If you’re like us, then over the last few cold winter months you’ve opted for a night in with the latest TV drama rather than taking full advantage of London’s vibrant nightlife (if you're eagerly awaiting summer why not read our guide to East London's top rooftop bars). Whilst catching up on those undeniably addictive dating shows, documentaries and dramas you’ll have noticed a plethora of adverts relating to the most recent trend of online estate agents, all trying to sway you with their latest reform to the sale of your property.
One of these is the latest offering from an online agent titled ‘In-Laws’. In the commercial we see a gentleman informing his father-in-law that he’s sold his property and his father-in-law asks him if he used a certain online agent, it becomes apparent that he hasn’t as he believes they are ‘just an online agent’ and we hear the rebuttal ‘No, no, no they are proper estate agents, you just don’t pay commission’. Hilarity then ensues as we see the young gentleman yelling in a cupboard over the thought of having paid x amount of commission.
Let’s focus on the line ‘don’t pay commission’, however doesn’t the saying go there’s no such thing as a free lunch? A quick flick through the website, you quickly come across a price list for the services with a surcharge for London. Focusing on London, for the small upfront cost of £1,199 you can place your advert solely online which seems to be about all you get. So, who conducts the viewings? You do (unless you want to pay extra). Who filters out the time-wasters who just like to look at houses? You do. Who spends their time and effort selling the property? You do. Finally do you still pay if they are unable to do the job? Absolutely. See a pattern here?
Let’s compare this to a high street agent. Who conducts the viewings? We do. Who meticulously vets everyone who is entering your home? We do. Who spends their time and effort selling the property? We do. Finally, do you still pay us even if we are unable to do the job? Absolutely not. The majority of estate agents will not take a single penny of commission from our vendors until the paperwork is signed, the keys are handed over and most importantly everyone is happy. Still not convinced? Let’s look at the business model for the online agents and where they are unable to compete with a more traditional agent:
A newly-wed couple with a baby on the way need a bigger place, what are their initial options?
Option 1) Walk into a high street branch and have a chat with a local agent who is filled to the brim with local knowledge and knows the area like the back of his hand.
Option 2) Looking in a specific area by looking through the local agents website and selecting a few properties that they would like to view.
Option 3) Sifting through 1,000s of properties on the property portals Zoopla & Rightmove, flicking through endless links and photos.
A high street agent offers you all three of the above whilst an online agent only covers Option 3. Is it worth paying a smaller fee for two thirds less exposure on the property market? A recent study by Estate Agent Today stated that it takes, on average five months for the completed sale of a property as opposed to the suggested 14 days that is advertised by Purple Bricks and 25 days stated by House Simple, two leading online agents. Whereas traditional agents report the process to be shorter at around three months.
To some however, time isn’t an issue so let’s discuss the driving force behind the rising popularity of the online agent – the fees! What are the negative effects of paying your fee upfront? Once you have paid an online agent, where does the incentive to complete on the sale come from? If you are only rewarded for generating listings, why is it in an online agent’s interest to work overtime to secure you the completion? Having spoken to many vendors who have used online agents to varying success, the common denominator where an issue arises is in the progression. It can often be a challenge to get a sale over the line and without a dedicated agent working with you and for the reward at the end (commission), when things run into hot water, who would you rather have fighting in your corner?
An analogy we like to use regularly is that selling your home should be a unique and special occasion as it is often the start of a new adventure, much like a honeymoon. You are more inclined to spend more money on having a more pleasant and memorable time on your honeymoon than cutting costs, why should it be so different to do the same when you are selling your home…