Faced with double-digit inflation, a cost-of-living crisis and soaring mortgage bills, anyone moving home this autumn will want to count the pennies.
So, is a low-cost online estate agent just the ticket or a false economy? And is the tried-and-tested traditional High Street agent the most sensible way to sell in a difficult market?
Operators such as Strike, Yopa and Purplebricks — the three largest online agencies — claim to save thousands for sellers by charging budget commissions or even offering to sell a home for free, although offering various optional ‘marketing boosts’, which come with a charge.
But supporters of old-school High Street agents say the sales records of online rivals are poor, they may have hidden charges and they get lower prices from buyers.
Options: Anyone moving home this autumn will want to count the pennies – but is using a cheaper online estate agent a false economy?
Online firms have struggled to make an impact, despite millions spent on advertising. New data out this week from property consultancy TwentyCi shows onliners handled only 7.6 per cent of the sales of homes across the country in the third quarter of this year — a proportion that has been largely unchanged for years.
But will they tempt sellers as the economy slides and bills soar? Here are the pros and cons of a budget sale.
FAIR FEES
Online agencies appear to win hands down for cheapness, but remember this is just the basic package without extras.
Purplebricks charges £1,999 in and around London and £1,119 across the rest of the UK. So if you are in, say, the Midlands and use this agency to sell a home priced at £300,000 the basic fee will be £1,800 less than a High Street firm’s 1.0 per cent commission. If that traditional agent charges 1.5 per cent, as some do, the saving is a whopping £3,300.
‘This encourages owners of lovely homes to reconsider whether they truly need the out-dated approach of the old High Street,’ says Purplebricks chief executive Helen Marston.
EXTRA CHARGES
This is where traditional agents win out. Most High Street firms routinely offer accompanied viewings and often provide video tours of a property as standard services with no additional cost to the seller.
Seller’s regret? Supporters of traditional estate agents say online firms don’t get as many buyers through the door, and therefore sell homes for less
Online firms typically charge for different services. For example, Strike, which offers to sell a home for no basic fee at all, offers optional ‘marketing boosts’ costing £599 to £799, plus a ‘hosted viewings package’ of £699 to £899.
Most other online agencies get additional fees if their customers use recommended conveyancers, surveyors or mortgage lenders.
And remember, traditional agents do not charge at all if your property fails to sell, whereas many of the online rivals levy upfront fees which are not returned if no buyer is found.
CONSUMER RIGHTS
Both online and traditional agents have to play by the same rules.
They must by law be members of either the Property Ombudsman or the Property Redress Scheme and abide by the Estate Agents Act and the Consumer Protection from Unfair Trading Regulations. Membership of a trade body is optional, but the biggest is Propertymark, which TV property expert Phil Spencer describes as ‘driving change towards a better, more trusted industry, through regulation and protecting everyone involved in property’.
LOCAL KNOWLEDGE
Unsurprisingly, most High Street firms pride themselves on knowing how the housing market works, not just in a broad location but in specific neighbourhoods or even streets. Some may have years of experience in the same area.
Online agents operate more centrally — for example, the largest, Purplebricks, says it has a ‘field force’ of 600 people working ‘across a wide set of geographies’ throughout the UK.
STRENGTH IN SALES
Some property analysts suggest that since online agents get fees upfront, there is less incentive for them to push through a sale if there are breakdowns in a chain or hold-ups in conveyancing, although the online firms deny this is the case.
In a difficult housing market, which many believe we are now entering, the best High Street agents will have a list of potential buyers and will then hit the phones to call, text or email them to persuade them to view a property on sale.
Little black book: Traditional agents are more likely to have a list of interested local buyers to call on, meaning it could be easier for them to snag a sale
Likewise if a sale has been agreed but one part of the chain slows down, perhaps because of a mortgage problem or a poor survey result, the High Street agent will step in and try to make progress.
Online agencies, typically relying on call centres and lower staffing levels, are less likely to have the resources to chase sales and act as troubleshooters.
PERFORMANCE AND PRICES
The bottom line for most sellers is how many buyers they get through the door, how many offers they receive and how much they actually get for their property when they accept an offer, irrespective of the type of agent involved.
The HomeOwners Alliance, a consumer group, publishes online agents’ own claims about the prices for which they sell properties. The three big online firms claim their averages are between 96 and 97 per cent of the asking price.
There are no comparable figures for High Street agents, but another consumer advice service called The Advisory conducted a study before the pandemic, comparing different agency types. It found High Street firms produced 48 per cent more viewings than online, got 64 per cent more offers and, on average, secured a five per cent higher sale price.
Anxious sellers in a nervous marketplace will make their choices this autumn, but the safest bet looks like a well-established traditional agency, despite the higher fee.
