The pros and cons of online estate agents

Online estate agents are increasingly popular, accounting for almost 8% of exchanges in the second quarter of 2018¹. Lower overheads allow online agents to offer cost-conscious vendors potential savings when it comes to selling their homes, making them an attractive option for many sellers². 

For the most part, the services offered by online agents will be similar to those of traditional estate agents. However, Angela Kerr, director at HomeOwners Alliance, recommends consumers do their homework. “Online agents are not all the same and their packages can be very different.”

So, what are the main advantages and disadvantages of using an online estate agent? Here, we take a look at some of the pros and cons.

The pros of using an online agent

Lower overall fees
Control over the selling process
Potential for greater exposure

The potential cons of using an online agent

Upfront fees
Lack of local knowledge
Lower percentage of sales
Summary

Lower overall fees

Online agents offer similar services to traditional estate agents; they will value your home, produce floor plans, take professional photos and promote it on property listings websites. They can also arrange viewings, negotiate offers on your behalf and liaise with your solicitor, depending on the packages you choose.

The key difference is that, with no expensive branches to maintain or local staff to employ, online estate agents can potentially undercut high-street agents by charging lower fees.

Unlike their high-street counterparts, which typically charge around 1.5% of your property’s selling price, most online estate agents charge a fixed fee, which can be as low as one or two hundred pounds regardless of the value of your property.

To put it in context, if you sell a £300,000 property through a high-street agent, it’s likely you’ll pay around £4,500 in commission. If you sell the same property with an online agent, you might pay between £200 and £1,000 (including VAT), depending on the package you choose³.

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Control over the selling process

If you’re willing to manage the house sale yourself, using an online estate agent can give you the feeling of greater control over the sales process. On cheaper packages, you may need to carry out viewings yourself.

Furthermore, unlike the high street, the internet is always open. Whether you’re uploading your own photographs or managing potential viewing times, you’ll have round-the-clock access using an online estate agent – and so will potential buyers.

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Potential for greater exposure

You may have the freedom to appoint multiple agents without them charging you a higher fee, as is usually the case with high-street agents. However, you should always ask to see the contract, if there is one, so you can check the terms and find out whether there’s a tie-in period.

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Some online agents require full payment upfront, which is non-refundable, even if your property doesn’t sell. Some will allow you to pay when your property sells, while others offer ‘No sale, no fee’ packages, although these may be more expensive than upfront packages. It pays to do your homework, so you don’t get caught out. 

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Lack of local knowledge

While more established online estate agents can offer a 24/7 service, you may find yourself dealing with call-centre staff who have little or no insight into the area where you live. This could affect the valuation of your property and the effectiveness of any online advertising.

David Blake, Principal Mortgage Adviser at Which? Mortgage Advisers, recommends a cautious approach: “Online agents may struggle to compete with a high-street agent who knows your neighbourhood and its property market inside out.”

However, some online agents do offer support from experienced local property agents in some of their packages, so – if local expertise is important to you – check carefully before making your selection.

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Lower percentage of sales

Despite the increasing popularity of online estate agents, more than 90% of sellers still choose traditional high-street agents to sell their home⁴. However, many sellers risk getting a bad deal because they don’t do their research, according to the HomeOwners Alliance⁵. Their website includes a useful comparison tool⁶ that can help you make an informed decision about which agent to choose. It allows you to compare estate agents in your area against certain criteria – which has the best track record at selling homes quickly, for example.

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Summary

Don’t take anything for granted: it may be possible to save money selling your home online, but it’s important to understand exactly what services you’re getting from the start, and to read the small print so you avoid any nasty surprises.

Remember that the market is evolving all the time. For example, hybrid estate agents bridge the gap between online and traditional agents, aiming to provide sellers with the best of both worlds. They can offer a full estate agent service, including face-to-face contact and access to local experts, absorbed into a fixed fee.

Whichever route you take, make sure the agency you choose is registered with The Property Ombudsman, or a similar governing body.

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