Over the past few years a new type of property service has emerged – the ‘online estate agent’ – offering to sell your property for a low fixed fee. This guide covers who is behind them, how much they charge and what services they offer.
What are online estate agents?
Online estate agents are an emerging set of companies that offer to help sell your property using primarily internet-based marketing methods and scaled down services, for a low cost fee.
The services offered by online estate agents vary – some offer to replicate a ‘high street’ agent’s typical services, but most emphasise the no-frills aspect and require the seller to do much of the work themselves (e.g. host their own viewings).
What almost every online estate agent has in common is that they are able to list properties for sale on the most popular online portals such as Rightmove.co.uk and Zoopla.co.uk. This is a key selling point because it means they are able to reach many of the same potential buyers that a high street agent can.
The benefit to the property seller is that they can often save a large amount of money by choosing an online estate agent compared to a traditional high street agent. The downside is that the seller may have to take on some of the duties and may receive a less pro-active service from the agent.
Where did online estate agents come from?
The online estate agency industry has been formed over the past 10 years as a response to a perception – right or wrong – that regular agents charge a large amount of money for not very much work. In other words, the idea that being an estate agent is an easy job that anyone can do with no qualifications and for which the seller pays over the odds.
Is this perception fair? Whether or not high street agents are worth the money they charge is a matter of opinion. Some sellers see agents as a valuable ally: a hardworking professional who uses sales negotiation skills and local market knowledge to help you set the right asking price, get the very highest offers and close the deal, as well as removing a lot of the hassle by conducting viewings.
Others see high street agents as low skilled middlemen who add little value and make too much money. The reality is that all agents are different and if you get a good one you may be very grateful to them, and if you get a bad one, you may feel extremely disappointed.
The first stage in understanding why online estate agents have emerged is to look at the mainstream ‘high street’ industry, how it works and how much you pay.
For most people who have ever sold a property in the UK, the process of finding an estate agent is straightforward.
They walk to the local high street or ring around, invite some agents to visit for a free valuation and choose the most convincing one with the lowest commission.
Once you sign their contract, you are giving the agent exclusive rights to sell your property, or joint-rights if you are appointing more than one agent.
Either way, it’s as easy as that to put your financial and domestic future in in the hands of your local high street estate agent.
The pros and cons of ‘high street’ estate agents
Hiring a traditional estate agent is a remarkably simple process. You can ask them any question face to face and you can assess them based on the criteria that matter to you, for example, whether they have a professional look, how busy and organised their office is, how friendly they are and so on.
It’s also simple because they basically all offer the same services, albeit with varying degrees of effectiveness. For instance, pretty much every single high street estate agent in the UK will offer a full service to you, which will include: a valuation of your property to help you set an asking price; taking photos and measuring up the rooms; listing it on the internet portals like Rightmove.co.uk and Zoopla.co.uk; showing people around for you; liaising with potential buyers and negotiating offers and finally handling the ‘sales progression’ (e.g. chasing up solicitors and smoothing over problems) all the way through to the day you hand over the keys.
This level of service can be excellent, especially when you get a good agent who really adds value by giving good advice and working hard. The downside is that they are very expensive, and you never know in advance how good your agent will actually be.
You may find you have hired an agent that gives you: an inflated – or deflated – valuation (the former to attract your business, the latter for a quick sale and commission); poor quality photos with inaccurate measurements; bad advice on whether to accept an offer and a lazy sales progression service.
In short, you may be guaranteed certain services by hiring a high street agent but you have little assurance of the quality, and irrespective of how good or bad they are, once you have signed a contract you are bound to pay them a commission when your sale goes through. It’s usually a large commission, and the worse the agent performs the more painful that is going to be.
How much commission do you pay a high street agent?
Here are examples of the typical range of fees you would expect to pay depending on the final price of the property when sold:
@ 1.5% commission (+ VAT) = £2,700
@ 2% commission (+ VAT) = £3600
@ 2.5% commission (+ VAT) = £4500
@ 1.5% commission (+ VAT) = £5,400
@ 2% commission (+ VAT) = £7,200
@ 2.5% commission (+ VAT) = £9,000
@ 1.5% commission (+ VAT) = £10,800
@ 2% commission (+ VAT) = £14,400
@ 2.5% commission (+ VAT) = £18,000
Most high street estate agents charge between 1% and 3% commission on the final sale price of your property. The commission is usually negotiable, so the agent may at first state their fee is 2%, but if you bargain hard you may be able to get them down to as low as 1.5% (or lower if they are desperate for new properties).
How much do online estate agents charge?
An online estate agent’s fees will vary according to the services you ask them to carry out but as a guide you can expect to pay a fixed fee of £250-£500 for basics like listing your property on Rightmove.co.uk and Zoopla.co.uk, taking photos, vetting buyers and helping to negotiate. More labour intensive services like following up with solicitors as the sale progresses and hosting accompanied viewings can increase the fixed fee to the £500-£1000 range.
It’s important to remember that the fewer your requirements are from the online agent, plus the more expensive your property is, the greater the saving you will make.
A key benefit of online agents – especially for those selling higher priced properties – is that the fees are fixed so if you happen to be selling an £800,000 house you will pay the same fee as someone selling a £50,000 flat. This could be seen as logical, after all, the fact that the house is more expensive doesn’t mean that the agent’s job has been harder. Online estate agents would argue that there is no way a high street agent can justify charging £12,000+VAT (1.5%) to the seller of the £800,000 house when it may have required no more work than it took to sell the £50,000 flat for which he would charge £750+VAT. Just because the owner has made more money from the sale, they should not have to line the pockets of the agent, the argument goes.
