Why Online Estate Agents Save Money, But Could Cost You A Fortune

Categories Property, Selling

If you are in the market to sell your property, it’s hard to escape the high budget national advertising for the country’s leading ‘online only estate agents’ – but the question remains, does it really make good financial sense?

As a leading High Street estate agent in Surrey, we valued more than £3.5bn worth of properties in the last year – on these 5000+ valuation appointments, we have spoken to hundreds of potential sellers who are considering using an online only estate agent.

We get asked time and time again, “As a seller can you really save thousands of pounds by using an online only estate agent?”

In truth competition in any marketplace is a good thing. Online only estate agents have forced the traditional High Street estate agent to take a fresh look at the service they offer their customers to make sure we are keeping up with current consumer trends and how customers prefer to communicate online. But does it really make good financial sense?

Here, we tell the story of two homeowners, who each chose a different route to selling, so in the end you can make your own mind up about the benefits of an online only estate agent vs a High Street estate agent.

The Online Only Estate Agent

The two sellers in our story live in identical 3 bedroom semi-detached houses on the same road.  Our first sellers, Mr & Mrs DIY, decided to use an online only estate agent to sell their home. Here is their experience…

What Is An Online Only Estate Agent?

The definition of an online only estate agent as provided by the consumer website Which? is:

Online only estate agencies are run via websites and call centres, they tend to offer a more basic service than you would receive from a high-street agent… Online-only estate agents require the seller to do most of the work themselves, from taking photos and creating an advert to handling buyer enquiries, conducting viewings and negotiating offers.

The Valuation Appointment

Mr & Mrs DIY had seen the TV advertising and liked the idea that they could save thousands of pounds in estate agency fees with an online only estate agent. They went online and quickly booked a valuation of their home via the online only estate agent’s website.

The online only estate agent sent a valuer to Mr & Mrs DIY’s home, who explained the process and the costs involved.

Upfront Fee

Mr & Mrs DIY paid £899.00 up-front to place their home on the market with the online only estate agent, who then arranged for photographs to be taken, a floorplan drawn up and the property was placed on the UK’s leading property portals Rightmove, Zoopla and Prime Location.

Viewings

During the initial appointment, Mr & Mrs DIY were given the option of paying an additional £300 to have the online only estate agent conduct the viewings, but since Mrs DIY was on maternity leave and they didn’t want the extra expense, they decided that she would save a bit more money and conduct the viewings themselves. Mrs DIY was confident she could talk about the house, the local area and the neighbours to potential buyers.

Mr & Mrs DIY were given access to the online only estate agent’s website portal, where potential buyers could message Mr & Mrs DIY directly to arrange a convenient time to view.

Before meeting the potential buyers, Mr & Mrs DIY have no concrete information on who they have arranged to allow into their home.

Mr & Mrs DIY would show potential buyers around their home themselves and feedback from buyers about their home could be accessed by logging in to the online only estate agents website, provided the potential buyers choose to leave comments.

If any of the buyers were interested in purchasing the property, this was also done exclusively online with offers presented to Mr & Mrs DIY through the online portal for them to accept or decline.

The High Street Estate Agent

Our second homeowners, Mr & Mrs Long-Game live in the same street, in an identical house to Mr & Mrs DIY.  The key difference in our story is that Mr & Mrs Long-Game decided to sell their home with a traditional High Street estate agent.

The Valuation Appointment

Mr & Mrs Long-Game called their local estate agent to book a consultation. The process was quick, easy and free to arrange and shortly after the Manager of the local High Street estate agency branch, came to Mr & Mrs Long-Game’s home to talk to them about their objectives and to offer an opinion on the sale price.

The Asking Price

Mr & Mrs Long-Game’s home was valued at exactly the same amount as Mr & Mrs DIY with an asking price of £600,000.

On the initial appointment, the High Street estate agent explained that they charge a fee of 1.5% of the final sale price for their service.  This meant that at the end of the transaction and only when the property has successfully sold, Mr & Mrs Long-Game would pay the High Street estate agent £9,000 +VAT assuming the full asking price is achieved.  If the property did not end up selling, there would be no fee to pay.

