Websites log on to the power of private sales
Large numbers of property sellers are abandoning the traditional services provided by estate agents and marketing their homes directly to house hunters via a growing number of private websites.
Sellers have become increasingly frustrated with inflated estate agents’ fees, especially when much of the initial marketing of properties is done through online portals such as findaproperty.com and rightmove.co.uk.
But vendors now have the choice of using one of around 130 websites that market properties privately to buyers, potentially saving them agency costs of up to 3 per cent of the property price.
The drawback is that these sites have only a fraction of the properties on the market, and only reach a small percentage of buyers.
“A lot of these sites are run by people from home in their spare time,” says Jim Craft, development manager at Flatshare, which runs a range of property websites.
He says these websites often focus on their local region, while some specialise in certain types of properties, such as periodproperty.co.uk and barnsetc.com.
These “buy from owner” sites have been banned from advertising on propertyfinder.com, one of the main property portals, as it claimed their presence was damaging advertising revenue from estate agents. Rightmove.co.uk also only accepts listings from estate agents.
Flatshare has launched a portal dedicated exclusively to direct property sales, propertiesdirect.com, which has private property listings from a range of websites.
Craft says that 2,000 potential buyers look at this website every day. The number of properties each website listed on its portal is selling varies significantly, from around 30 to more than 1,000.
The total number of properties on the site is around 3,000. In comparison, a site such as Rightmove, which lists property details from multiple estate agents across the country, has around 700,000 properties listed.
Some of the biggest names for private property sales include House Web, House Ladder, The Little House Company and ClickSell and new providers are entering the market all the time.
Craft believes the reason people are choosing these sites is “hugely financial”. He says a typical estate agent fee on a £267,000 property – the average London price – would be £7,843. In comparison, Rupert Hunt, owner of nomoreagents.com, a private site that launched last year, says a typical private property transaction might cost the seller £200.
“People are asking why should they pay this much commission for the work the agent is doing,” says Craft.
The cost of a private sale does, however, depend largely on what service you want and the type of property you are selling. Also the pricing structure differs between providers.
For example nomore-agents.com allows sellers to advertise on its site for free, but charges extra for further services. A “portals package”, which means the property is marketed on other websites such as Properties Direct and Fish4Homes is £18 per month, while a “for sale” board costs a one-off £49.
By comparison, thelittlehousecompany.co.uk, charges £89 for a standard listing on its own website, which includes services such as a legal compliance review and Google mapping. For a one-off payment of £135 the company will market your property on other websites until it is sold. It gives a discount of 25 per cent for second and subsequent properties, and a further 10 per cent if you have more than 10 properties listed.
Alternatively, cutthemiddleman.co.uk offers a one- month, three-month or “until sold” package. Owners can list their property for free until October 17. After that, costs will vary from £20-£120.
Sellers can usually market their properties on these sites even if they have a sole agent agreement with a traditional estate agent. However if the agent has sole selling rights it will still charge its fee even if the property is sold directly.
Craft says another advantage of these services is that the buyer can contact the seller out of hours. Also, because the two parties strike up a personal relationship, there develops a level of trust that could lead to a higher proportion of transactions being completed.
But estate agents are quick to highlight the pitfalls of these buy-from-owner deals.
Rupert Sebag-Montefiore, chief executive of Savills Residential, says that running the property sale yourself, especially if you work, is “almost impossible”. You would have to manage viewings and inquiries, as well as answer queries from buyers and negotiate the best price.
Sebag-Montefiore says that this may be feasible for properties at the lower end of the market as you can get a clear idea of price by monitoring similar properties. But for more expensive houses it is useful to have someone who can negotiate the sale price on your behalf. “Expertise can change the value of your house,” he says.
Also, these services do not generally provide as comprehensive a service as the established agent websites. For example, they might not provide floorplans, virtual tours or street maps.
Foxtons says: “None of these companies are household names and do not have the critical mass to target enough buyers.”
Some of the private property sites claim to have far-reaching marketing techniques. The Little House Company, for example, says its advertisements are seen by 3m people, while Houseladder.com says it has more than 300,000 visitors per month.
But in reality the number of buyers that seek out these sites is still fairly small. According to the Office of Fair Trading, around 6 of 7 per cent of property transactions in the UK are done online.
Foxtons says the sites are not big enough to make their presence known and because of their size, many fall outside the radar of search engines such as Google. “People just don’t know they’re there,” says the agency. But with more potential buyers conducting property searches over the web, awareness of private property websites looks set to grow.
The Financial Times Limited 2006
