In light of recent events with Emoov, its important that anyone planning on selling up is aware of the facts that surround the current property market.
In no way is this another boring post about Online Vs. High Street Agents, but it should both inform prospective sellers of risks, as well as give high street agencies the kick up the backside that they need.
For those of you that aren’t aware of Emoov and the world of online agents, they were one of the largest online agents in the country and have recently gone into administration, leaving thousands of vendors unsure what will happen with the money they’ve already fronted. The business model of these online agencies revolves around the premise that you pay a flat fee upfront (for example, Emoov charged £895+ to sell a property), which puts the vendor’s property on the major portals, however this is just about the extent of their service. Hidden costs need to be considered (e.g. professional photographs), as well as the fact that the likes of viewings and negotiations must be done personally, rather than relying on an agent. The initial low fee may not seem so idyllic once these factors have been considered.
According to The Advisory, the average high street agency fee is 1.18% plus VAT, working on a no sale no fee basis. The Advisory conducted a study surrounding the interest in a property that a high street agent generates in comparison to direct interest generated by the RightMove advert. The study shows that high street agents generate 64% more offers, 48% more viewings, as well as the fact that in 73% of property sales, the buyer paid 5% more.
One of the main factors to consider is that the majority of properties that are sold through a high street agent achieve 5% more than online agents - when you put these figures on paper, they are quite alarming. For example, with an online agent, a £250,000 sale could lose you around £12,500, a £500,000 sale could lose you around £25,000, and a £1 million sale could lose you around £50,000. Even more alarming is the fact that 73% of homes sold would have not sold, taken longer to sell or needed a price reduction without the involvement of a high street estate agency.
There is no doubt that despite these figures, the age of the online agent is making somewhat of an impact on traditional high street estate agents and the way that they will have to practice in future.
Sellers will gradually become more expectant of a more modern approach to selling their home, which is something that high street agencies will need to adapt to. The technological revolution is in full swing, and as younger generations become ever more technology obsessed, the more efficient they will expect their experience in selling to be.
Online agents have grasped the incorporation of technology, for example, giving people the ability to book the likes of viewings and valuations from their own home at whatever time is convenient for them – therefore massively reducing the amount of administration time that could be used far more efficiently.
Despite this, the online agent hasn’t quite understood the process that people go through when selling/buying a home, the emotional attachment that comes with the process can far outweigh the budget in terms of importance. People crave an emotional attachment, someone who can hold their hand along the process, someone who can be a personal adviser and a voice of reason, and above all, the ability to speak to someone physically in an office-based environment.
To conclude, the study conducted by The Advisory highlights the fact that internet only agents are just as good as an ‘average’ high street agency, however if a high street agency works to a high standard, they will be able to provide the highest ‘walkaway figure’, accentuating the fact that the online strategy is inferior. High street agents must take this into consideration and work towards ensuring that their strategy incorporates a hybrid of both a technological and emotional approach.
*Methodology of the study is available here: https://www.theadvisory.co.uk/estate-agents/online-vs-high-street/