If you sold your property at £200,000 with an online agent, you would pay around £1,000. But a traditional estate agent charging 1 per cent or 1.25per cent commission would cost £2,000 or £2,500 respectively plus VAT.
However, it pays to look beyond the headline figures, because some sellers using online firms do not ‘save’ at all. That’s because the fee to an online agent is usually up-front and non-returnable.
GetAgent.co.uk – a comparison website looking at which agents get the best prices in the quickest times – analysed homes listed by four leading online agencies over a year to see if they sold. ‘Purplebricks homeowners completed on just 57 per cent of the listings. HouseSimple fared best, but only completed on 58 per cent, while eMoov and Tepilo were at 51 per cent and 48 per cent,’ says GetAgent’s Colby Short.
By comparison, the HomeOwners’ Alliance consumer group says traditional agents with a local office sell more than 84 per cent of homes. The result is that online sellers who don’t find a buyer are then likely to go on to instruct a traditional agent – meaning that they could end up paying two sets of fees to secure a sale.
Some internet agencies will insist that you use a solicitor allocated by them and this solicitor is not necessarily local and may be considerably more expensive than your local family solicitor who is more likely to provide you with the best service.
On top of that, online agents’ basic costs rarely include services which are standard from traditional agents. This has led the Government’s National Trading Standards team – charged with policing the estate agency industry – to issue a warning. ‘We’ve seen many examples of online agents making unsubstantiated claims about fees when compared to traditional or High Street agents. It’s wrong to make general claims about savings when the headline price does not include facilities such as a sales board, floor plans, photographs, accompanied viewings or other facilities normally included with traditional firms,’ says National Trading Standards spokesman James Munro.
For consumers, the decision is whether they are prepared to risk losing their £1,000 or possibly end up saving many thousands more if the gamble pays off. ‘Sellers who look carefully at their local market before listing their home for sale will probably still be better off instructing the best High Street agent in their area. For those looking for a quick sale, online agents are an excellent and rapidly improving option,’ says Paula Higgins, of the HomeOwners’ Alliance.
But I do not consider the above to be the biggest reason for potential loss to a user of an internet agency. Any business model must have the aim of making a profit. To sell a house for £1,000 and make a profit means that savings must be made. For example; I will typically spend two and a half hours valuing a property even before it goes to market. The same will be measured and inspected then a detailed and forensic study of comparable sales (including study of respective size and state and condition) will lead to a much higher chance of an accurate valuation. If time is not spent at valuation stage, thousands, if not tens of thousands of pounds could be lost (but £1,000) would be saved on the fee! In addition, once a property is sold, hours are spent checking the status of the buyer, chasing solicitors and agents up and down the chain and keeping all parties fully informed. The internet is full of anecdotal tales illustrating that the “local” expert is not that local, is not that contactable and does not have that much experience. Even more tales abound of sales at undervalue primarily caused by a desire to get any sale through and not a desire to get the best sale through. The fixed fee will be the same whatever price is achieved so there is no incentive to get the best price. Your property is the biggest asset you own!
That being said, internet agencies do have a place; especially where a house is the same as other houses on an estate and where the sales process is simple and straightforward. I’m not saying that all High Street agencies are the last bastion of integrity and efficiency but I think that carefully choosing a local High Street agent will give you a significantly greater chance of achieving a higher price and a pain free sale (but I would say that wouldn’t I!!!!)