are necessary.

As new properties come onto the market, add them to the list in the category that fits best, and as soon as a property sells, remove it from the list entirely. Your ultimate goal is to move all your properties from Red to Amber and from Amber to Green, ensuring that your for-sale stock is as sellable as possible.

One of the most common adjustments you’ll need to make with Amber properties is a price reduction. But how much should you reduce the price by? Estate agents need to be mindful of the property portals’ rules for price reductions to ensure their changes have the desired effect. For a property to be included in the mass email updates sent out by portals, the reduction typically needs to be at least 2% of the listed price. Anything less than this won’t trigger the exposure boost you’re looking for. For example, if you’re marketing a property at £250,000, reducing it to £246,000 won’t be enough to make it into the email update. However, reducing it to £245,000 would just about meet the 2% threshold and gain additional visibility. Therefore, it’s important to ensure that any price reductions you make are significant enough to be noticed.

One of the most challenging aspects of managing your listings is aligning seller expectations with market realities. Homeowners often have an idea of what they want to receive for their property, but it’s your job as an estate agent to guide them towards a realistic figure. A useful technique to gauge a seller’s true expectations is to low-ball them with an offer that you know they won’t accept, then ask them what they would accept instead. This helps to establish a baseline figure that they’re willing to consider. By having a clear understanding of what your clients are willing to accept, you can better position each property in the market and make informed decisions about when and how to adjust the price.

The key to success with the RAG system is consistency. Keep the system running at all times, regularly updating your lists as properties come on the market or are sold. The goal is to create a dynamic process where your properties are always moving in the right direction – from Red to Amber to Green. This will ensure that your for-sale stock remains as attractive and sellable as possible, rather than sitting on the market for long periods.

Implementing the Red, Amber, Green system is a straightforward yet highly effective way to manage your for-sale stock. It helps you stay on top of your listings, ensures you’re taking proactive steps to sell properties, and makes it easier to identify where adjustments need to be made. By categorising your properties and actively working to move them through the stages, you’ll see better results, happier clients, and ultimately more successful sales. So, if you haven’t already, start using this system in your estate agency today and watch your success rate soar.