Should I use an online estate agent and what are the risks?
You could save money on fees by selling through an online agent. But could a local agent get you more offers? Or a better price? Here's what you need to know.
What is the difference between a high street estate agent and an online agent?
Until fairly recently, the line between a high street and online agents was clear. Where high street agents occupied high street premises and branded Minis raced between viewings, online agents offered pure online advertising models with no local representation.
However, over recent years online agents have gained market share, particularly in light of the COVID-19 pandemic.
The difference between traditional and online agents has blurred, with the following models now commonplace:
|Estate agent type||Model||Cost|
|High street||Traditional agency model operating from high street premises. High street agents still advertise on the property portals.||Highest|
|Online||Pure advertising model where the seller lists their own property on the advertiser's website. The property's particulars are then usually also listed on the main property portals.||Lowest|
|Hybrid||With no high street premises. the hybrid model offers online advertising with local home-based agents offering valuation and negotiation services in the same fashion as a high street agent.||Sits between Online and high street pricing, depending on the level of service offered.|
Online agents may have come of age, but traditional estate agent windows still occupy a significant proportion of most UK high streets.
However, the pandemic has left most property commentators predicting online estate agency as the future. Below we look at the different online models in more detail:
Are all online agents the same?
No. The services on offer range from basic advertising only, to a near equivalent of a traditional agent. Some online agents offer a basic service but will attempt to cross-sell optional added services, such as EPC's, floorplans and conveyancing.
Barebones 'advertising only' service
With the most basic offering, online agents will list the property on their own website. Most will also advertise on the property portal (Rightmove, Zoopla, On the Market etc.). Most property buyers start their search on the property portals. Sellers are advised to check that their listing will also be advertised on the portals as a bare minimum service.
With a barebones service, you will usually have to:
- Arrange your own Energy Performance Certificate (EPC)
- Take and upload your own photos (much like selling through eBay)
- Arrange or carry out your own floor plans
- Write a description of the property
- Erect your own for sale board
- Handle all enquiries, viewings and negotiation.
The next level would be an agent offering some of the traditional agent services as bolt-on extras. These services might 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
Full-service hybrid agents
Some online agencies offer a ‘hybrid’ model (Purplebricks and Yopa being two of the more high profile examples).
Hybrid agencies offer full estate agency services without the high street presence. Everything is taken care of, from measuring up to accompanied viewings (if required). The agent will also handle the negotiation with prospective buyers and will assist the sale throughout the conveyancing process.
Sellers would still receive a face-to-face service from a local account manager, usually working from home. The lack of local high street premises allows the agent to work on a lower commission.
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.
Should I choose an online agent?
Selling through an online agent can offer significant savings on agent fees, potentially running into thousands of pounds.
High street agents will charge an average of 1.5% (inc. VAT) of the selling price of your home. If you end up selling for £300,000, a traditional agent's commission would be £4,500.
Selling fees through online agencies fees start at a few hundred pounds. Even at the upper end, hybrid agents tend to charge around £1,000 (inc. VAT), or around £1,500 (inc. VAT) if you are selling in London.
No sale, no fee
Initially, online agents asked for an upfront fee as opposed to the traditional no sale no fee commission model. Things have moved on, however, with many agents, offering a fixed fee and/or no sale no fee option.
You will of course pay more for no sale, no fee option when you do sell. You should also check that the no sale, no fee terms don't include conveyancing tie- ins or additional admin fees.
Are you likely to achieve the same selling price?
Traditional agents are first and foremost salespeople. They can be quite expert in building up the desire for a property and playing one potential buyer off against another. Open house days and sealed bids are common theatrical tactics employed by agents because they can help drive up demand and increase buyers' offers.
Local agents often know how to overcome objections and extract an offer that might not have been forthcoming otherwise.
Without the support of an agent (hybrid or high street), you will have to handle these areas yourself.
If on an average property, the agent secures a 1% higher offer, the commission saved through an online-only agent 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 upfront
- Many don't work on a ‘no sale, no fee’ basis
- 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.
- 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 service 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 the buyer's 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 will also 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.
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