Traditionally, when selling a property, you will go to your local estate agent who will advertise your property in their store window, brochures, website and online portals. They will also be responsible for taking enquiries by email and phone and then meeting up with prospective buyers and showing them around the house or flat. But all this comes at a cost. The estate agency fees range from 1.5% to 2% of the ultimate sale price, which for a £500,00 property can easily cost £10,000. (Source: The Telegraph)
The Alternatives and How They Work
Over the last few years, there has been new startups entering the property selling market that allow you to cut out estate agency fees. Notable players include Tepilo and House Simple who have become household names (excuse the pun!) through advertising on the tube and TV. Sellers are required to a pay a one-off subscription starting from £495 and they will list your house on property portals such as Rightmove, Zoopla and Primelocation, where approximately 95% of property searches start in the UK.
The benefit of using these alternate websites is that you cut out the estate agency fees altogether and you essentially become the estate agent in a more DIY approach. The pricing is also good value considering the subscription fees do not change the greater the value of your home – whereas an agency will certainly earn a bigger commission for a more expensive home. The fees are completely one-off meaning that you do not have recurring payments monthly or annually and you can defer payment once your property has been eventually sold.
The Different Pricing Options
Basic pricing starts at £495 for both Tepilo and House Simple and this includes a legal setup and a home visit to verify that your property is real. However, there are limitations to the most basic pricing level. For instance, if Jim wants to sell his property right away, he does not have fancy photography of his home, floor plans or specifications. This is something that Tepilo and competitors can provide, for an additional fee of £120 for photos and £75 for a floorplan or you can choose to upgrade to the ‘Pay Later’ version of £795.
If you do not want to commit to paying the £495 right away, you can defer this repayment for longer (around 6 months), although it will be more expensive. You are getting the same service, but paying £595 on House Simple and £795 on Tepilo once your property has been sold. Other add-ons include featured listings on Zoopla and Rightmove (which an estate agent would cover) and professional 360 virtual tours of the home.
The companies will also try to offer other services required to sell your property such as valuations, conveyancing and mortgage brokering – so this should give you an overview of their business model.
Whilst certainly more cost-effective, the DIY approach to selling your property also has its risks. By being ‘your own estate agent,’ you will have to deal with the enquiries over the phone from potential buyers and welcome them into your property. Whilst the potential risks are low, the idea of welcoming strangers is not always that appealing, and having that estate agent with you can give you extra confidence and security and they can do background checks on buyers too.
To become the estate agent yourself, you must have some background knowledge of buying and selling property. You should be able to answer questions about property chains, leaseholds and stamp duty quite easily.
Also, without an estate agent, you do not have the opportunity of private selling or possibly the negotiating skills of an experienced agent who might be able to get you a higher price.