What is the future?
What is the future for the estate agency industry?
Over the last ten years and coincidently since the recession we have seen a large amount of companies enter the property market offering a number of different methods to sell a vendors property. Before these companies tried to revolutionise the industry people would go to one of their local agents for help selling their property.
The main reason for such significant changes in the industry is technology and the internet. It’s because of the power of the internet we ask the question how long does your local agent have left?
Please read below for the options people now have to sell their property.
Local estate agent
As already explained the local estate agent has generally always been the port of call for vendors looking to sell their property. The local estate agency market is a hugely competitive one. Over the years many people have seen this business as a sexy and lucrative one to enter, so much so that a number of towns in England are reaching saturation point. In anyone town you may find as many as twelve agents in the area. As there are only so many chimney points in this particular town these agents must find it hugely tough to generate their annual revenue from purely selling property. It’s because of this problem why we have seen some of the agents diversifying and entering into other areas of the property market i.e rental services.
It is proven that when a vendor has their property valued by a local agent they will have three different companies round to value their home. Because the agent is aware of this a number of them will have a strategy to advise the vendor of a value that is actually higher than what the market is dictating. The reason for this is to ensure they get the instruction to sell the house rather than losing it to a competitor. Although the price of the house will not be attractive to buyers from day one all the agent is hoping is that they will be able to call the vendor after a number of months and encourage them to reduce the price to a figure that is attractive to the market and will result in a sale.
This strategy is becoming more and more common with your local agents and all it is doing is hindering and slowing the process down for the vendor to sell their property.
How the local agent operates
Once a local agent has been instructed to sell the property they will use a number of different methods to market the home.
- They will place a ‘For Sale’ board outside your house
- They will list the property in their local shop (you are not guaranteed to be in the window)
- They will upload the property onto their website
- They will list your property on Rightmove, and the other property portals
Please beware that just because they are an estate agent your property will not automatically appear on Rightmove, Zoopla, On The Market.com. These property portals are independent companies, therefore in order for an agent to display the properties they have for sale on these sites they must pay a monthly subscription. Always check which sites the agent subscribes too before making a decision.
Once the property is listed providing the price and marketing are attractive potential buyers should start to show interest in the house which should in turn lead to viewings. Once the viewing has taken place the agent should contact the viewer for their thought and report this to the vendor.
A local estate agent is generally open from 9am – 5pm Monday – Friday and potentially Saturday mornings. This may make speaking to the viewers (potential buyers) quite difficult if they are working the same hours the agent is open.
Once the vendor receives an offer they are happy with solicitors will be instructed and the agent will progress the sale with the solicitor until completion.
A traditional estate agent will be paid their fee on completion. This is generally paid by the solicitor and is either a percentage of the sale price or a fixed price. This is agreed between the vendor and the agent at the start of their working relationship.
On Line Estate Agencies
As previously mentioned over the last number of years technology has evolved enormously and the internet is one of the main reasons.
The power of the internet has allowed the emergence of on-line estate agents to enter the property industry. The amount of people going into their local agent to see what they have for sale has reduced significantly over the last few years. Websites i.e. Rightmove are now peoples first point of call when looking for houses.
The way people communicate has also changed over the years. More and more people are communicating via e-mail and phone on a daily basis than talking face to face.
In light of the above an agent no longer needs the presence of a high street shop as they no longer need a way of displaying their properties to the public because the internet can do this for them. Secondly, they do not need the staff in the shop speaking to buyers and vendors because the way people communicate has changed so significantly.
Because the internet is a worldwide mechanism on-line agents are able to target vendors all over the Country. Basically there business model is to sell houses all over the UK from one office which is much more cost effective than having offices in local towns and villages.
However, unlike a local agent on-line agents can generate their annual revenue from selling properties all over the Country. Therefore they are more inclined to give a more realistic valuation from the outset which should result in a faster move for the vendor.
The way online estate agents market and sell properties is very similar to that of a local estate agent. They will place a for sale board outside the property, display the property on the property portals i.e Rightmove, (remember a vendor should check which portals the agent subscribes to).
For a vendor to maximise their property to the market and get the best price possible for it their estate agent needs to introduce as many people as they can to the property.
A great way of doing this is to open for longer hours and more days in a week. This allows potential buyers to speak to someone any time of day. This is where a number of on-line agents can offer a better quality service as some of them are open 7 days a week from 8am – 9pm, for example Fast Move. There thoughts are that to buy a house you have to work, a working person will generally work from 9am-5pm Monday – Friday. Therefore if an agent is only open the hours the potential buyers work are they maximising the vendor’s property to the market? Fast Move sells a large amount of their properties outside of the normal working day.
Like a local agent once a vendor accepts an offer from a buyer the on-line agent is responsible for instructing the solicitors and progressing the sale to completion.
There are a number of different ways on-line agents charge the vendor for their services.
- The vendor will be charged an up-front fee and will have nothing to pay at the end. Although this may seem appealing to the vendor as it will be cheaper than the traditional way. An agent will dress this up as costs they incur to market the house. However, you have to think this fee is payable irrespective of whether the property sells or not. Furthermore you are paying someone for a service before you have seen how they operate.
- The Vendor will be charged an upfront fee and also at the end of the transaction. Again the agent will charge a fee before the property is marketed, probably less than if all the fee is upfront. The vendor will then have to pay a further fee on completion.
Because this new structure of charging a vendor has become appealing to the vendor your traditional local agents have altered the way they charge the vendor to try and encompass these new methods.
We Buy Any House
In the last few years vendors have seen a new way to sell a property. There are now a number of companies who will actually buy the property direct from the vendor. This is obviously a lot quicker than advertising the property with an agent which in turn should make the process a lot less stressful. However, don’t be fooled into letting companies tell you they will pay market value for the property. If this was the case they would be buying every property on the market.
So although this may be the fastest and easiest way to sell your property if you do agree to sell your house to a we buy any house company be prepared to take a price lower than the estate agent values it at. Typically a company like this will be at most 80% of its market value.
If you do happen to come across a company that offers say 95% of the price it is currently marketed at or has been valued at alarm bells should raise. Remember this is only a verbal offer and can be reduced right up until exchange of contracts.
This was becoming such a well-documented issue in the industry that it was actually investigated by the Office of Fair Trading. A large proportion of companies were found to be taking advantage of people’s venerable positon. These companies were found to be offering what seemed to be an attractive price for a vendor’s property to get their attention.
They would then leave it to just before exchange of contracts to reduce the price leaving the vendor in a very awkward position.
One of the companies not investigated was Fast Move. As well has having an estate agency department Fast Move can also state ‘we buy any house’. Although their offer for your home will be lower than market value at least you know the offer is secure and the sale of your property will be fast and stress free.