Are upfront fees dead? Despite many estate agents promoting a ‘pay less upfront’ pricing model, 60% of people considering using an online agent would prefer to pay fees on completion of their sale.
That’s according to data we have collected over that past 12 months, here at Property Road.
2,717 home sellers who were actively considering selling via an online estate agent took part and were asked a series of 5 questions about what they were looking for in an online estate agent.
We also found that 44% are happy to conduct all viewings themselves and 47% value an online agents’ ability to achieve the asking price as the most important factor in deciding which one to use.
60% Prefer ‘Lower Risk’ Of Paying On Completion
When given a choice between the ‘lower risk’ of paying on completion versus the ‘lower cost’ of paying upfront, 60% of respondents preferred to pay on completion with 22% indicating ‘no preference’ and only 17% opting for paying upfront.
While many online estate agents initially launched with an upfront pricing model, most of the major players have since added the option of paying on completion, and thereby more closely mirroring the typical high street estate agent.
However, there are still some notable exceptions, such as market-leading Purplebricks who have long-resisted introducing a true ‘Pay On Completion’ option.
Our research suggests this may be costing the brand a lot of business. We expect that is only a matter of time before Purplebricks follow suit and introduce a ‘no sale, no fee’ style offering.
High street estate agents who have introduced a ‘pay upfront’ option in response to the threat of online agents may well want to revisit their decision to ensure they are still meeting the demands of potential vendors.
Comments from the founder of Property Road, Paul James:
“While most online estate agents have positioned themselves as the lower cost option versus high street brands, this has been heavily based on consumers paying for the service upfront.“
“Our research suggests that even among those actively considering using online agents, there isn’t a huge appetite within the market for a ‘pay upfront’ pricing model.”
“This is despite the incredible buoyancy seen within the market over the past 12 months, with demand massively outstripping supply and the vast majority of properties being snapped up very quickly. This should have given consumers more confidence in their ability to sell and therefore increased the appeal of the lower fees offered by paying estate agents upfront. However, that simply hasn’t been the case.”
47% Most Value Online Agents ‘Ability To Achieve Asking Price’
When given a choice between five different factors that can help distinguish between estate agents, 47% felt that the ‘ability to achieve asking price’ was the most important trait they valued.
This compares to 25% who prefer the ‘ability to sell properties quickly’ and 12% who value ‘good customer service’ the most. Meanwhile, ‘low prices’ (9%) and ‘option to pay on completion’ (4%) were the least selected traits that people looked for.
This suggests that while 60% of people prefer to pay on completion, it isn’t necessarily the factor that’s most likely to affect peoples decision.
Vendors appear to be more concerned about reaching their desired asking price than they are about selling quickly, though both are considered more important than factors linked to fees or service.
While many estate agents already highlight their performance in terms of the percentage of asking price typically achieved and how quickly they sell properties on average, this shows highlighting these factors (especially if regularly updates and full transparency is achieved) could be key to winning instructions.
Comment from the founder of Property Road, Paul James:
“What vendors are looking for in an estate agent has never been complicated. They want an agent that can achieve the price they say they can, in a reasonably quick amount of time, for a fair price. Our data shows that this is still very much the case, though perhaps the fee they pay to the agent for doing so isn’t quite as important as many believe.”
44% Are Happy To Conduct Viewings Without The Help Of An Agent
Perhaps partially fuelled by the ‘work from home’ culture that the pandemic has helped establish, some 44% of respondents were happy to conduct ALL viewings themselves.
A further 26% were happy to conduct SOME viewings themselves but would still want an estate agent to do some too. While 28% did not want to conduct ANY viewings themselves.
As all respondents were already considering using an online estate agent, this may reflect the nature of online agents who often promote ‘vendor-hosted’ viewings and charge additional fees for viewings hosted by local agents.
However, it may also be the first signs that vendors are increasingly willing to get their hands dirty and the days of estate agents spending their days travelling from viewing to viewing may well be numbered.
Comment from the founder of Property Road, Paul James:
“We’ve been encouraging sellers to consider hosting their own viewings for a long time now and this shows that attitudes, certainly among those considering online agents, appear to be changing. While it’s not for everyone, vendors know their home much better than any estate agent ever will and with a little preparation and forethought, can often do a better job at showing off its best bits.“
33% Believe Their Property Is Worth In Excess Of £400,000
While online estate agents have traditionally been associated with selling lower value properties, there are signs that they are slowly gaining market share in higher value properties.
Of the people we questioned that were considering using an online estate agent, 33% thought that their property was worth in excess of £400,000.
However, the majority (52%) expected their property to be worth between £150,000 and £400,000. Only 12% were expecting a valuation below £150,000.
Comment from the founder of Property Road, Paul James:
“It has always made sense that online estate agents would eventually appeal more to higher value property sellers due to the increased savings that can be made against percentage based fee structures. However, online agents have faced an uphill battle to convince consumers that it isn’t always a case of ‘you get what you pay for’. These results show that their message may finally be starting to get through.“
26% Are ‘Unsure’ Whether They Require An Energy Performance Certicate (EPC)
When respondents were asked if they required an Energy Performance Certificate (EPC), the results were fairly evenly split between ‘No’ (37%) and ‘Yes’ (36%).
However, 26% of people said they were ‘Unsure’ as to whether they needed one or not.
This suggests that there is more work to be done within the industry to educate homeowners as to when an EPC is required, how long it is valid for, and how to check if a property has a current valid certificate.
Comment from the founder of Property Road, Paul James:
“Our results show that EPCs are still not on high on the list of things to consider when selling a house. This means the onus is still on estate agents to ensure vendors understand EPCs and meet their legal requirements.”
About The Survey:
2,717 visitors to the Property Road website who were showing an interest in the services of online estate agents were asked 5 questions to help match them to the best online agent based on their answers.
The survey ran from 17th May 2021 to 16th May 2022.
A press pack for this research can be downloaded here.
