In the UK (and most places I suppose) we sell our houses through an estate agent. We always have done. We find an agent, they put up a for sale board, put our property up in their window, handle viewings and negotiations and charge 2% commission, which is around £16,000 based on the current average house price.
In the last 20 years the internet has become a massive part of selling and buying property. In fact, according to the Advisory 2 out of 3 homebuyers in the UK have found their home on Rightmove.co.uk, which is the largest property website in the country. It also says that 97% of all properties for sale in the UK are listed on the big 5 websites, Rightmove, Find a Property, PropertyFinder, Primelocation and Fish 4 Homes.
The internet has also opened up the possibility of selling your home privately, and thereby saving the 2% commission. But this comes with one problem. With the exception of Fish 4 Homes, which is the smallest of the sites listed above in terms of traffic, none of those sites allow private sellers to list their property; they provide an exclusive service to estate agents. This is because estate agents are their main income source, but also because estate agents are legally bound to provide accurate information about a property, which is better for their users.
If you don't list on those 4 biggest sites then you really aren't giving yourself the best chance of selling for the best price. So we are stuck with using estate agents and forking over 2% of our hard earned sale price, right? Wrong. The internet also gave birth to a new breed of estate agent, online estate agents. These guys can list on all the big property portals, but charge a fixed fee, which ranges from £400-£1500.
Online estate agents are so much cheaper because of their vastly different business model. A Comscore report in 2010 found that 90% of UK home buyers were searching online, while 5% would visit a high street estate agent. Online estate agents focus on internet selling, they work from a central office, have no high street offices, and because they don't do accompanied viewings they do not have the expense of company cars or travelling expenses. All the agents work from the central office and concentrate on effectively marketing properties using the internet.
So, all you lose out on when choosing an online estate agent really, is their valuation, for sale board and accompanied viewings. But with most online estate agents you can tag on additional services and products, including valuations, and for sale boards, but not accompanied viewings. So you lose out on comparatively little given the huge financial saving. At a time when house prices are struggling, being able to save 2% can make all the difference, so right now online estate agents are growing massively. Time will tell if they can be the future of the industry.
- Wednesday 11 April 2012