August 4, 2020
Online agents versus traditional – what are the pros and cons?
It’s a topic which provokes fierce debate, with passionate opinions on both sides, but what are the pros and cons of the online versus traditional model?
During lockdown, pretty much every agency across the country became an online one as face-to-face communication, in-branch visits and viewings were all disallowed. While the market has been reopen since May 13, there are still restrictions in place and virtual viewings/valuations are still being encouraged.
Traditional agents may have learnt some lessons about what they could do better. Maybe they will prioritise more digital solutions moving forward. Maybe they will even consider hubs rather than expensive offices. Equally, many will have missed the more traditional aspects of agency – the face-to-face interaction, the building of relationships with clients, the live viewings.
Here, we explore the pros and cons of each model.
Online agents – what are the pros?
Responsible for between 4-8% of the market, and dominated by a number of big players, the online model puts forward its lower costs and greater flexibility as its main selling points.
Fees for online agents tend to be fixed, and are often lower than their high street counterparts. Some even offer to homes sell for free, or at massively reduced rates. They may even offer a ‘no sale, no fee’ approach.
The lack of overheads (they don’t have branches on high streets, although they do have hubs or central HQs) means they can charge less in fees and may be able to spend more on advertising, PR and property marketing.
Sellers also have more control over their properties. This could include conducting their own viewings. Or even negotiating directly with their buyers. Some sellers prefer this level of autonomy.
And the cons?
Online agency fees, while lower, are nearly always paid upfront. This means you pay out as a seller even if your home doesn’t sell.
With online agents being paid no matter what happens (traditional agents are only paid a fee upon exchange of contracts), there is a chance they will be less motivated. Even if your home doesn’t sell, they still get paid.
While a traditional agent should go out their way to help you sell your home (for the best possible price) because it’s in their best interests, this might not always be the case with online agents.
Online agents, too, tend to be much more hands-off. Property viewings will normally be carried out by the seller. While that might have been OK before, even desirable for some, the new normal has a number of requirements when it comes to making viewings safe.
Buyers may be more reassured by the presence of an agent. One who understands the new Covid-safe viewing requirements can ensure they are properly implemented.
Support may be less tailored and bespoke – with communication usually only by phone and email. Although this could now be seen as a benefit, with Covid-19 making face-to-face communication with people outside of your household less desirable, we are all missing human contact and this is likely to return in some form long-term.
Sellers will also often be left to their own devices when it comes to negotiations with buyers and sales progression. Meanwhile, marketing can sometimes only last for a fixed period of time, depending on your package.
Traditional agents – what are the pros?
Most traditional agencies will have some kind of branch structure – with offices typically found on high streets up and down the land. They tend to employ a combo of traditional techniques – for sale/to let boards, newspaper and magazine advertising, leaflet drops – and more modern methods such as online marketing, a strong portal presence and social media advertising.
Fees are typically on a commission basis and calculated as a percentage of the price paid by the buyer. The commission is usually between 1-3%, which is lower than many equivalent nations.
Because the amount of commission a traditional agent gets depends on the price a buyer is willing to pay and the successful exchange of contracts, there is an extra incentive for them to get the sale over the line quicker and for the best possible price.
Traditional agents will also take a lot of the pressure off a seller by taking care of negotiations and communication with the buyer and their legal representatives, as well as arranging the conveyancing process on behalf of the seller and putting pressure on the other side if delays and stalling tactics are an issue.
Furthermore, traditional agencies tend to have a list of buyers to target your home towards, and an excellent local knowledge of their area – to know what buyers want and what the main selling points are in terms of local amenities and schools. Rather than one local property expert covering a huge area, traditional agencies are much more localised.
And the cons?
Traditional agents will cost more – although the counter argument is that you get more for your money.
There has also been a general decline in footfall in recent years, which will probably be exacerbated by Covid-19, and some would argue that for sale boards and newspaper advertising no longer hold the value they once did. Some argue that too much money is wasted on these marketing techniques.
With the world set to become increasingly digital over the coming years, some traditional agencies could also be left behind. Again, though, the counter-argument would be that many traditional agencies do have a significant online presence. On the portals. On their own websites. On social media.
Here at Atkinson McLeod, we are biased in thinking that the traditional agent model is the way forward, but we appreciate that the world is changing and this is likely to be accelerated by the pandemic. Our offices are now open again, but we are offering free virtual tours of the properties on our books. And, even as a traditional agent, like most of our colleagues we offer a combo of traditional and digital methods to get the most for our sellers and landlords. We recently revealed the growing importance of virtual viewings to buyers and tenants, which is likely to be a long-lasting legacy of the pandemic.
If you have any questions about selling, buying, letting or renting a home in the London area, we are here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.