Assessing the Benefits and Drawbacks of Selling Houses Using an Online Estate Agent
‘I need to sell my house. What are the pros and cons of using an online estate agent?’
Selling houses in the UK is easier than ever. The Internet has made the process of finding a buyer and completing a sale fast, convenient and safe. But by quite a distance, the traditional method of selling via a High Street agent is still the most popular. What has changed in recent years is the level of knowledge amongst owners, who are more likely than ever to assess their options and compare selling the process to find the most cost-effective one for them. A combination of convenience and speed is persuading an increasing number of people to opt for the online route — around five percent at the last count.
The best way to sell a house depends on your personal circumstances. If you are open to being actively involved in the home selling process, the benefits of using an online company are pretty clear. For a start, listing your home online could give it an audience of thousands for less than £500. So if your property is worth more than £100,000, the alternative of between 1 and 3.5% in commission will be a lot more expensive. Although there are other reasons, this is why the majority of people are making the switch to online companies.
When the first online agents emerged, they were little more than Internet ad boards, giving homeowners an instant audience for their property. Now, however, the leading companies offer a range of services to rival their High Street, competitors. Increasingly, online agents are providing a range of premium add-ons and bespoke packages that allow homeowners to pick and choose the help they need to sell a house. And when combined with listings on the likes of Rightmove and Zoopla, these additional services can make house selling a relatively quick and painless experience. Of course, in most cases, going down this route saves people money, which is often crucial to their chances of securing their next home.
Selling a house online brings with it some benefits and drawbacks, and to make the best decision possible, you should consider each of them in detail.
Why online selling is a good idea
Selling your house online is now more accessible than ever, and there are several reasons why it could be the way to go for you.
- It provides transparency
- It’s usually cheaper
- It’s convenient
- It’s flexible
- You can tailor your house selling package
Why online selling might not be the best option for you
- An online estate agent often lack local knowledge
- It involves more legwork from the homeowner
- A lack of incentive could result in a disappointing sale price
- An upfront payment is necessary
In most cases, selling online will be cheaper — but that’s not to say this should be your only consideration. To ensure you choose the right person or service for the job, consider each of the pros and cons in turn.
The advantages of selling houses online
Using an online agent could be the best way to sell your home if financial planning for your next purchase is a priority. Selling with an Internet-based company gives you the transparency of charges. The majority of online services will provide you with a fixed price at the beginning of the process and paid upfront. So regardless of how much your home fetches, you won’t be required to pay any more. If the purchase of your next home relies on a minimum profit from the sale, this transparency in pricing could be critical to you.
Perhaps the most significant benefit of selling online pertains to the cost. In most cases, the more expensive your home is, the more cost-effective selling online becomes. An example highlights the issue:
Imagine the following:
- You’re selling your home for £250,000
- You’ve signed an agreement with a High Street estate agents
- You’ve committed to paying a rate of commission of 1.5%
- You receive the full asking price of £250,000
While it’s great that you’ve sold your house, you’ll get a massive bill for £3,750 within days — money you may have needed for the purchase of your next home. These funds will probably be due within a month, so you can’t put off paying it until after your house purchase has completed.
Now imagine you decided to sell the property online. You agreed to pay an upfront fee of £400 to £700, paid at the very beginning of the process. Whatever you earned from the sale of your home is now yours to pour into your next purchase. This scenario is played out thousands of times every month in the UK, which is why online agents are becoming so popular. Saving more than £2,500 + on the sale of your home might be the difference between securing the home of your dreams and settling for second best.
What could be simpler than sitting with your laptop in the comfort of your home and listing your home for sale? With just a few basic details about your property, some basic property price research from Land Registry and you can reach an audience of thousands in less than an hour.
Most online agents will provide you with tips to sell your home. More hands-on help is available through additional services on offer. You’ll usually have access to a range of online reference material, as well as a telephone number if you need to speak to a real person for advice. And all of this is available outside regular office hours, so regardless of your work and personal commitments, you can manage the sale of your home competently.
Choosing an online agency will give you the opportunity to tailor a house selling package that’s right for you. You can save the maximum amount of money by choosing the simplest listing service. Or if you need help with individual tasks such as property viewings, you can either pick a premium selling package or opt for different add-ons. So whether you want to be free to manage the process yourself or call upon expert know-how as and when you need it, an online agent can help.
If time is of the essence, you might want to use multiple agents to amplify the reach of your home. Most online companies don’t use exclusivity clauses in their service agreements, which means you are free to list your home with as many agencies as you wish. However, this is something that can differ from company to company, so check the small print and get your questions answered before committing to anything.
Your house selling package
Perhaps you think you’re the best person to sell your home. Or maybe you don’t want strangers showing people around your home. The truth is that your personal circumstances dictate exactly which type of house selling service you require. Instead of having to settle for an out-of-the-box package from a High Street agent, an online company gives you the chance to pick and choose the help you need. And in most cases, you’ll only have to pay for the services you request. Creating a bespoke agreement from the outset will make it easier to change things at a later date if your circumstances change.
