We look at the practical pros and cons of traditional high street agency and online agency to establish what really works.
What is an online estate agent?
Online estate agencies come in different forms but generally work in the same manner. The seller or landlord pays a fee either upfront (best value option) or on completion. This is normally in the region of £1,000 for sales and £250 for lettings. The service includes valuation, professional photography, floorplans and marketing on the major portals Zoopla and Rightmove. Most online agents claim they offer a traditional estate agency experience, which is arguable as few offer free assisted viewings and their negotiation and completion expertise is questionable. Importantly, they lack local knowledge.
Online agency is similar to a DIY listing service. The online firms claim they negotiate and deal with your potential buyers or tenants and they book in your viewings, but offer very little advice apart from this. And how could they as they have not seen your property, met your buyer or tenant, or you for that matter? Online agents will also seldom make a concerted effort to push your property - meaning no calls or emails to potential buyers and very little, if any, qualification. Online agents usually take an upfront fee, so they get paid whether a sale is executed or not.
This type of agency does offer a low cost fee if you manage to sell your property, but bear in mind you’ll have to do quite a bit of the running around.
How about traditional estate agency?
Traditional estate agency is based on the principle that the agents are knowledgeable of their area and community, both in terms of the property and the clientele. They’ll have years of experience in the area, will probably be familiar with where locals are moving and can understand your needs in relation to this picture. The traditional agent will have a shop window in a prominent location with numerous ‘available’ properties, to attract your buyer.
So let's break this down: if Mrs Smith is looking for a 3 bed semi, it’s likely that she’s looking at Zoopla and Rightmove on a daily basis. Mrs Smith researches well and regularly and she knows what’s on the market, probably better than the agent himself. The local agent will call her from time to time and offer her the ‘perfect house’ but Mrs Smith will want to see photos and floorplans and will probably be directed to the portals again. So the traditional job of the agent knowing something that the buyer doesn't has gone out of the window.
Speaking of windows, how often do people look at an estate agents shop window, walk in the office and buy that property? Very rarely one would imagine. The property market moves so fast that these windows are rarely up to date. So what is the window doing? the traditional agent will argue that they’re bringing in buyers to which they can sell other property. But actually they’re promoting the agency itself, making you see their name to attract sellers and landlords - the very people who pay for the fancy shop.
The value of instructing a good, traditional agent is that they will communicate with their customers well. They give an insider’s knowledge of the local area, where the best pub, restaurant or coffee shops are; which schools are achieving the best grades and which roads are popular. Viewings and negotiations are conducted face-to-face with the buyer and the seller. The traditional agent liaises with solicitors and troubleshoots, offering a consultancy type service, relieving the client of calls, emails and hassle.
Traditional agents are more expensive, with fees ranging from 1-3% of eventual sale value. High street agents need to pay rent and remunerate their agents but these agents have to be proactive and the client subsequently pays for time invested and effort exerted. In many circumstances they can achieve the best price for the vendor, especially if the market is not as active as a seller or landlord had expected.
So which is better?
This depends on how much time you have, how much effort you can devote, if you trust your own negotiating abilities, not only with the buyer or tenant but also the solicitors, and quite importantly what the market condition is doing. This is a huge point which is often overlooked. Online agents have really only taken off over the past 6 years, pretty much since the last crash and the eventuality of the credit crunch. Since 2008 the market has been on a steady increase, meaning that buyers have been in abundance - a sellers market. Property agency has been less about selling and more about organising and good communication. Many online agents communicate through the portals alone. I question how well online agents would fair in a tougher market, where selling and reaching out to your applicant is necessary.
Online agents have changed the market forever, possibly for the better. Traditional agents have had to up their game and prove they have something to offer for their high fees. Less professional outfits will be pushed out and online agents will create a new offer in the market. There is room for all types of agent, as long as they are offering a high quality service and good value. This doesn’t mean the lowest fee, but the agent that will accommodate you with a service bespoke to your needs, whilst achieving the best possible price.
The future of estate agency is less to do with how much high street presence they have or the fact that they have been in the area for donkey’s years and more about a better quality, more engaging service offering the seller or landlord the best possible value.
Clever Property brings estate agency into the modern world, offering a bespoke service, delivering exceptional value and offering insightful local knowledge with the efficiency of an online agent. Contact us to find out how we can offer you more for less.