Smart ideas for home buyers and sellers
If you’re thinking of buying or selling a property, then make sure you’re up to speed with all the tools available to get the best deal. Over the past few years, the property sector has had a shake-up with consumers expecting a more convenient 24/7 approach to their house sale, which has challenged the traditional high street estate agent model.
House prices may have gone up but fees from high street agents have remained static, typically charging around 1.5% for sole agency and between 2% and 3.5% for multiple-agency contracts – and then there is 20% VAT on top of that.
Average prices that properties were sold for in England and Wales rose to £186,350 in October, according to latest figures from the Land Registry, which means that if you sold a house at that price and paid 2% commission, you’d be handing over £4,472 to your estate agent.
On an average London house priced at £503,431, you’d pay commission of more than £12,000. So are you better off with a DIY approach or using an online agent?
Going it alone
If you live in an area where property gets snapped up, you could try to sell your home privately. This route won’t suit everyone, as it is time-consuming to market your property and oversee viewings. Another disadvantage is that you won’t be able to advertise on the main property portals, such as Rightmove and Zoopla, which only feature properties listed by estate agents.
You can visit Nethouseprices.com or Rightmove.co.uk to work out the asking price – just key in your postcode to see what local houses have sold for.
Alternatively, you can pay £19.95 for a property valuation report from Hometrack, which includes a table of prices for comparable properties in your neighbourhood – and if you don’t feel too guilty about wasting their time, you can always ask a local estate agent for a free valuation.
As well as placing classified ads, why not advertise your property online? Rather like the Airbnb of property sales, EMOH (that’s ‘home’ spelt backwards), which was launched in October, allows you to upload photos, a floor plan, Energy Performance Certificate (EPC) and description for free or you can pay the site for help with your listing, with prices ranging from £99 for professional photos to £249 for photos, a floor plan and EPC.
Once your listing is live, you can arrange viewings directly with potential buyers on the site’s online calendar. Other long-established property marketplaces include Houseladder.co.uk, where you can list your property for free, and HouseWeb.co.uk, which offers packages from £47 for three months.
Mark Devaux, managing director of HouseWeb, says: “When we first started out nearly 20 years ago, only 1% to 2% of homes were sold privately, while now it’s 8% to 10%. If buyers and sellers deal directly with each other, it removes a lot of the stress out of the process. When you use an estate agent, there’s more scope for misunderstandings to arise.”
More adventurous vendors are now making the most of social media to market their properties. Take Josh Hocking from Lytham St Annes, who recently posted his two-bedroom, semi-detached property on Facebook with a price tag of £195,000. As an incentive, he offered to give £1,000 to the person who ‘shared’ the posting that brought it to the buyer’s attention. His advert went viral with more than 80,000 shares.
Ebay is another possibility: placing a classified ad costs just £35, with no commission if you sell. As property listings tend to run for 28 days, there is plenty of time to arrange viewings before the bidding ends.
Due to the wide variety of laws governing the sale of properties, eBay says its property listings are not legally binding. Instead, they are simply a way for sellers to advertise their property and meet potential buyers.
At the close of the auction, the seller should contact the winning bidder to discuss entering into a contract for the property. However, neither party is obliged to complete the transaction.
Another option, which seems more widespread in the US, is to produce a video of your property and upload it on to YouTube, then post the link on Facebook or Twitter.
Online estate agents
You can cut your costs while still being able to market your home on the main property portals, such as Rightmove, Zoopla and PrimeLocation, by signing up to an online agent.
Alex Gosling, chief executive of online agent HouseSimple.com, says: “Most people now start their property searches online, yet consumers are still paying for traditional agents to have a high street presence. The reality is that online estate agents offer an almost identical service to that of a high street agent but for a fraction of the price.”
There are hundreds of companies out there, so you need to tread carefully. Most online agents won’t show people around your home, so think twice if this would be a problem for you. Fees vary greatly from around £200 to £1,500, with some sites offering a choice of either a pay- as-you-go or an upfront fee.
To whittle down the choice of agents, take a look at two comparison sites: Sellingup.com and the HomeOwners Alliance website, Hoa.com. With Sellingup, you can compare agents by price and size, while Hoa.com also gives background information on each company. All the agents featured on both sites have signed up to The Property Ombudsman, which mediates on disputes between consumers and estate agents.
Oliver Lewis, editor of Sellingup, says: “Although there are more than 200 online estate agents registered with The Property Ombudsman, many of these are small, one-man-band-type businesses without much of a track record. There are far fewer well-established online agents, perhaps around 50, but the majority of the market is owned by the ‘big five’, which are Purplebricks, eMoov, HouseSimple, House Network and Tepilo.”
Some online agents, such as Turtle Homes, focus on being the cheapest and offer a no-frills deal for less than £200 that does not include taking photos and drawing a floor plan. Others will handle the sales progression and negotiation for you but in return for a higher fixed fee.
You will also need to do your homework when it comes to valuing your property, as most online agents recommend automated valuation tools to work out the asking price.
