31 May 2017
Online estate agents have certainly made a big splash in the property market. You only need to turn on your TV to see an online estate agency advert, or walk down the street to see their 'for sale' boards outside a home. As a nation that has spent many years knocking estate agents, it's no surprise that a money saving 'do it yourself' model was a welcome change. Then came the best of both worlds - a hybrid approach that combined the online experience with the support of regional estate agents.
There has been a lot of debate about the different approaches. Some have criticised hybrid estate agents for lack of local knowledge and others have criticised traditional estate agents for charging too much commission. At the end of the day, surely it's simple. Homeowners will be happy if their property sells.
Exploring the success and performance of the top online estate agents
GetAgent struggled to find any information on how many of the properties listed with online estate agents actually sell. As a data driven business we decided to conduct the research ourselves to help our homeowners.
We looked at 500 new listings by Purplebricks and all listings by Tepilo, Housesimple and Emoov from January 2016. We analysed the success of each of these listings from January 2016 through to February 2017, allowing a 14 month period.
We have outlined the main findings from the research below, supporting graphics are within the attached PDF.
Almost half of online agent listings remain unsold
Our research found that around half of online agent listings hadn't sold after the 14-month period.
Purplebricks completed on just 57% of the listings from January 2016, as of February 2017. Housesimple completed on 58%, while Emoov and Tepilo were even lower with 51% and 48% completion rates.
The cheaper upfront fee could cost homeowners more
Online estate agents charge an upfront fee, which is payable even if the property does not sell. Traditional high street estate agents charge a commission on a 'no sale, no fee' basis.
When looking at the completion rates above and then the upfront fee paid to the online agents, some customers are being left with empty pockets. We have used Tepilo as an example:
Tepilo completed on just 48% of listings. That means over half of Tepilo customers paid more than they would have if they had used a traditional high street agent on a 'no sale, no fee' basis.
Online customers switch back to high street agents
What's more concerning, is that 17% of homeowners went on to instruct a high street agent meaning they paid Tepilo and then paid a high street agent.
GetAgent also found that those who switched to a high street agent tended to do so quite quickly – almost 10% within a fortnight, and the highest proportion, nearly 14%, within 42-56 days.
The research also showed that there were asking price changes in 65% of re-listed properties.
“I came across the hybrid agent online and I liked the idea of saving money. I did not like the idea of conducting the viewings myself so chose the full packaged service. However, I found there were a lot of communication issues and I had to ask them to redo the photos they took because the quality was so poor.
Homeowners were crying out for a change and online agents have definitely disrupted the market. However, it's too early to tell whether online agents are a better way for homeowners to sell their homes. With over 15,000 estate agents in the UK, you can't help but think adding more to the mix will just confuse homeowners further. Perhaps homeowners don't need more estate agents to choose from, and instead they need help distinguishing between the good and the bad from those that already exist.
GetAgent CEO, Colby Short:
“Homeowners should decide which estate agent to use based on their performance. How many properties they have sold in that area. How quickly they have sold them. How close to the asking price they were sold for. With this information, homeowners can feel more confident in their decision making and make sure they end up with an estate agent that suits them”