Online estate agents have become increasingly popular among house sellers in recent years as their low prices have attracted people keen to reduce the cost of moving home.
The savings can be significant. While many online estate agents charge a flat-fee of approximately £800-£900 to sell a home, traditional agents charge a percentage of the property’s sale value.
This on average is 1.42% or, based on the UK average house price of £254,624, a fee of £3,616, including VAT.
But although they’re cheap, do they offer value for money? Here we explore the key considerations if you’re thinking about using one.
What is an online estate agency?
There’s plenty to consider when choosing an estate agent. Before we delve into the issues, it’s vital to explain that there are two types of online estate agent. The most popular and successful are called hybrid estate agents because they are similar to traditional ones, but do not have high street offices. Both allow buyers to find your house online.
The other type is the online-only agent. These do not have local staff or branches and operate entirely online offering some support via call-centres. But they provide only upload services to the big property portals and often the house seller is then left to fend for themselves. This includes a property valuation or floor plan, for example. But these are usually the cheapest of the two kinds of online agent, charging as low as £400 for their service.
But most of the well-known online estate agents, like Purplebricks, is a hybrid. Many buyers start their property search in places such as this. A search online is often the first step in the journey.
What do they do that’s different to a traditional estate agency, and how are they so cheap?
Hybrid estate agents
These have local representatives on the ground who are usually self employed and whose role is to value homes, gain instructions from sellers, take pictures, write property descriptions and be the ‘face’ of the company. The rest of the process after a buyer has been found is completed by call centre staff or via mobile phone apps or a website.
Most traditional agents have branches on high streets that are staffed by employees who look after the sale progression both face-to-face and on the phone.
How can hybrid estate agents be so cheap?
Hybrids claim that by stripping out the cost of high street estate agents and their armies of local staff, the cost savings can be passed on to the seller. Many advertise that they could ‘save you thousands’.
They also claim that by moving a lot of the paperwork and communication online, cost savings are also possible. Therefore, you might be tempted to list your property with one.
Using One to Sell Your Property
But hybrid agents only do the easy bit of selling your house – i.e. finding a buyer – because like traditional agents they upload your property to the big portals like Zoopla or Rightmove, helping generate interest from buyers.
Often, the most difficult part of selling a home is after an offer is made by a buyer. Price negotiations can be prolonged and require sensitivity and patience, and agents also liaise with surveyors, lenders and solicitors to get an offer across the line and turn it into a sale.
One criticism of hybrid estate agents is that although they are good at finding buyers for your home, they can prove less efficient at the later stages of progressing the sale.
But if you have the time and inclination to do more of the donkey work after an offer has been received, then hybrid estate agents are one way to cut down the costs of selling your home.
Which are the most well-known hybrid and online-only estate agents?
Do online estate agents have hidden charges?
In a word, yes. Whilst they may offer a fixed-fees service in their advertising, you should be careful to check for any potential hidden costs such as extra charges to accompany viewings of your property. This is something traditional estate agents do as part of their service for free. Some traditional agents will provide a free valuation also, while many online ones won’t.
Some hybrid and also online estate agents charge their fees up-front rather than on completion, as traditional estate agents do.
No sale no fee isn’t always provided. Critics argue that this means you’re paying for a service that you have yet to receive and that, should your home struggle to find a buyer, it’s a lot of money to pay for failure. Traditional agents, although they charge a lot more, only bill the seller after the property has sold.
Get the location right
You may think you’ve found your dream home, but it’s important to know the facts. This is the place you’ll be living for the foreseeable future, so make sure it’s all it claims to be.
Phil Spencer’s Property Report will detail everything you need to know about the property and its surrounding area. Get your report below.
Last Updated: July 30th, 2021