Online services offer cheaper deals, but do they provide the value of a high street agent?
Good photography can help to sell a home as it did for this £80 million terrace house in Regent’s Park.
The great irony of selling your house is that you will likely pay your estate agent more than your solicitor. Average conveyancing packages cost about £850, plus extras such as Land Registry fees and searches, according to the property website reallymoving.com. The average high street estate agent commission demands 1.3 per cent of the sale price, says the consumer organisation Which?.
On the average UK house sales price of £216,750 (Land Registry figure), you will pay an agent £2,818, plus VAT at 20 per cent, making a total of £3,382. Bear in mind too that this is the average; commission can range from less than 1 per cent to 3.5 per cent, depending on your location and the type of agency you choose. A high-end prime London company with an expensive office to maintain will charge more than a provincial chain competing with other provincial chains in the same patch.
What you have to factor in to the equation of how to sell your home is a quality beyond the reach of hard cash — the skill of the property professional. With more than a quarter of transactions falling through before completion, according to the property investment company Quick Move Now, you need a dedicated individual who can chivvy buyers and close offers on your behalf. If you are lucky enough to find one, their price should be above rubies.
Some high street estate agents are dropping their commission to as little as 1 per cent, says Stephen Hayter, the sales director of the online conveyancer myhomemove.com. Hayter has conducted research on estate agency fees for the trade website propertyindustryeye.com and has found discounting is rife. In 2015, using invoices settled by his company, he found that more than 30 per cent of all transactions were achieved on a commission of less than 1 per cent, and 1 in 16 were for less than 0.75 per cent.
At the other end of the scale, premium agencies, promising an enhanced service for marketing unusual or upscale homes, are at the top of, or above, the average rate, but usually deliver services such as photography as part of the deal.
A plus point of using a traditional agent is that you don’t have to pay anything upfront, so if finances are tight you can use some of the proceeds of your house sale to settle the bill. And the final fee you pay is dependent on the price achieved, so the blow of taking a lower offer can be softened (slightly).
However, the commission system is under attack. Online agencies offering a tempting pay now/pay later flat fee are forcing traditional estate agencies to consider whether they will lose vendors tempted by online sales packages of less than £800. “Sellers that I have spoken to don’t see why the agent should make several thousand pounds of commission when they only pay their solicitor a £500 to £2,000 fixed fee,” says Oliver Lewis, the director of sellingup.com, an online estate agency comparison site.
This six-bedroom house in Bury St Edmunds, Suffolk, is £845,000 with Carter Jonas
Flat fees could become a key issue for estate agencies. Anticipating the trend is the London agent Christian Thomas. He has set up his own company, Proper Local, in Canary Wharf, to deal in properties only in the E14 postcode and selling only on a fixed-fee basis.
Thomas has a sliding scale of fixed fees that range from £4,500 plus VAT to £5,500 plus VAT, dependent on the time it takes him to sell a property. He admits that fixing the fee is straightforward in a discrete geographical area because he can base his business model on tight sales data, offering sellers a deal competitive to a typical commission. How this might pan out in a provincial multibranch agency with everything on its books has yet to be tested. However, online agencies are also evolving to attract more customers. The buzzword is “hybrid” — companies that offer multiplatform internet coverage on portals such as Rightmove and Zoopla, plus “local property experts” who are billed as having inside knowledge on your area. Online-only companies typically offer a basic package of services while hybrids are closer in type to a traditional agency, with more input into marketing materials, viewings and general “human interaction”.
“The term ‘online estate agents’ is a bit of a red herring,” says Lewis. “What is driving the growth of this new style of agency, such as Purple Bricks, YOPA [Your Online Property Agent] etc, is the prospect of paying a reasonable fixed fee rather than a commission.”
So how much might this fee be? And what do you get for your money? In short, online exposure, plus the attention of the local property expert to carry out the valuation and conduct viewings.
At Purple Bricks, the fee in London and surrounding areas is £1,199 including VAT, and in the UK, excluding London, £849 including VAT. However, if you want a Purple Bricks local property expert to show prospective buyers around, the viewings package costs
£300 for unlimited appointments. The company reports that instructions are up 121 per cent year on year, so it is becoming a competitive marketplace.
The cheapest way to sell your house of course is to do it yourself. This is where the “For Sale by Owner”websites come in, with companies offering internet-based advertising to those who wish to sell privately.
Be wary of add-ons — in some cases, basics such as sign-boards cost extra. Also watch for “agent creep”, where you end up paying for an online and a high street agent when your property fails to sell. At houseweb.co.uk, a package costs from £195 to £395 dependent on the number of photos allowed, regularity of performance updates, and accompanied viewings. “It is possible to advertise without an agent,” says Mark Desvaux, its managing director. “We print a custom For Sale board with a property ID, which enables people to view a property on HouseWeb and contact the seller directly.”
RISE OF THE VIEWBER ARMY
As a seller or a landlord you need to be confident that anyone who wants to view your property can do so. The problem is that most buyers or tenants want to view a property at the weekend or in the evening after work — when estate agencies are closed.
It is a problem that one company is hoping to resolve. The mission statement of Viewber (viewber.co.uk)— founded by the estate agent Ed Mead and the entrepreneur Marcus de Ferranti — is to make sure no one misses a viewing. To this end, an army of “viewbers” will conduct viewings in place of agents. The viewbers, responsible members of the public, will open up a home and show people around in return for £25 for a maximum of half an hour’s work.
“There are always occasions when viewings are missed,” says Mead, who came up with the idea for the business and recently retired as the executive director of the London-based estate agency Douglas & Gordon. “That missed viewing might have been the one that made an offer.”
Mead is taking an Uber approach to the problem, as echoed in the name; the company has recruited 1,500 viewbers around the country who will show properties that are local to them. Online agents, who may not be based near a property they are selling, are also likely to use the service (one such agency has already signed up).
At present a team is co-ordinating viewbers with viewings, but in three months’ time with the launch of the Viewber app, the process will be automated. A police-approved key-safe outside the property will be installed so viewbers can let people in, and agents and the person looking at the property can rate the viewber.
Six agencies have signed up and five or six viewings a day are taking place around the country. Mead is confident more will follow. Should Viewber be a success, Mead sees other spin-offs: people to walk your dog, wait at home for a delivery, etc. “For local people it’s a way of earning extra cash — they are also the people who will be best able to answer questions about an area,” he says.
The company carries out checks before viewbers are recruited; £1 is sent to their bank account, which they have to send back (banks are fairly rigorous in checking before they issue accounts), they have to have a landline and their social media profile is checked. The company also has insurance to cover any damage a Viewber may do.
Matthew Willis, a 22-year-old graduate who is unemployed, is working for Viewber to earn cash. So far he has done five viewings, all in the same home, a ten-minute drive from his home in Easingwold, North Yorkshire.
“The first time I arrived early and had a look round. I printed off the brochure to give to the client and explained I couldn’t answer any detailed questions,” says Willis.
“I then have a little bit of small talk with them as they look round the property and tell them a bit about the area. It takes half an hour at most. I put the key back in the safe, change the combination and report back to the agent what the people think about the property.”