Are online estate agents the best way to sell your home – or are their cheap fees a false economy?

Faced with a double digit inflationcost of living crisis and skyrocketing mortgage bills, anyone moving home this fall will want to count their pennies.

So is a low-cost online estate agent just the ticket or a false economy? And is a proven traditional High Street agent the smartest way to sell in a difficult market?

Operators such as Strike, Yopa and Purplebricks – the three biggest online agencies – claim to save thousands for sellers by charging a commission on the budget or even offering to sell the house for free, although they offer various additional “marketing incentives” that come at a cost.

But supporters of old High Street agents say online rivals’ sales reports are poor, they may have hidden costs and they are getting lower prices from buyers.

Internet firms have struggled to make an impact despite millions spent on advertising. New data released this week from real estate consultancy TwentyCi shows that in the third quarter of this year, Internet cameras processed just 7.6 percent of home sales nationwide — a proportion that has barely changed in years.

But will they tempt sellers as the economy slides and bills mount? Here are the pros and cons of a budget sale.

FAIR HONOURS

Online agencies seem to win out in terms of cheapness, but remember that this is just the basic package with no extras.

Purplebricks charges £1,999 in London and surrounding areas and £1,119 in the rest of the UK. So if you’re in, say, the Midlands and you use this agency to sell a £300,000 home, the base fee will be £1,800 less than the 1.0 per cent commission of a High Street firm. If this traditional agent charges 1.5 per cent, as some do, the saving will be a whopping £3,300.

“It’s encouraging owners of lovely homes to reconsider whether they really need the dated approach of the old High Street,” says Purplebricks chief executive Helen Marston.

ADDITIONAL CHARGES

This is where traditional agents win. Most High Street firms regularly offer escorted viewings and often provide video tours of the property as a standard service at no extra cost to the seller.

Seller’s remorse? Supporters of traditional real estate agents say online firms don’t attract as many buyers, so fewer homes sell

Online firms usually charge for various services. For example, Strike, which offers to sell a house without a core fee, offers additional ‘marketing boosts’ costing from £599 to £799, as well as an ‘arranged viewings package’ from £699 to £899.

Most other online agencies receive additional fees when their clients use recommended conveyancers, surveyors or mortgage lenders.

And remember, traditional agents don’t charge a fee at all if your property doesn’t sell, while many online competitors charge upfront fees that aren’t refundable if a buyer isn’t found.

CONSUMER RIGHTS

Both online and traditional agents must play by the same rules.

By law, they must be members of the property ombudsman or property protection scheme and comply with the Estate Agents Act and consumer protection rules against unfair trading. Trade association membership is optional, but the largest is Propertymark, which TV property expert Phil Spencer describes as “driving change towards a better, more secure industry through regulation and protection for everyone involved in property”.

LOCAL EXPLORATION

Unsurprisingly, most High Street firms pride themselves on knowing how the housing market works, not just broadly, but in specific areas or even streets. Some may have years of experience in the same field.

Online agents operate more centrally – for example, the largest, Purplebricks, says it has a “field team” of 600 people working “in a wide range of geographies” across the UK.

POWER IN SALES

Some real estate analysts suggest that because online agents are paid up front, they have less incentive to push a sale if there are disruptions or delays in the chain, although online firms deny this.

In the difficult housing market that many believe we are in, the best High Street agents will have a list of potential buyers and then call, text or email them to convince them to view the property for sale.

The Little Black Book: Traditional agents are more likely to have a list of interested local buyers to refer to, which means it can be easier for them to snag a sale

Likewise, if a sale has been agreed but one part of the chain is slowing down, perhaps due to a mortgage issue or poor survey results, the High Street agent will step in and try to make progress.

Online agencies, which typically rely on call centers and smaller staffs, are less likely to have the resources to chase sales and troubleshoot issues.

PRODUCTS AND PRICES

The bottom line for most sellers is how many buyers they get through the door, how many offers they get, and how much they actually get for their property when they accept an offer, regardless of the type of agent involved.

The HomeOwners Alliance, a consumer group, publishes statements by online agents about the prices at which they sell properties. The three major Internet companies say their average rates are between 96 and 97 percent of the asking price.

There are no comparable figures for High Street agents, but another consumer advice service called The Advisory carried out research before the pandemic comparing different types of agencies. It found that High Street firms generated 48 per cent more viewings than online, received 64 per cent more offers and secured a five per cent higher sale price on average.

Anxious sellers in a nervous market will be making their choices this fall, but the safest bet looks to be a well-established traditional agency, despite the higher fees.