“This clearly won’t be as accurate as an agent with local, up-to-date knowledge of the market,” adds Lewis. “This is changing though, as the top online agents are rapidly recruiting ‘local property experts’ across the country, who are able to bring a much needed human element into the valuation.”
The HomeOwners’ Alliance website features the main players, but also agents who are not as well known but have a good track record, have something else to offer, such as a pay-as-you-go facility or virtual walkthrough technology, or can provide the same services cheaper, such as SellmyHome, Hatched, IamtheAgent, Urban and 121Move.
While comparing online agents, look out for two newcomers. Firstly, easyProperty, the latest venture from easyJet’s Sir Stelios Haji-Ioannou, was launched in September and offers three packages at £475, £825 or £1,500, depending on the level of service you want. High-tech online agency YOPA, which launched in May 2015, charges a flat rate of £780 outside London and, unlike many online agents, arranges for a ‘property expert’ to visit your home for a free valuation. You can also pay an extra £150 for an agent to attend up to 20 viewings.
Angela Kerr, director of the HomeOwners Alliance, says: “The term ‘online agent’ doesn’t really do justice to the amount of choice on offer for consumers. Some online agents are hands off and let the property portals do all the work – for example, eMoov – while other models – easyProperty, for example – are based online but have lots of local experts on hand to help you with valuation, conducting viewings and negotiating.
“We still warn consumers not to take online agents at face value, though. If they claim they can sell your home for £475, we advise consumers to check that includes all the essentials – professional photos, floor plans, descriptions and being placed on the main property portals, as well as VAT.”
Hiring a buying agent to find the right property for you used to be the preserve of well-heeled buyers who didn’t have the time – or inclination – to search for properties themselves.
Over the past few years, this has started to change with buying agents now accepting budgets as low as £300,000 in some cases, which means that it is something even hard-pressed first-time buyers can now consider.
Homeowners approaching retirement are also hiring agents when they’re looking to downsize. Expect to pay anything from £500 to £1,000 as a one-off registration fee plus around 1.5% to 2% of the cost of the property. As you could spend as much as £11,000 in fees on buying a £500,000 house, you can see why it mainly attracts high- end buyers.
But an experienced property finder can offer more than just the time you’ll save. They will have built up a good relationship with estate agents, so they’ll find out about ‘pre-market’ properties long before they are available to the general public. They can also negotiate on your behalf, so you could get some of your fee back if the asking price is reduced.
Jo Eccles, managing director of Sourcing Property, says: “Buyers should interview a number of buying agents. There is a big difference between using a one-man band, with limited manpower and experience, versus an established company with an experienced team and pooled resources.
Speak to the different buying agents about their experience in the areas you’re looking in; they should be able to reel off purchases they’ve done for other clients and know the area, plus the local estate agents, very well.
“Also try to find out how long they have been in business; the longer they have been established, the more solid you’d expect their business foundations and procedures to be. Their contract should also be an indicator in terms of how comprehensive and compliant it is with industry standards and cooling- off periods. And check if they’ve won any industry-recognised awards or have a good presence in the press, which all adds to the credibility of the firm you’re using.”
Henry Sherwood, managing director of The Buying Agents, whose core market is buyers looking for homes in the £1 million to £3 million price bracket, adds: “Some of our consultants make more than 200 calls a day to agents and contacts, so we tend to know what is coming on the market long before anyone else.
We often view property days before there are floor plans and photos, so we can start to negotiate before the property hits the market.”
High street agents are keen to get the message across that house sellers are not getting the same level of service from their online rivals. High street agent haart recently asked 700 consumers for their view of estate agents.
It found that 88% of those surveyed believe that face-to- face meetings with an agent are an important part of selling a home. It also suggested that vendors tend to overestimate the fees high street agents charge: 76% wrongly believed that traditional agents’ commission was higher than it actually was, with 10% suggesting that it was more than 10% of the selling price.
Paul Smith, chief executive of haart, commented: “We welcome anything that injects a healthy dose of competition into the sector but for the vast majority, the reassurance of local expertise, regular contact and inside knowledge of potential local buyers ticks all the boxes.”
James Wyatt, a partner at Barton Wyatt estate agency in Surrey, agrees. “Online agents largely don’t have the marketing expertise we have. But the main point is that buyers want to talk and to be reassured. You can’t do that online. Would you buy a Roll-Royce – which is cheaper than a house – online? No!”
Perhaps the way forward is for high street estate agents to offer a hybrid experience, combining up-to- date technology with a personal service. For example, Haus Properties, – an agency in west London set up by BBC Apprentice finalist Jamie Lester – uses ‘open book’ technology to provide its vendors with an online journal to track exactly what’s happening with their property.
As well as correspondence, details of appointments and the applicant’s buying position and feedback, a useful ‘My Competitors’ feature offers an insight into similar houses in the neighbourhood, how long they have been on the market and whether they have ever dropped in price. Its ‘Vital Statistics’ section includes figures to highlight how many times the vendor’s property has been viewed on online portals, too.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.