Private house sales, otherwise known as For Sale By Owner, have long been viewed as the unreliable, and at times disruptive, black sheep of the property family.
Although us Brits are quick to voice complaints about the cost of agency fees, selling a home without the involvement of an estate agent is still a relative rarity, with private sales making up just 3-5% of total market share in the UK.
But in the US – where property owners are more comfortable and confident with the idea of selling their own home – FSBO sales account for about 15% of the market.
This is in part due to the fact that real estate fees on the other side of the Atlantic are significantly higher than the UK, with a typical commission of 6%. This means that a seller of a $500,000 property would pay $30,000 to their real estate broker.
In comparison, a £500,000 home sold in the UK would cost the seller just £7,500 at a typical rate of 1.5%. This significant difference in cost goes some way to explaining why private sales have not taken off in the UK in the same way they have in the US.
Traditionally, selling your own home involved the use of truly DIY physical marketing – designing and creating your own brochures, word of mouth in the local community, listings in local newspapers and posting classified ads.
But advances in technology and the scope of digital business have opened a host of new avenues not only to private sellers but to estate agents as well.
One of the most significant technological advances in the property industry has been the introduction of online property portals – vast digital marketplaces where buyers can search through properties from a huge variety of sources in the comfort of their own homes. Estate agents pay to list their properties on such platforms as the lead generation and coverage they provided is well worth the cost.
You would assume that private sellers would benefit the most from innovative new ways to market a property online, as it dramatically increases the scope and reach of their marketing efforts. However, as the digital dominance of the leading portals expands ever further, sellers considering a private sale are increasingly put off by the inability to list on these key platforms.
The refusal of major portals to accept private listings hinges on the fact that their business model relies on charging the agent representing the property, and not the seller. Partly as a result of this, the relationship between leading portals and private sales providers has been frosty at best, and confrontational at worst.
What does a private seller who wants to avoid the involvement of an estate agent – but still secure a listing on the most valuable property platform available – do?
Enter the online estate agent, which can facilitate a listing on the leading portals, without all the trimmings of a traditional high street agent.
OEAs supposedly represented a middle ground between the high street service and the DIY private sales approach at the other. But in reality, many of these online agents offer little more by way of service and support than a typical pure private sales website.
So what really is the difference between online estate agency sites and private sales sites? The answer is very simple. One will get you a listing on RightMove and Zoopla. The other will not. In this sense, many OEAs are merely a shop window for the leading portals.
New online agencies are popping up almost weekly, and some with serious multi-million pound investment deals backing them. But is there really room in the market for so many OEAs? Time will tell whether the online agency model will endure and if the millions and millions of pounds being ploughed into the sector will bank a return for their investors.