When it comes to online estate agents, opinions are sharply divided. We examine the pros and cons...
Traditional estate agents typically charge 1.5 per cent of the selling price (plus VAT). So, for a million pound property, that’s £18,000. Purplebricks, the UK’s leading online estate agent, conversely, charge a flat rate fee of £849 (including VAT) or £1,149, if you add “accompanied viewings”.
So, in terms of fees, the online estate agents win hands down. Unless, of course, your property doesn’t sell—in this case you still pay. Traditional estate agents operate a “no sale, no fee” model.
Purplebricks employ local “property experts” who you can find by entering your postcode on their website which is a definite improvement from the early days of online estate agents.
They also arrange floor-plan drawings and photographs for your property as well as writing the selling blurb and putting up a “For sale” sign. Your property will feature on various property portals such as Rightmove and Zoopla—in this respect, they match their traditional high street cousins.
Purplebricks score highly on Trust Pilot (9.5 out of 10). However, beware; property review website allAgents called for an independent audit of Trustpilot reviews, stating,"[Purplebrick’s] approval rating on Trustpilot is highly questionable."
Last year, Purplebricks claimed that it sold 78 per cent of properties listed within 10 months. Although they admitted the figure was “subject to contract”. And, as previously reported in Readers’ Digest, between 25 per cent and 30 per cent of accepted offers never reach completion.
City consultancy Jefferies suggested that the correct figure was probably more like 51.6 per cent, which puts Purplebricks “near the middle of the pack.”
There’s one area of which everyone can agree: the online estate agents are welcome disrupters in what had become a rather staid industry. The increased competition is set to hot up too. In May, online estate agent Emoov merged with rival Tepilo (the deal also included the web-based lettings agency Urban.co.uk) the combined group is now the UK’s second-largest digital estate agent.
More competition invariably leads to more choice and lower prices. The traditional estate agents will have to up their game. Assuming, of course, their online rivals survive—Purplebricks, Emoov and Tepilo are all loss-making companies. Despite this, US bank JPMorgan forecast that Purplebricks alone could account for as much as 15 per cent of the UK market by 2022. Watch this space.
The online estate agents are also perfectly poised to take advantage of new technologies—virtual property tours anyone?
As a buyer
Personally, I have little interest in properties on the World Wide Web—far too much competition. I prefer to make personal contacts and see properties before they hit the open market. But, as the market changes, we all have to adapt.
In a hot market, properties will consistently sell—so why not choose an online estate agent? Just make sure you do your homework first and get a range of traditional estate agents to value your property.
In a soft market you might need more help. Which is where the traditional estate agents can earn their crust. But, in the end, you can’t fight the rise of technology and online estate agents will continue to nibble away at the market.