September is a prime time to sell your home: everyone’s back after the summer holidays, the weather is still ok and thoughts have yet to turn to Christmas.
Ripe for disruption?
On the face of it, the estate agent sector looks ripe for the kind of disruption we are seeing in markets such as accommodation, transport and of course finance. The services offered by traditional estate agents can often appear overpriced. Their fees are typically stated as a percentage of a home’s sale price – say 1% or 2% — and if a buyer is found quickly, agents can make thousands of pounds for very little work indeed. If you were to sell a house for £300,000 via an agent who charged 2%, their fee would be £6,000 on top of all the other legal, tax and removal costs you face.
Their online rivals tend to charge fixed rates which are not linked to the property’s value. For example, eMoov gives customers the option of paying a £595 fee upfront (although you won’t get this back if your home doesn’t sell) or £1,195 on completion, with no charges in advance.
Internet services will typically arrange for professional photos to be taken of your home, and it will be listed on the main property-sale portals like Rightmove and Zoopla.
These prices look pretty competitive – all the more so for people selling relatively expensive homes. But although they’ve been around for a while – Tepilo was set up in 2009, for example – online agents have yet to hit the mainstream. According to the latest estimates, they account for just 8% of the overall property-sales market (although this is a big increase on the 2% recorded in 2013).
The pros and cons of online agents
In their early days, many of these services were little more than bulletin boards which allowed homeowners to list their own for-sale property. Customers tended to be responsible for the likes of photos and having Energy Performance Certificates drawn up. Today, though, there is not too much to differentiate them from traditional agents.
The big high-street names will argue that they have a number of advantages over their web-only rivals. Perhaps the two biggest ones are the personal service they offer and their local knowledge. Traditional agents say that their ability to meet potential buyers in person can help them negotiate better offers, or sort the wheat from the chaff.
And the fact they are based in the same area as your home means that they should in theory be better equipped to point out your property’s selling points to interested parties.
Does this justify paying £2,000 or £3,000 extra in fees? Perhaps not all the time, but if there is a chance that a high-street agent will be able to sell a property for an extra £5,000, say, many owners will take the risk.
The service available online is in reality not too far removed from that offered on the high street: you still get actual agents conducting your negotiations, for example, and there is little reason you’ll get a much better price by going down the traditional route.
But most people only sell a home once every few years, so it should come as no surprise that the novelty of online agents is taking some getting used to.