The Internet is the most incredible invention and has changed the way industry works and the way we live our lives. How did we ever manage without it? However, computers and the Internet are not the solution for every function of commerce.
For instance, a sophisticated computer programme working in a conventional estate agency office, helping to match buyers with suitable properties is not as effective as it would seem. Invariably buyers extend their initial budget, often by 30% (in some cases), and end up buying a completely different property to the one they originally asked for. The computer will never allow for this and to overcome this weakness it requires a canny estate agent, in person, to follow the twists and turns of the buyers ‘whims and fancies’ throughout the process. There is a great art in this and the skilled agents do far more business than the ‘nudniks’.
Now, that brings us nicely onto the on-line estate agency model. Looks great doesn’t it? What a bargain it at first appears. Watch out though it could put at risk part of your largest tax-free capital asset and be a safety risk. Let me explain.
Conventional agency is a contingency based system with fees between 1-2% charged at the end of what could often be a tortuous process (but not always) that can take months or years to complete. Only when the seller gets the last drop of benefit, by way of a sale on their optimum terms, does the agent get his reward. No problem so far; the agent deserves a higher fee as a result.
Invariably an agent actually sells a fraction of the properties that they take on, market and fund, but this is all part of the contingency business model and rightly so. Yes, it is a higher risk for the agent but it’s fairer for the seller. The competition between the agents and market forces ensures that the fees are always relatively low and the best terms are achieved. The estate agent deals with all the functions, from start to finish, and the seller is spared any personal involvement unless they want to be ‘hands on’. At the end of the process the seller then ‘nurses that warm inner satisfaction’ that they have achieved the best possible price. Problem solved.
The on-line estate agency model on the other hand involves one of their representative (who may not be particularly well trained) coming to see you, measuring your house and charging you circa £500 for the listing, which you have to pay regardless of whether you sell or not. If you don’t sell your home via this method you have to go to a conventional agent and pay again. ‘You are on your own mate’ as the expression goes. You have to work out the asking price and the value, which may be wildly inaccurate. You have to show any potential buyers over the property on your own (who you never know may be ‘casing the joint’ or, even worse, be a threat to your safety) and then you have to negotiate a price yourself with a buyer who may be far more skilled at it and, therefore, you put yourself at a huge disadvantage which could cost you a fortune. What a deal!
If you bear in mind that the average British consumer would rather ‘run through the high street naked’ than negotiate the sale of their property this model must be ‘daftness on a stick’. Your aim is to reduce selling fees (a laudable pursuit maybe) but you could end up giving away tens of thousands of pounds for a sale under value and you have that agonising feeling that you will never know whether you sold at a high enough price.
There is nothing new about the on-line estate agency model. Thirty years ago there were a few listing only estate agents who encountered resistance from the consumer to the principal of a ‘listing only fee’ and died a death after ten years. So we wish them luck with this pursuit.
Despite conventional estate agency being considered one of the lowest esteemed professions, there is a reason why, in this Internet dependent age, 99% of consumers still choose to use them for a sale and purchase. In some things there are just no short cuts.
In there lies a perfect illustration where the Internet/computer on its own is just not the right medium for the job at hand. I rest my case.