Whatever you think about the internet, it does bring one great benefit to mankind — the gradual death of the old-fashioned estate agent. The funeral is still some way off. At the moment, only 5.5 per cent of UK house sales are carried out through the new, ultra-cheap, online estate agents. But that has risen from practically zero a decade ago. By 2018, the figure is expected to rise to 50 per cent, and to as much as 70 per cent by 2020.
I’d have thought the increase will be even more rapid than that. At the moment, 90 per cent of all homebuyers begin their search on the internet before most of them go on to a bricks-and-mortar estate agent to complete the deal. It won’t be long before they realise their journey to the High Street is a wasted — and ruinously expensive — one, and they’re better off staying online for the whole transaction.
Most traditional estate agents charge 1 to 2 per cent on the sale price, plus VAT. The new online agencies charge a flat fee of around £500. Apply the 2 per cent figure to a typical London house, costing £403,792, and you save yourself £7,576, about a quarter of the average Londoner’s net salary, by using the new option.
The business model of the old-fashioned estate agent is ludicrous. Why pay someone £20,000 to sell you a million-pound house in London, but £2,000 to sell you a similar £100,000 house in Burnley? It’s not like you’re paying for much expertise — no qualifications are needed to become an estate agent. You could set yourself up as one tomorrow. They’re certainly no better at valuing your house than you are — thanks to the internet, I have an encyclopaedic knowledge of house prices in my street over the past decade.
And why pay for the estate agent’s grand office and his decal-plastered company car? Typically, 8 per cent of your fee goes on the estate agent’s branch, 7 per cent on his car and 51 per cent on his salary and the firm’s commission. What do you get in return — a whistle-stop tour and a few photos of the side return?
The estate agent’s knowledge, too, is extremely fragmented. Try asking an estate agent in Chelsea about comparable properties in Islington and he’ll refer you to his company’s Islington branch. These days, thanks to the internet, you can make the comparison yourself without getting off the sofa.
New online agencies have stripped the overheads to provide you with the bare minimum. You tend to conduct your own property viewings — which a recent YouGov survey says 55 per cent of Britons would prefer, rather than go to the bother of giving estate agents a set of keys and arranging mutually convenient viewing times.
The fastest-growing online agent, sellmyhome.co.uk, takes the photos, does the floor plan, sorts out an Energy Performance Certificate and advertises your house on an online portal, and all for £499. You do the rest — not just the viewings, but also the online description.
Maybe you’ll be just as disingenuous about the charms of your outside lavatory as the old-fashioned estate agents. But you won’t be mad enough to sabotage your own sale the way some disreputable estate agents do: tearing down rival ‘For Sale’ boards; pointlessly overvaluing your property; making up pretend rival buyers to hike the sale price so high that the sale collapses; concealing the sole agency agreement so that, when you try to switch agents, they hit you with a 3 per cent penalty charge.
Again and again, the internet has destroyed old cartels: think of the minicab apps that expose the overpriced, inefficient practices of black cabs. Or, even better, consider how the internet gets rid of the supposed professional altogether and lets you do the job better yourself. Airbnb, the American home rental company, has revealed how overpriced hotels are; we’d prefer to stay in each other’s houses than in a tiny, single-bedroom cell.
Every time, the old guard objects in vain to the new, more efficient kids on the block, as the cabbies and the hotels have. It’s like the old story of prostitution in Turkey, where the practice is legal but heavily regulated. Ladies employed in official brothels enjoyed a degree of protection which led to a decline in the quality of their services — and, not to put too fine a point on it, their person. A decade ago, the state grew less energetic in keeping out new entrants. As a result, the city was overrun by younger, lither and more reasonably-priced Natashas — to the fury of the old guard, and the delight of Turkish gentlemen.
No business is as interested in sorting out your life as quickly, efficiently and cheaply as you are. Some things you can’t do for yourself — like brain surgery. But other simple things — like selling your own house — are much better done by you. Buying a house should be no more complicated than buying a kettle. We should also do our own conveyancing — a long word used by lawyers to conceal an extremely simple transaction. Why pay £1,000 for something you should be able to do online for next to nothing?
When it comes to selling your house, you can now do practically all the sales basics yourself — the photography, the floor plans and all the rest of it. The supercheap agent noestateagentsplease.co.uk lets you do all that, and only charges you £49.98 to put your ad on their website.
When you pay a few hundred quid extra, you’re really paying for exposure to more people — for the online agent to register your house on one of the popular property websites, like the three biggest ones: Prime Location, Zoopla and Rightmove. It costs around £15,000 a month for an online agent to register on the big portals — which the cheaper online agents, like noestateagents-please.co.uk, don’t do.
In the old days, you were essentially paying for a less efficient property advertisement service from the traditional agents. In return for trousering that stonking 2 per cent of the house price, they’d kindly stick a photo of your house in their front window. These days, the old-fashioned estate agents are online, too, but they’re still charging you 2 per cent for a service that should cost a tiny fraction of that.
Estate agents began life as medieval stewards — disreputable figures whose sharp practices were reined in during the 18th century, when they were replaced by more respectable land agents and surveyors. The definitive way to clean up the age-old, dodgy reputation of the estate agent is to become one yourself — for your own house sale. Thanks to the cartel-busting internet, you now can.
Harry Mount is the author of How England Made the English.