More home owners are using online estate agents; in fact, according to a recent survey by Zoopla, 24 per cent of homeowners used an online estate agent to try to sell their home last year, which is double the number of just five years ago. What's behind this shift, and is opting for an online estate agent the best move for you? We submit both types of estate agents to a detailed analysis to give you our verdict.
Need more advice on selling your home? Find out how to sell a house in our guide.
How do online estate agents work?
Online estate agents all have the same basic structure as high street agents, though different individual agents will offer add-ons at an additional cost that, at least in theory, will increase your chances of selling your home. The online agent will:
- evaluate your home;
- take photos ;
- create a listing that will be displayed on major property websites such as Zoopla and Rightmove;
- they will respond to queries regarding your property, though you will typically have to conduct viewings yourself.
Optional extras offered by online estate agents
These may include a physical 'for sale' sign outside your property, premium adverts on property websites that will make your property more visible, or the estate agent conducting viewings on your behalf, which technically makes them a 'hybrid' estate agent – that is, an agent that provides some of the services normally performed by a high street estate agent.
Unlike the traditional 'no-sell, no-fee' model used by traditional estate agents, online platforms require a fixed fee of between £300 to £1,500, either upfront or payable after a certain period of time (typically within 12 months of signing up), regardless of whether your property sells or not.
Do online agents fulfil their promise?
This last condition of paying whether or not your property sells has been the subject of much discussion about whether online estate agents put in quite as much of an effort into trying to sell your home as traditional, high street agents.
There have been reports from people who have used online estate agents about a lack of communication after the initial sign-up, and, more worryingly, about hardly getting any viewings despite being advertised on all major property websites (although the same could be said about some traditional high street estate agents).
How can this be, given that as many as 98 per cent of prospective home buyers begin their search on Rightmove or Zoopla? Well, the answer partly lies in our misconceptions about the role of these property websites in selling your home.
Why relying on online estate agents can mean missed opportunities
Some property experts and estate agents have been pointing to the fact that advertising a property is only the first step in selling your home, and far from guarantees selling at the best price, or even selling at all.
To put it simply, more people view properties online than go on to see them in person, and lots of people end up dismissing properties that could be suitable simply because the home didn't seem attractive from the photos, or didn't match their expectations of their ideal home.
This is a Tinder-like effect – with so much choice and so little time, people don't give properties that don't match all of their criteria enough thought. So, if you are selling a good property that doesn't look like a dream online, you might find a lack of interest from buyers. The lesson here is, of course, that if you're selling online only, good pictures are of utmost importance.
Check and compare your online valuation carefully
More worryingly, some customers report having their homes overvalued by online agents, which puts off potential buyers. Moreover, when the value of the house is then reduced (a common tactic of the less scrupulous online agents), the house becomes less attractive to potential buyers yet again, this time because the price reduction signals a property's undesirability or problems with the home itself. In the end, the home owner could end up losing money, forced to reduce their price even further.
One route is to get a valuation by a traditional estate agent before you put your property up for sale with an online agent, although that's a somewhat cynical move. Another option is to consult Land Registry records for your area to get a very good sense of what you could realistically get for your property. Trying to sell at an inflated price via an online agent is likely to lose you money in the long run, negating any savings made with the fixed fee.
How popular are online estate agents?
There is no straightforward answer to this question; or rather, while the interest in online agents is currently high, the actual share of house sales by online estate agents remains quite low at five per cent.
Forty six per cent of Zoopla users now say they might consider using an online agent next time they're looking to sell, but this does not translate into an actual volume of sales by online agents. In fact, there is some evidence that online agents have higher rates of no sells in comparison to traditional agents, and that traditional agents tend to secure more viewing and better prices for their customers. We discuss the reasons for this below.
What are the benefits of using a high street estate agent?
Traditional high street estate agents cost more than online agents, and that's a fact. A high street agent will charge anywhere between one and 3.5 percent of the total price of the property, making them an expensive option, especially if your home is worth a lot. However, there are several benefits to the way high-street agents operate that can make this expense well worth it:
- Local expertise: it is true that some online agents now have regional managers and 'local experts'; but, in the case of tradtional, full-service agents, local expertise translates into more physical viewings of more properties. For example, an estate agent may convince a prospective buyer to view a property they hadn't considered, or they may suggest a property in a nearby area that the buyer will like, but didn't know about. This way, you, the home seller, may get prospective buyers you didn't know you could get, in indirect ways.
- The incentive and skills to negotiate a higher price: estate agents are professional sales people (as opposed to advertisers) and know the techniques for making a property desirable to multiple prospective buyers. In the best-case scenario, they can generate a bidding war for your property (something online agents will unlikely to be able to do).
- The incentive to sell your home quickly: It is in a high-street agent's best interest to sell your home at the best possible price within a reasonable time frame, which is invaluable if you are looking to move house quickly. Many customers report selling their home with a traditional agent within weeks after getting little interest in their property for months with an online agent.
Online estate agents versus traditional estate agents: our verdict
Ultimately, whether you choose to sell your home with an online agent, or a traditional agent, is a decision that should be made only when you feel confident of these three things:
- Be informed: make sure you gather as much information as you can about an estate agent you are planning to use, whether online or high street. An online agent will probably be better if your local agent has a bad reputation, as at least you'll pay an online agent less; however, be wary of online agents that have been reported as not making sales or having poor communication.
- Be realistic about your property: is your property newly refurbished, in a prime location, and looking amazing in photos? Provided you've done an evaluation, you may well be good to go with an online agent. If, on the other hand, your home has an unusual layout, is a doer-upper, or is in an area that not many people know about, a traditional agent is a must.
- Be honest about what you can do: if you already have experience selling a home, know how to conduct viewings, and are basically prepared to do some, or even much of the negotiating work yourself, then an online agent is a low-risk undertaking for you; you can even think about it as handy advertising that will then help you sell your home. If you are a first-time seller, and especially if you foresee any potential complications to the sale of your property, or need to sell quickly, save yourself the work and stress, and go with a traditional agent.
And, what with Brexit putting the fear in home owners, get expert advice on how to sell your home in a buyer's market.