Shopping on the internet is second nature these days – even more so since Covid lockdown put many physical shops off limits. But while we are happy to buy groceries, clothes and even cars online, there seems to be a reluctance to go virtual when buying and selling our biggest assets: our property. Of course, we all look at the property portals (RIghtmove, Zoopla etc), and expect our homes to be listed on the web, but online-only estate agents, which a few years ago threatened to make high-street agencies a thing of the past, still only account for 5% of the UK property market.
On the face of it, online estate agents such as Purplebricks and Yopa seem to offer good value: usually with a fixed fee, paid upfront, rather than the 'no sale no fee' percentage commission charged by high-street firms. (See our article on estate agent fees for more information.) Some, such as Strike and Doorsteps, offer basic listings completely free of charge, making their money with extras such as hosted viewings, premium professional photography and promoted adverts on Rightmove and Zoopla, as well as from commission on mortgages, removals and other services.
However, as our guide to choosing an estate agent shows, the fee you pay is only one factor to take into account when deciding how to sell your property. To find out whether online firms offer good value for money compared to their high-street competitors, Movewise has analysed UK property market data from the past six months, during which time almost one million properties were listed. We compared the sales rate, the average time to sell, the percentage of listings that saw price reductions, and the average size of those price reductions. We then further broke those figures down into three categories of selling price: low (up to £400,000), medium (£401,000 to £1 million) and high (over £1 million).
Out of 935,143 new listings during the period, 46,910, or 5%, were through an online estate agent. Of these online listings, the majority (4.3%) were with paid agents (predominantly Purplebricks), while less than 1% were with free firms. For properties priced over £1m, just 1.2% of sellers used an online estate agent.
By price band:
Low (up to £400,000): Traditional: 94.4%. Paid online: 4.7%. Free online: 0.8%
Medium (£401,000-£1m): Traditional: 95.9%. Paid online: 3.5%. Free online: 0.6%
High (over £1m): Traditional: 98.8%. Paid online: 1.0%. Free online: 0.2%
To calculate sales rates, we looked at how many of the closed listings were taken off the market because they had sold, rather than being withdrawn unsold. For paid online firms, the overall average sales rate was 72%, compared with an overall average of 61%. With free online firms, it was 55%. The fee-charging internet firms showed a better sales rate than high-street agents in both low and medium price bands, although with higher-value properties, their sales performance dropped significantly. The free firms performed less well than traditional agents, although on lower-value sales the difference was very small.
Note, however, that the sales rate does not take into account active listings that are still unsold. Users of paid online agencies have already paid their fee, so may be more likely to leave the listing active, even if the property is not selling.
By price band:
Low (up to £400,000): Top 5 traditional: 61%. Paid online: 75%. Free online: 60%
Medium (£401,000-£1m): Top 5 traditional 59%. Paid online: 63%. Free online: 47%
High (over £1m): Top 5 traditional: 55%. Paid online: 41%. Free online: 22%
Paid online agents took a similar length of time to sell, on average, as traditional agents, with little variation across the price bands. The free online firms performed somewhat better, especially with mid-range properties, albeit with a considerably smaller number of listings. For high-end sales, there was not enough data from free firms to allow comparison.
Bear in mind that the “time to sell” metric only applies to those properties that did sell, and does not take into account those homes that were withdrawn or remain on the market unsold.
By price band:
Low (up to £400,000): Top 5 traditional: 157 days. Paid online: 156 days. Free online: 117 days
Medium (£401,000-£1m): Top 5 traditional 155 days. Paid online:161 days. Free online: 114 days
High (over £1m): Top 5 traditional:157 days. Paid online: 168 days. Free online: n/a
Out of both paid and free online listings, 35% were reduced: significantly higher than the overall market average of 25%, suggesting that these properties may not sell for the best price. The average price reductions were 4.2% for paid online firms and 4.8% for free ones, both slightly below the typical 5.4% price cut seen in reduced listings, but all were considerably higher for £1m-plus listings.
By price band:
Low (up to £400,000): Top 5 traditional: 30% (average reduction 5.1%). Paid online: 35% (4.3%). Free online: 34% (4.4%)
Medium (£401,000-£1m): Traditional: 32% (4.9%). Paid online: 36% (4.0%). Free online: 39% (5.1%)
High (over £1m): Traditional: 22% (7.2%). Paid online: 25% (6.3%). Free online: 22% (9.9%)
At first glance, the sales rates of online estate agents look pretty impressive, especially in the lower price bracket. Paid online firms have a better sales rate than traditional agents on properties priced under £1 million, and even the free firms can almost match the high street in the lowest price band. However, the sales rate is calculated on closed listings: either they sell or they are withdrawn from the market unsold. People who have paid an upfront fee to an online firm will probably be less inclined to withdraw the listing than those who only pay a fee on completion.
Therefore, the sales rate should be viewed in combination with the other data, such as time to sell. These figures show that, when properties do sell, there is very little to choose between the traditional and paid online firms: a few days make little difference when the typical time to sell is over five months. Based on this data from the past 180 days, free internet agents actually tend to close a deal considerably faster than traditional firms or their paid online rivals.
One area where online agencies do perform less well for sellers is in price reductions. Listings with internet firms are 40% more likely to need a price cut than the market average (35% of listings, compared with 25%). The average reduction is, however, slightly smaller than with high-street firms.
What is clear from our analysis is that online agents are not well suited to selling more expensive properties. Few sellers in the £1m+ range choose them, and those who do are likely to do less well than they would with a carefully chosen local agent. However, for cheaper properties, using an internet firm could be a good option. Our view is that if you do decide to go down the internet route, there is little advantage in choosing the paid option, as the free firms also perform well at the lower end of the market.
There is a third option: sell your property with Movewise and you get the best of both worlds. Our unique model combines the speed, insight and efficiency of the best online estate agents with the expertise and diligence of the high-street specialists. We analyse the housing market daily to pinpoint the agents most likely to find a buyer for your home, and the numbers speak for themselves:
Movewise: 88%. Top 5 traditional agents: 61%. Online agents: 73%
Our sales rate is more than 20% higher than the average online estate agent, and 44% higher than the big high-street firms. Nearly 9 out of 10 homes listed with us sell, compared with just over 6 out of 10 with the top five traditional agents.
Movewise: 127 days. Top 5 traditional agents: 157 days. Online agents: 151 days
Choose Movewise and on average you are likely to sell your home more than a month earlier than if you relied on a high-street agent, and 24 days faster than with internet firms.
Movewise: 14%. Top 5 traditional agents: 30%. Online agents: 35%
Properties listed with Movewise are less than half as likely to require a price reduction in order to sell, meaning you stand double the chance of achieving your asking price. Listings with online agents are 2.5 times more likely to need the price tag trimmed.
Above figures based on property listings priced £400,000 and below from past 180 days
Our technology chooses the best agent for you, taking the guesswork out of selling to ensure you get the best price. And if you don’t sell your home fast, you can relist with another recommended agent at no additional cost – you remain in control and you deal with a single Movewise agent, vastly reducing the hassle of switching agents. Take the first step by getting in touch today.