In this article, we consider the issue of selling houses, both with and without the services of an estate agent. You’ll be able to read about:
- The pros and cons of using an estate agent
- The growth in online estate agents
- Selling your home privately
- Selling your property at auction
- Offering your home in a prize draw
Approximately 90% of UK property sales are carried out using the services of an estate agent, and the industry makes estimated profits of £4 billion every year. But are estate agents really worth the money?
Before looking at alternative methods of selling your home, we take a brief look at the advantages and disadvantages of using an estate agent. We then weigh up your other options.
What are the pros and cons of using an estate agent?
One of the main benefits of using an estate agent is that they know the property market in your area inside-out. Their in-depth knowledge and their access to prospective buyers make it easier for them to market and sell your home. Another advantage is that they’re able to devote time to investigating any delays or last-minute hitches. If you didn’t use an estate agent, would you have the time and patience to do this on your own?
The main complaint that people have about estate agents is the price that they charge for selling a property. An average 2% commission on the sale price will end up costing you thousands.
Another drawback of using them is that they may have 15-30 other properties to sell. How much of their time and attention will they devote to yours? They may not be interested in getting the maximum price for your home since it won’t make a significant difference to their commission (in terms of the extra work they may have to do). If you’re considering not using a High Street estate agent, what are the alternatives?
The growth in online estate agents
Online estate agents don’t have a bricks-and-mortar base so their overheads are much lower. As a result, they are much cheaper than their High Street counterparts. You can save even more money if you pay their fees up-front.
Most online estate agents won’t be responsible for viewings. Many use an online system where these can be arranged.
Online estate agents usually offer a range of prices according to the ‘package’ you’re interested in. The price also depends on whether the property will be advertised for a fixed or unlimited period, and if you want any add-ons (such as premium listing). However, the fee for a basic package usually includes photographs, floor plans, advertising and a For Sale board. One main difference is that most online estate agents won’t be responsible for viewings. Many use an online system (accessible to sellers and buyers) where these can be arranged.
The DIY option: Selling your house alone
Another way to avoid using estate agents is to sell your house privately. Think carefully before you choose this option as it will require a lot of work. You will have to arrange for photos to be taken of the property. It’s highly advisable to use a professional who will have the expertise to show off its highlights from the best angles. You will also have to write a description to accompany the photos. Be concise and avoid using cliches.
Although some people worry about pricing their property as they aren’t experts, you can do this with research beforehand. Look at what comparable properties have sold for in your area, and think carefully about the possibility of being asked to drop the price. Have a set idea in your mind before any negotiations about how low you’re prepared to go and stick to it.
There are a number of options open to you when advertising your property. Although there are websites for private house sales, don’t forget about the traditional method of adverts in the local press. An increasingly popular way nowadays is to use social media. Some sellers have even organised live streaming, having films made by a vlogger or an American-style ‘Open House’ to attract buyers.
Selling your house at auction
Properties which sell at auction tend to be the ones that lenders won’t grant a mortgage for. For example, they are non-standard build, unusual conversions and/or need extensive renovation work. Although auctions might be a viable option for these hard-to-sell properties, auctioning can work out as costly as an estate agent. Not only will you have to pay 2.5% commission plus VAT but you’ll still have to pay the auctioneer even if the property isn’t sold.
Offering your home in a prize draw
You’ve probably read stories in the popular press about homeowners who choose to sell their home by selling tickets. Be very careful before selecting this option since prize draws are governed by the Gambling Commission. Anyone breaking the law could face up to 51 weeks in prison; a fine of up to £5,000 and a further 12% penalty charge from HMRC on tickets sold.
When the prize for a lottery or raffle is worth over a certain value, it’s judged to be run for your own personal gain, which is illegal. You could therefore offer a Prize Draw, and turn it into a test of skill by asking participants to solve a puzzle or set some questions. Alternatively, you could make it into a Free Draw by selling tickets, but also offering a well-publicised free (postal) option to contestants.
You should also be clear about the terms and conditions. Not only must you set a final entry date, but you must think about what you’ll do if you don’t sell enough tickets to cover the value of the property. Some people give a cash equivalent to the money raised from the sale of tickets (after subtracting their own costs in organising the draw), and might combine this with a charitable donation.
Concluding words on selling a house without an estate agent
Moving house is a stressful time for all of us. Even more so when it also involves buying and selling property. Think carefully before dispensing with the services of an estate agent. Make sure that you have the time, commitment and necessary skills to take an alternative route. If you drop your property price by 5% when an estate agent might have got the asking price and only cost 2% in fees, this could end up costing – instead of saving – you money.