Should I use an online estate agent and what are the risks?
You could save money by selling through an online agent. But will you get the same selling price that you could with a local agent. What you need to know.
How is an online estate agent different from a traditional agent?
You cannot walk down a British high street without passing a traditional estate agent. Shop windows displaying properties for sale, branded cars and negotiators and valuers beavering away to tie up sales.
By contrast, Online agents are a new way of selling your home through the internet. High street premises are replaced with websites.
Certain aspects of the marketing process are looked after remotely and others must be taken care of by the seller. Although this can add to the seller's workload, it comes with the promised of lower marketing fees.
Are all online agents the same?
No. The services on offer range from the basic to a near equivalent of a traditional agent. Many offer a basic service but will then attempt to cross sell optional added services such as EPC's and conveyancing.
Bare bones service
In their most basic form, the agent will list the property on their website as well as the now essential property portals such as Rightmove and Zoopla. And that's about it - cheap and cheerful.
Some agents will even do it for free, making their money through advertising.
You will have to take and upload your own photos in much the same way as selling through an online auction site like Ebay. You will also have to measure up floor plans and write a description of the property.
The next level would be an agent offering some of the traditional agent services as bolt-on extras. These can include:
- Professional photographs
- For sale board
- Premium online listings on property portals
- The online agent taking offers, feeding back to you and negotiating on your behalf, as well as liaising with your conveyancing solicitor
- Online virtual tours of your house
- Provision of your EPC (a document required when selling that details your home’s energy efficiency).
Full service 'hybrid agents’
Some online agencies offer a ‘hybrid’ model (Purplebricks is a major example).
Hybrid agencies offer a full estate agency service minus the local offices. Everything is taken care of - from measuring up to accompanied viewings (if required) to sales negotiation.
You are usually allocated a local account manager or ‘property expert’ as standard so sellers receive a face to face service. The lack of local premises means the cost saving can be passed onto the seller.
The term ‘local’ is worth querying in this instance however, as the person you are allocated may cover a large area, so may not be as clued up about your immediate location as you would like.
Why choose an online agent?
The clear benefit of going online when selling your property is how much money you can save: this can run to thousands of pounds.
High street agents will charge an average of 1.3% of the selling price of your home, so if you sold for £250,000, their commission would be £3,250.
You could sell through an online agent for just a few hundred pounds. Even at the upper end, hybrid agents tend to charge around £1,000, or around £1,300 if you are selling in London).
No Sale no fee
Initially online agents asked for an upfront fee as opposed tho the traditional no sale no fee commission model. Things have moved with many agents, such as Yopa, offering a fixed fee or no sale no fee option.
You will of course pay more for no sale no fee if you do sell, that's the gamble.
Are you likely to achieve the same selling price?
Traditional agents are first and foremost sales people. They can be quite expert in building up desire for a property and playing one potential buyer off against another. Open house days and sealed bids are common theatrical tactics because they can really help drive up the price.
Local agents also know how to overcome objections and extract an offer which might not have been forthcoming otherwise.
Without an agent you will have to do this yourself.
If the agent achieves a 1% higher asking price on an average property, than the online route, then on an average property the online saving is negated.
Pros of using an online agent
- Cost - substantial savings can be made
- You can sometimes make a deferred payment, usually meaning you pay 10 or 12 months in (whether or not you have sold).
- You can get up and running immediately
- Security - the agent does not hold your keys
- Further savings - you can shop around for cheaper services like EPC's and floorplans
Cons of using an online agent
- You are usually expected to pay up front
- Many don't work on a ‘no sale, no fee’ basis so if the house does not sell, you will lose the fee you paid
- Deferred payments may be offered on the condition that you sign up to using the agent’s recommended conveyancer or mortgage broker. Ensure you are clear on the terms. See: Tips for choosing the best conveyancer or solicitor
- You have to deal and negotiate with the buyer directly
- You may have to conduct viewings yourself
- The extras soon add up
- Most have no local knowledge
- More basic services means no post-offer support
- Most or all contact between you and the agent will be via email, phone or their online portal
- You may or may not be provided with a for sale sign
- Most online estate agents don't vet buyers for you, ascertaining their financial circumstances and whether they are part of a chain.
Do this before considering an online agent…
- Ask yourself whether you have time to shoulder a significant burden of the selling process yourself, or whether your schedule makes it sensible to get a traditional agent to fully manage it for you.
- Get a few valuations from local estate agents. This will not only give you expert advice on how much your home is worth, but give you the chance to meet a few local agents. Ask them how they would be better than an online agent.
- Remember that local agents have comprehensive knowledge of your area, and have direct experience in selling properties like yours. They also have a ready list of local buyers, many of whom they will have met personally.
- Shop around, there are lots of online estate agents with differing levels of service and varying reputations. Look for feedback from other people and investigate exactly what you would get for your money.