The high street agent may argue back that the more expensive house requires a more experienced agent to sell it, the higher price tag means they would be delivering a premium service and that they will justify their cost by the extra money they are able to make for the vendor through their skilled negotiating efforts.
Who are the leading online estate agents?
The online estate agency industry is dominated by:
- Purplebricks – Established 2012
- eMoov – Established 2010
- House Network – Established 2004
- Housesimple – Established 2006
- Tepilo – Established 2009
There are several noteworthy mid-sized online estate agents including:
- Urban Sales and Lettings – Established 2005
- My Online Estate Agent – Established 2011
- MyHouseAdvert – Established 2011
There are plenty of others who are smaller because growth has not been as fast as some of the larger agents or they are just starting out and are yet to establish themselves fully in the market. Examples are:
This is a selection of the most successful online agents. Others do exist but have not been listed above for reasons of brevity.
All of the online estate agents featured here are included in our independent price comparison tool, alongside lots more. For details of the prices that each charges for various service packages go to compare prices of online estate agents.
What are you paying for with online agents?
It is established that you could save money – possibly many thousands of pounds in fees – by hiring an online estate agent but you will need to accept that you are almost certainly not paying for a like-for-like service as the high street. With any luck the end result should be the same, in that they can help to sell your property, but you are going to have consider whether you are prepared to roll your sleeves up and take on a bit more of the research, admin and effort in order to save that money.
A vital point to understand is that there is no typical online estate agent – yet. The market is still so new that there are no established service levels, no convention on how to price and package what they do. In short, you are going to have to consider first what you actually require from the agent in order to make sure that you only factor in agents that offer what you need.
As a rule of thumb, if you are prepared to pay a bit more than the bare minimum most online agents will get close to replicating a high street level of service. But there are key differences.
What you probably will get from your online agent
Most online estate agents will offer to take photos of your property but some will make it cheaper if you take your own. If you want a floorplan, most agents are able to provide one for you but it may cost extra. The majority of online agents will also offer a negotiation service, in which they liaise with people making offers and help you decide which one to accept. Likewise a sales progression service (calling solicitors etc.) is something that some, not all, offer – often for an added fee.
What you might get from your online agent
One of the tasks that is most commonly given to a high street agent is conducting viewings, but only a handful of online agents are willing or able to offer this so far.
A low cost online estate agent based for example in the north of England probably won’t have the resources to send an agent to a property at short notice to conduct viewings in London. In this case you have to decide whether you are prepared to run the viewings yourself. It is not complicated to show someone around a property, but will you have the spare time and will you feel comfortable? It’s an important question to consider.
Some of the larger agents do offer a hosted viewings option however, so if showing people around is not something you are prepared to do yourself you should only be considering those few agents. But remember, you will pay more for this service (typically £150-£350 extra – which is still vastly less than via the high street agent).
What you probably won’t get from your online agent
You are not likely to find an online agent that has a current database of active local buyers or in-depth knowledge of your local area, let alone your neighbourhood or road. Their nationwide coverage makes them too broad.
When you get a valuation from a high street agent, you expect it to be based on him or her spending months or even years of working in that area, accumulating knowledge about what roads are the most appealing to buyers and how factors like proximity to a good local school might make a difference to the price.
You also expect that they will have a list of people who want to buy in your area and can contact them to persuade some to view your property.
There is no denying that these two local factors are advantages that high street agents have over their online competitors.
On the other hand, an agent’s local knowledge does not in any way mean he or she is able to predict what price your property will end up selling for. They can sometimes influence buyers but they have no more definitive control over the number and level of offers you receive than you do.
If you are considering using an online estate agent, think about how confident you are at setting an asking price yourself. You may want to do some online research on the main property sales websites, which will list ‘sold for’ prices at a street level. But these historical sold prices (gleaned from the Land Registry) may be no longer relevant to the present market, so the most effective way can be to look at what others in the area are asking for similar sized properties on Rightmove.co.uk and Zoopla.co.uk .
Soon you will get a feeling for the kind of levels you will want to be considering, and then talk to some online agents, many of which have valuation advisers, and use their automated tools to see if they agree with your pricing.
How about just asking some high street agents to come over for a free valuation and then putting it with an online agent? If you are genuinely willing to consider the high street agent as an option too, then it would be legitimate to hear what they have to say – part of which would include receiving a valuation. The upshot is that he or she gets the chance to pitch to you, you get a valuation into the bargain and then you make up your mind if you are going with the high street or online.
Finally, don’t forget you can always alter the price up or down after its listed online and you are not obliged to accept any offers. So if in the first week you get several offers at asking price or above chances are you have priced it a little low. No problem, you could now have a bidding war for your property and with help from an online agent’s negotiator you should be able to get a great price. Alternatively, if you have no offers after a few weeks, the chances are your asking price is too ambitious and you can reduce it.
On the question of the local buyer database, there is no doubt that this is an ace up the sleeve of the high street agent. The option to call so called ‘hot buyers’ and get them in to view your property gives them an edge. But the chances are that most of those serious buyers are also looking at the internet portals that an online agent will be listing you on, so in the end most of the right buyers will probably discover your property. It just might take a little longer for them to do so in some cases.
The bottom line on online agents
Whether you want to go with an online agent or your local high street agent is going to depend on several factors, including the price of your property; the commission rates you are being offered; whether you are prepared to do some of the work yourself and whether you can find an online agent that convinces you they are worth signing up with.
One thing seems certain – with potentially thousands of pounds to be saved, it is going to be a tempting proposition for more and more UK home sellers in the coming years.