Pros and Cons of Online Estate Agents

04/10/2017
The primary draw for using an online estate agent has always been the seemingly huge savings that can be made on the costs of selling. Many online agents advertise fixed fees from £250 to £1,600, whereas the conventional high street estate agent's fee ranges from 1 to 3% of the sale price. This has left many sellers thinking what does the high street estate agent do for this that an online estate agent doesn't - especially as 90% of property searches are online.

Although at face value the saving on the estate agent's fees are considerable, there are cons to using an online estate agent to sell your property and even to buying from a seller who is using an online agent. This article examines these for you. You may also like to read our other article - How to Successfully Negotiate with your Buyer/Seller.

Be careful what you verbally agree with the buyer/seller
With no high street estate agent in the middle, both buyer and seller can freely communicate, often agreeing to things that if not agreed through their solicitor could leave them exposed if either party fails to keep their side of the agreement. We will examine this and all the other pros and cons in our article below.

As well as reading our top 5 Pros & top 5 Cons, you should also read our FAQs at the bottom of the article which include:

  • Who is the best online estate agent?
  • When do you pay for your online estate agent's fee?
  • What does a high street estate agent do that an online estate agent doesn't?
  • Do online estate agents value your property?
  • Are there hidden fees?
  • Could high street estate agents disappear completely like travel agents did?
  • Who completes the EPC?
  • Who takes the photos?

Give us a call if you need any advice regarding your online estate agent or if you want a conveyancing solicitor to help you with your sale or purchase - 0333 344 3234 (local call charges apply).

* No Sale No Fee - On All Mortgage Lender Panels - Friendly & Professional Service

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What are the Top 5 Pros of using an online estate agent?


    1
    Saving on the estate agent's fees
Many high street estate agents charge a percentage of the sale price and the percentage can range from 1 to 3% plus VAT. One of the key reasons sellers use online estate agents is that they have moved away from a percentage on sale fee to a fixed fee, either part paid upfront, or fully payable on completion. If paid upfront the online estate agent's fee is often cheaper, however this seems to vary also depending on the different services that they include or exclude.

An example of the savings gained by using an online estate agent
A high street estate agent levying a 2% fee to sell a £250,000 property would charge you £6,000 (£5,000 + VAT). Purple Bricks charge a fee of £849 (or £1,199 in London) which can either be paid on completion or after 10 months). You save £5,151 (or £4,801 in London) (1).

(1) Data sourced from Purple Bricks as at date of article.

 

    2
    You market your own property
Sellers are often frustrated when they have an estate agent conducting the viewing of their home and they don't know the 'ins and outs' of the property and the surrounding area. This often puts buyers off when they ask questions but don't get accurate answers. When using an online estate agent, you are in control of conducting the viewings with the buyer and can sell your home the way you want to sell it (this can be a con as well but we'll come onto this later).

There are some online estate agents like Settled who include arranging for viewings within their fee so make sure to check.


    3
    Your home is more secure
High street estate agents normally hold keys on behalf of the seller allowing them access to the property for viewings and for surveys. Some sellers are fearful of what could happen to their property during a viewing while they are not there. There is also a question over whether the property is insured for loss of contents if keys are left with the estate agent in their office. This is not an issue if you conduct your own viewings as you are not giving your keys/access to anyone else.


    4
    Convenience and speed
A seller can register their property with a few clicks and the online estate agent lists the property for you. Purple Bricks advertise that your listing becomes live within 48 hours. Depending on the online estate agent, the property is then normally listed on their website and some of the other property selling portals such as Rightmove and Zoopla.


    5
    Flexibility
Sellers are becoming more tech savvy and want to sell their own property in their own way. Online videos, high res photos and digital tours can all be created by the seller themselves to save paying the estate agent to do it for them. Online estate agents are acutely aware of this and allow the seller to choose the added extras they offer.

These are some of the things that are often offered as extras (check as some may be included):

  • Floorplans
  • Photographs
  • EPC - Energy Performance Certificate
  • Accompanied viewings
  • Virtual tour
  • Premium listings

What are the Top 5 Cons of using an online estate agent?


    1
    Beware any verbal agreements with the seller/buyer
With high street estate agents, there is normally very limited communication between buyer and seller as negotiation is invariably through the agent. This is different with online estate agents because buyers and sellers talk directly to each other. This can feel like a great idea as you don’t have a middleman in between you, getting in the way and slowing down the process.

The challenge however is you don't have the estate agent to manage the volume of communication (an overeager buyer/seller could call or email many times each day) or regulate what is being verbally agreed between the buyer and seller.

For example, Jane is buying a property from Michael. During the viewing Michael verbally confirmed he is going to leave all of the white goods in the property as part of the sale price. When Jane gets the Fittings and Contents form she notices that the white goods aren't included. Jane speaks to Michael that night and Michael confirms that the forms are wrong and he is going to leave them in the property. 

After completion the white goods aren't in the property, Jane informs Michael and Michael informs her he had changed his mind and kept the items. Although Jane could pursue this further, if there had been an estate agent managing communications they would have been aware that the verbal agreements required formalising through the conveyancing solicitors.


A further challenge buyers/sellers may have when there is no estate agent in the middle are unreasonable requests relating to price negotiations. Although buyers and sellers negotiate through their high street estate agent, the agent can help mediate if there is a challenge that either party doesn't agree to the change in price. Without an estate agent to support with their experience of the housing market in the local area, buyers and sellers could hit a serious stumbling block here.