Viewings

Before the property was placed on the market, the entire team of sales negotiators from their local High Street estate agency branch visited Mr & Mrs Long-Game’s home, so they all had first-hand experience of the property and could personally convey it’s appeal when speaking to potential buyers and actively generating viewings.

High Street estate agents invest a lot of time into maintaining a list of potential buyers, so that when they started marketing Mr & Mrs Long-Game’s home, they had a database of buyers to immediately contact about the property.  In contrast to the online agent who would have been entirely dependent on buyers coming from online advertising.

Online advertising is still an important tool for the High Street estate agents like ourselves, which is why we also invest heavily in online advertising to put properties on Rightmove, Zoopla, Prime Location, but also leading property websites such as OnTheMarket.com, CountryLife.co.uk and our own website.

Research from The Advisory – an independent consumer advice group for house sellers, says that High Street estate agents generate 48% more viewings because they are not so dependent on online advertising to attract buyers.

A standard part of the service provided and included in the final fee, Curchods accompany 100% of our viewing appointments.

Mr & Mrs Long-Game are both working professionals with busy lives and so appreciated not having to take time off work to conduct the viewings themselves.

This means one of our experienced staff can actively ‘sell’ your property and afterwards, a member of our sales team will follow up with a call to the owner to talk you through the viewing feedback provided by the prospective buyer.

Better Quality Buyers

When buyers contact the High Street estate agent to arrange a viewing of Mr & Mrs Long-Game’s home, the High Street estate agent will qualify their position before the viewing is booked. This assessment process means the High Street estate agent will interview the buyer, find out if they have a house to sell themselves and so understand their timescale for moving, find out what their financial position is to understand if they can actually afford the property.  The High Street estate agent will verify the potential buyers for security reasons.

This qualification process conducted by the High Street estate agent means that the only buyers that view Mr & Mrs Long-Game’s home in person are of sufficient quality to be able to proceed, making the process much more targetted and more efficient.

In contrast, remember Mr & Mrs DIY’s experience – booking the viewings direct with potential buyers through an online portal, Mr & Mrs DIY do not have any concrete information about who they are inviting into their home or how able they are to purchase the property.

Negotiating The Best Price

The High Street estate agent has the incentive to achieve a higher price, because their fee goes up the more money they sell the property for.

In contrast, online only estate agents that take their fee upfront, have no involvement in trying to negotiate a better price for their client.

In 73% of cases, buyers introduced by High Street estate agents are willing to pay on average 5% more than buyers generated by online only estate agents.

– Source The Advisory

For ease of working out the final sums, we are going to make the assumption that the High Street estate agent achieved the full asking price for Mr & Mrs Long-Game’s home and the sale was agreed at £600,000.

Working with the statistic provided by The Advisory, the sale figure achieved by the online only estate agent is 5% less than the High Street estate agent at £570,000.

The Final Sums

Let’s take a look at who benefitted the most.

Online Only Agent High Street Agent
Valuation Appointment £0.00 £0.00
Upfront Fee £899.00 £0.00
Sale Price £570,000.00 £600,000.00
% of sale price paid on completion 0% 1.5%
Total Fees £899.00 £9,000.00 +VAT
Walkaway Figure £569,101.00 £589,200.00

Using the research conducted by The Advisory, the independent consumer advice group for house sellers, we have shown that in this example Mr & Mrs Long-Game were £20,099.00 better off by using their local High Street estate agent.

The fee they paid their estate agent may have been higher, but Mr & Mrs Long-Game reaped the financial benefit when their property was sold.

 

An Overview

Below we have outlined the process in visual form to demonstrate who is responsible for conducting each part of the process.

 

This report has been created from data produced by The Advisory.  The latest guide is available here: https://www.theadvisory.co.uk/estate-agents/online-vs-high-street/

Its methodology is at: https://www.theadvisory.co.uk/estate-agents/online-vs-high-street/#anchor-7

 

Contributors

Graeme Wadhams – Marketing Manager