Online estate agent Purplebricks has now completed its pre-Christmas IPO with shares initially valued at £240m. It’s the latest news that has once again sparked the heated debate over clicks vs bricks.
Russell Quirk, founder of online agency eMoov, has also stirred up the debate, inviting high street agents to 'come and sleep with the enemy' by investing in his crowdfunding appeal for £1 million – a pitch that values his online agency at a huge £20 million, despite the fact it has not yet turned a profit.
Online agents are clearly very confident in their business model, but are they better suited to sell property?
Let’s start by looking at the difference between online and traditional agents. Online agents charge lower fees because they cut out the middleman - the estate agent. In fact, traditional agents tend to charge around 1.5% of the sale price achieved, (with nothing to pay if they don’t sell the property). That means for a £400,000 house, you’d expect to pay £6,000. Online agents however, offer packages that start from just £400, and even the most expensive service won’t set you back more than £1,000.
So, why isn’t everyone switching to an online agent?
Cutting out the actual estate agent from the process can lead to a number of problems. Firstly, you don’t benefit from a quality, reliable property valuation – so a property could be significantly undervalued or overvalued.
Online agents tend to work from national call centres, so their local knowledge is usually quite limited. Traditional agents typically offer unrivalled local knowledge, and know the area like the back of their hand.
The significant difference with “bricks and mortar” estate agency is the sales manager and their team’s local experience and knowledge.
The traditional model guarantees that property viewings are accompanied with a skilled sales person and negotiator, to maximise the sales price.
Buying and selling homes is also never a simple process in reality. Having a person based locally who can negotiate on the seller's behalf and chase an agreed sale through to completion is invaluable in securing the sale of what is most people’s biggest asset.
Like anything, though, there is always a place for online operators. If we look at retail, traditional retail shops still have a place in a market where you can buy cheaper online.
At Portico, we understand this and the fact that there is a market for a higher quality, service driven approach for those who want to maximise the sale price of their properties.
Of course, I’d be lying if I said I wasn’t biased, but I can honestly say I’d use a traditional agent. That’s because, like most people, I want two things: minimal hassle and the best price.
I don’t have the time to put everything I’ve got into a sales battle. I want to be able to hand over my keys and let an expert do the job.
I’ve been in the property business for years, and in that time I’ve learnt that there’s not a science to selling houses.
Buyers can change their budgets considerably and even their specifications, and an agent will need to take the initiative to come to the most effective solution – something a computer or virtual agent is unable to do.
Doing it yourself almost always translates into a lower price and a longer, stressful process.
I do believe, however, that the rise in the number of online agents will, in the long run, be a good thing for us traditional agents.
There is not one agent who won’t agree that the internet has truly revolutionised the property market, and those who aren’t utilising the internet and modern technology will fall behind more progressive competitors.
But despite this, there is still a reason why, in this digital age, the nation is still choosing traditional over online.
*Robert Nichols is managing director of Portico.com