Pay-per-view estate agent saves seller £8k: will it catch on?
So how does it work, and will it catch on?
SoldPerdy's home was on the market for £560,000. If she had used a traditional agent, it would have cost her £8,600 to sell the property. However, instead she used a service from WeSold, which charges £99 plus VAT for the initial photos, listing and floor plans, and then £35 plus VAT for arranging each viewing. The home was sold after just one viewing - leaving her with fees of under £200.
It worksIt clearly worked for Perdy. She had details of the property put on the major property websites like Zoopla, Rightmove and Primelocation - where increasingly house hunting begins.
If she had needed more viewings it would have cost more. However, it would still have been much cheaper than a traditional agency, because there's a cap of £420 on the cost of viewings - so it never costs more than £519 plus VAT to sell a property.
The downsideHowever, as Jan Hytch, President of the National Association of Estate Agents, points out, it's not quite so straightforward.
First, the online agencies won't do the viewings - that's up to you. She says: "It's not a direct comparison, because this is a very cut down version of estate agency." In addition, while they will put the details together for you, they won't revisit them and redesign them and reconsider the approach if the property isn't selling - in the way a good traditional agent will.
Second, she says that once an agent has gone to all the trouble of putting the details together, the viewings are relatively easy money. Where is their incentive to close out a quick sale, when they can arrange a handful of showings in the interim to bump up your bill? "The longer the house is on the market, the more profit there is: where's the incentive to sell?", says Hytch.
Third, there may come a time when the viewings will stop paying off for the agent, because they have reached the cap. It begs the question of what their incentive is for showing and selling the property if they can't get anything else out of it. She says: "There's the risk the agent loses interest because they've reached the maximum they can earn from that property."
Fourth, traditional agents work on commission, so only get paid if the property is sold. This gives them a powerful incentive to sell - which they don't have if they are paid regardless.
Finally, in the current market some properties are stuck on the market for a considerable time before the owners rethink their decision to sell, or put the property up for rent instead. Traditional agents wouldn't necessarily charge anything in these circumstances - whereas all the fees will still be due on a pay-per-view property.
Would you?There will be those who this approach will suit. Hytch says that for those with very attractive properties who are willing to sell at an attractive price and do the viewings themselves, an online model may appeal. However, she highlights that given that all the models of online agency currently only deal with 5% of sales, pay-per-view is unlikely to become a major force in the market.
Meanwhile there may be also those who are willing to give it a try. After-all in the worst case they are no more than £519 plus VAT out of pocket, and in the best case scenario they could save thousands.
But what do you think? Would you do it?