The disadvantages of selling houses online
An online estate agency may lack local knowledge
There is no substitute for a local estate agent who has a working knowledge of your particular property market. As online agents are usually based remotely, they often don’t have the detailed knowledge that local property professionals offer. With opportunities missed, the full value of the house sold may not reach its full potential.
You may need to do more of the legwork yourself when selling a home using an online agent
Most online agencies will leave much of the house selling work to you. They list your home in their directories and pass on information about prospective buyers, but they don’t get involved in property viewings, negotiations and conveyancing. Of course, some online companies WILL offer these services as part of a premium package or additional service. If you don’t have the time to manage the selling process in its entirety, and you want to rely on someone you’ve met to sell your property, your interests might be best served by a High Street agent. This process is not only complicated, but it is also extremely time-consuming — which may make it impossible for you to manage on your own. Besides, selling with an online real estate agent could leave you with a lot more unwanted stress.
A fixed-price fee may not create an incentive to sell for your agent
One of the reasons why hiring an estate agent to sell a house fast is a cost-effective move is the fact that their commission-based fee increases the rewards in line with the final sale price achieved. In short, the more money the agent secures for your property, the more they get paid. This incentive will ensure that they do everything in their power to achieve the maximum price possible. Unfortunately, the fixed-price fee structure that many online agents use removes this incentive, so you need to be sure that you’ve chosen an Internet-based firm with an excellent reputation amongst previous customers.
But you can still sell a home online and achieve the best possible price. A growing number of Internet-based agents are giving their customers a range of payment options, including pay-as-you-go deals and commission-only fees (often payable on completion).
You will usually need to pay an upfront fee
Despite the fact that online agents are slowly moving towards a range of payment options, the majority take a fixed payment upfront. Therefore, before any listings and photos taken, a significant payment is required. If your finances are tight, you may not be in a position to pay this fee upfront. Indeed, you might be relying on the proceeds of your house sale to cover your home selling expenses.
But you do have options. Research the many online estate agents out there, and you will see that many of them list homes for sale for as little as £70 per month. You also get the added advantage of being able to list your property when multiple agencies.
How do I decide whether an online estate agent is right for me?
Because it’s now more important than ever to buy a house, the cost of selling is at its highest too, so explore anything you can do to reduce the cost of selling your home. So, if the issue of cost is one of your top priorities, you should think very seriously about starting with a ‘budget selling package’ with an online agency. While, generally speaking, homes take a little longer to sell with centralised online companies, the fees involved are often £400 t0 £700, which is substantially less than the average estate agent’s fee in the UK.
To put the savings, you can make online into some perspective; you need to consider the cost of selling houses the traditional way. Sell your property on the High Street, and the likelihood is you will pay a commission of anything between 1% and 3.5% of the final selling price. Now, say, you sell your home for £200,000, and the rate you signed up to was 2%. You’d be liable for a fee of £4,000. When you consider that even the most expensive of fixed-rate fees with online agents is around £1,000, the potential savings are massive.
Sales with online agents account for just five percent of the UK’s total house sales every year. But this percentage is rising quickly. Some analysts are predicting that online sales could account for up to 50 percent of the total by 2020. So, if you want to save money, take control of the house selling process, and enjoy the convenience of being able to attend to your affairs at any time of the day, selling online could be the way to go.
But don’t be fooled, there are some good online agents out there who do far more than simply list your property for sale and take your money. Depending on the package you sign up to, your online agent might be prepared to take control of the entire process — from managing the property viewing process to negotiating with prospective buyers.
Compare online estate agents first
There are now dozens of options on the Internet, so it’s important to check an online estate agent before you sign any agreements. You will find that there are now more options available than ever before, including:
- A cut-price, fixed-fee service that includes some basic listing services
- A premium fee that includes additional services such as property viewing management and communications with buyers
- A more traditional commission-based fee, which is payable on completion
- A pay-as-you-go service, which allows you to list your home for sale a month at a time for a fixed fee
But a word of caution: make sure the services included in your preferred package before entering into an agreement. There are still some online agents out there that are little more than a noticeboard for house sellers. They will only publish the details of your home and make sure interested buyers have your contact information.
Making your final decision, is it online or a high st estate agent?
There is no right and wrong way to go when selling your home. There are other options to sell your home, online is only one of these. There are clear advantages and disadvantages of the sale of a house online — you just need to know which of them apply to you.
If you’re someone who struggles to find any spare time, you’re probably going to need as much help selling your home as you can get. Selling with most online agents will leave many of the main selling tasks with you, including property viewings, communication with prospective buyers and various conveyancing issues.
Signing up to the cheapest deal you can find might save you some money, but it won’t necessarily sell your home quickly and at the best possible price. If you go down this road, you will need a thorough working knowledge of the process and your local market.
But, in most cases, these decisions boil down to cost. Selling online is, in the vast majority of cases, a great deal cheaper. Yes, you often have to pay upfront, but the potential savings are massive — sometimes a significant percentage of the average deposit. So take your time to compare every option, and choose the route that works best for you.