Sellers especially benefit from having an experienced estate agent on their side especially if the buyer makes unreasonable requests. The estate agent can help the seller understand what they have to do and what they are not obliged to do.


    2
    Fixed costs but with lots of extras
The often low online estate agent's fee is a draw, however it often doesn't include things that are a necessity to sell your property quickly and for the largest sum of money. An example of this is My Online Estate Agent who charge a fixed fee of £395 to market the property online, however you have to pay extra if you require any of the following items:

  • For sale board
  • Professional photographs
  • Description of the property
  • Floor plan
  • EPC (required by law before you can sell your property)
  • Virtual tour
Some sellers prefer to know an exactly how much it's going to cost to sell their home as quickly as possible for the largest possible financial return.


    3
    Payment upfront, or it costs more
Many online estate agents offer flexible payment terms, however they often charge more if you opt to pay on completion. To get the cheapest online estate agent's fee you need to pay for the service upfront but risk not finding a buyer. An example of this is House Simple who charge £595 upfront, or £695 if paid on completion or after 6 months (1).


    4
    Inexperience in selling or buying
We touched on this a little before, however you are unlikely to be an experienced buyer or seller unless you are a developer who buys and sells multiple properties each month. The process is complicated and full of twists and turns. Without an estate agent in the middle you can often be faced with making decisions based on your own limited knowledge and a solicitor whom you either can't get hold of or who won't give you their opinion (for fear of being 'on the hook' if everything goes wrong).


    5
    No 'No Sale No Fee' Online Estate Agents!
Most high street estate agents work on a no sale no fee which means they absorb all of the costs of valuing, marketing, registering on Zoopla/Rightmove and the photographs if you fail to sell your property. There are very few online estate agents who offer a no sale no fee and most often they state a minimum fee within their terms and conditions that is payable if you do not sell your property.

FAQs about using an Online Estate Agent


Who is the best online estate agent?

People normally rate online estate agents in terms of how quickly they found a buyer and the selling price they achieved. As so much depends on the location of a property, these measurements are unreliable at best when deciding which online estate agent to use.

That said, many previous customers have given their opinions on the online estate agent they used on various review websites. It's currently clear that, based on the volume and quality of the reviews, the highest regarded online estate agent is Purple Bricks. Here is a list of of the most highly rated online estate agents in order of their online review rating (as at publishing date):

  • Purple Bricks - 27,541 reviews 9.5 out of 10 stars on Trust Pilot
  • Settled- 102 reviews 9.4 out of 10 stars on Trust Pilot
  • Yopa- 1,185 reviews 9.3 out of 10 stars on Trust Pilot
  • House Network - 946 reviews 9.3 out of 10 stars on Trust Pilot
  • Emoov - 987 reviews 9.3 out of 10 stars on Trust Pilot
  • House Simple - 90 reviews 4.4 out of 5 stars on Trust Pilot
  • Hatched - 717 reviews 8 out of 10 stars on Trust Pilot
  • Easyproperty - 454 reviews 7.9 out of 10 stars on Trust Pilot
  • My Online Estate Agent - 121 reviews 6.9 out of 10 stars on Trust Pilot
  • Tepilo - 1,209 reviews 9 out of 10 stars on Trust Pilot

There are, however, many many more online estate agents developing a reputation, some of which specialise in a particular area, such as Love Your Postcode, which concentrates on the Birmingham area, and which has already garnered 297 reviews at 9.7 out of 10 stars on Trust Pilot.

When do you pay your online estate agent's fees?

As discussed above, you have options regarding when you pay your online estate agent's fees; you can opt to pay the entire sum upfront or pay an initial deposit and the balance on completion or 6 months later. You generally pay more fees in total if you don't pay them all at the start of the process.

What does a high street do that an online estate agent doesn't?

As we have seen above, one of the key things a high street estate agent includes as standard within their service is to handle all viewings. They often include the cost of the EPC within their fee, although some don't and charge an additional fee for organising this (which is the case for online estate agents).

Do online estate agents value your property?

Yes. The majority of online estate agents will value the property for you, either through a local agent viewing it or using online valuing tools.

Are there hidden fees?

Online estate agents offer a variety of added extras which you can choose from however these come at a cost. You should make sure to read through your online estate agent's terms and conditions before signing any contract to ensure you know:

  • the full cost for selling the property;
  • the cost for any additional items;
  • the cancellation policy; and
  • what you are liable for if the property sells or doesn't sell

Could high street estate agents disappear completely like travel agents did?

There are a number of clients who wish to physically see their estate agent and work with them to handle the sale of perhaps the most expensive asset they've ever owned. This makes it unlikely that the larger high street estate agents will fade away altogether, but the increasing online competition may eventually make it very difficult for smaller high street estate agents to compete and survive in business.

Who completes the EPC?

The Energy Performance Certificate is completed by a local assessor. The costs vary from £50 to £150 INC VAT. You may not need to pay for an EPC if one has already been completed  for the property within the last 10 years. You can check to see if there is an EPC on your property by clicking here - Retrieve an Energy Performance Certificate.

Who takes the photos?

Depending on your online estate agent you can either provide your own photos or they send round a professional photographer to take them. Be careful as getting professional photos taken can come at a considerable extra cost.

As discussed above, there are various pros and cons of online estate agents. Give us a call if you need any help with your online estate agent or if you want a conveyancing solicitor to help you with the sale or purchase - 0333 344 3234 (local call charges apply).


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