The rise of online estate agents has brought radical change to the property industry. Not only have they introduced an entirely new way of buying and selling homes, but they have also created a pricing model which is significantly cheaper than traditional high street agents.
But are they actually any good?
You’ve probably read and heard many conflicting answers to this question. Hopefully, this short article will help clear some things up.
The Price and The Motivation
Let’s start with the price, online agents claim to be significantly cheaper than high street agents. This is because high street agents usually charge a fee based on a small percentage of the home’s value. So, if a home sells for £200,000, the agent will take 1-2% as commission. If they fail to sell the home, however, they get nothing. It’s called ‘no sale, no fee’.
Online agents do it differently, they charge a small upfront fixed fee which you must pay at the very beginning of the journey. This is often a small amount of money, much less than the 1-2% commission you’ll be paying a traditional agent.
However, it’s important to realise that the commission-based model of high street agents gives them great motivation to work hard on your behalf and achieve the best possible price for your home. If they don’t, they don’t get paid.
Online agents, on the other hand, take all of the money they’re going to get from you at the start of the journey. Whether or not they go on to successfully sell your home has no effect on the amount they make.
There is a strong argument which says this leaves online agents with absolutely no motivation to work hard on your behalf because there is nothing in it for them.
Part of an estate agent’s power comes from their knowledge of the local area. Because they’ve spent years or decades buying and selling homes in the area, they know it back-to-front: they know exactly what sort of homes are in demand, they know exactly how to most effectively market properties, and so on.
Some online agents use so-called ‘local property experts’ who they claim share this great local knowledge. We strongly recommend you push them to demonstrate how good this knowledge is before hiring them to represent you and your home.
How comprehensive is their service?
Online agents might offer a cheap quote, but what services are included in that price? Are you, for example, going to have to pay extra cash for photos to be taken, floor plans to be drawn up, and so on? Because if so, their cheap upfront fee might not seem such good value.
What are their customers saying?
Check the customer reviews for every agent you consider working with, whether they’re online or traditional. This is a quick way to gauge their effectiveness and how well they might serve your interests.
There are a number of websites you can visit to read customer reviews, including AllAgents and TrustPilot, but we would recommend broadening your search away from these rating sites. We’re not saying they’re unreliable, but these sites benefit from agents coming over in a generally positive light: they want agents to boast about their positive reviews and, in doing so, advertise the review website. We’ve all seen ads which include the phrase, “Rated 5-stars on TrustPilot!”.
Instead of just relying on these review sites, we recommend simply Googling the words: “[Name of agent] reviews”.
This can help you find a wider scope of reviews. A lot of people leave their reviews on forums like Mumsnet, or discussion boards like Reddit – this is where you’ll find the most honest and comprehensive reviews.
Have you used an online agent recently? We’d love to hear how you got on. Was it a successful partnership, or did it leave you disappointed? Would you use an online agent again?