It has certainly been a difficult time for online estate agencies, with one major company closing and a second seeking new ownership. Even the market leader Purplebricks which has achieved so much since its conception in 2012, has seen its share value slashed from £5.00 to £2.00. Nevertheless, 9% of house buyers still begin their search online and 28% of house sellers prefer to use an online agent for one big reason – fixed upfront fees.
Selling Your House with an Online Agent
House sellers like the idea of paying a fixed fee in advance when their house goes on the market. Sellers with larger and more valuable properties particularly like this idea. They have worked long and hard to buy the property, so why should they be charged huge commission to sell it? If they are selling a £400,000 house using a traditional estate agent, they will be charged nearly double the commission paid by a seller with a property worth £200,000 and of course, they will not be getting double the service!
A traditional estate agency charges on average, 1.5 % to 2% of the market price of a property and then whacks VAT on the figure so if for example you are selling a property worth £800,000 a huge £19,200 with VAT could be going to the agent – compared with about £1,200 that the online agency charges.
Many house sellers feel that some traditional estate agencies do not put enough effort into trying to sell their property. They feel that agents often do not market the property properly nor do they actively try and sell the property when they conduct a viewing. Using an online agency has its advantages because your property can be viewed online by countless people and a virtual tour can be taken by a potential buyer, miles away, from the comfort of their armchair.
House sellers often feel that their property has been overvalued by their estate agent who of course works on commission. Whilst it may sound nice that the property has a higher value than the owner originally thought, it can work against them as the property will not sell speedily and just 'stick' on the market.
The Internet and Online Estate Agencies
Without a doubt, the internet has totally changed our lives and the way we do business and interact. Real estate has been one of the industries that has been hardest hit. House hunting has changed completely as the internet offers you the chance to view countless properties of all shapes and sizes in a myriad of locations – without stepping outside your front door! Can you imagine the time and money saved as traditionally, house buyers had to visit numerous estate agencies to see just a portion of the selection now available online.
Having said that, there are still many house sellers who lack the time or the confidence to sell their property using an online agency. They would prefer to work with an estate agency who can help them every step of the way and handle all aspects such as advertising and viewings. These sellers are prepared to pay for the service of a traditional estate agent - but a fair price. There is a 'fudging of the lines in services offered as some online estate agencies are using 'hybrid techniques' that mean that a 'property expert' will visit the house seller at home and offer all the traditional services such as a photographing the property, but the vendor must conduct all the viewings themselves.
Whilst most of the 'fixed fee' agents are currently online agents, a few smart traditional estate agents are now binning percentage commissions in favour of fixed fee. They are also completely overhauling their websites to ensure that they are easy to navigate and kept really current. They are offering their clients extra services like property dressing and 'virtual tours' that have both been proven to work. These agents are definitely being extra smart because both buyers and sellers definitely appreciate the fixed fee angle but at the end of the day, they prefer the human touch and feel that it is an advantage to work with a personable estate agent who really does seem to be taking an interest in them and personally overseeing their purchase or sale.
Will Online Estate Agencies Recover?
At the end of the day, the online estate agencies are starting to flourish again because they hold such a trump card with 'fixed upfront fee charges' but this has served to give the industry a much needed 'shake up' and has made estate agents overhaul the way in which they operate and review how they charge their clients and the type of service they give.
There is definitely room in the market for both types of estate agencies and may the best ones win.