End of estate agents? What you need to know about commission-free online realty

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If you have been thinking about selling the family home and downsizing, then fixed fee, zero commission online estate agents could be an option. But, before you sign up, here is everything you need to know. Source: Getty

Selling your house is no easy feat and there are a plethora of things to consider, from decor and repairs to asking price and whether to sell your place furnished, all of which can affect your sale before you have even considered bringing in an estate agent to guide you through the process.

But now, given the fact that almost everything can be done online these days, many Aussies are moving away from the traditional estate agent experience and opting to use zero commission companies based primarily online to lower the outgoing costs of their property sale.

Outlets such as Upside and Purplebricks have popped up on the market in recent years – with some enjoying more success than others – but, before you think about signing up, what do you need to know and how do these types of companies work?

What options are out there?

While the market is not as saturated here as in the UK, there are still a few options to consider when it comes to selecting an online estate agent, one of which is Upside. Adam Rigby, Upside founder, said the market is changing and urged savvy homeowners to take advantage of this.

The Aussie-based company said that by selling fixed-fee, you can dodge high commission costs which can reach as much as 3 per cent with standard agents, as firms like Upside charge a one-off fee which encompasses all potential other costs.

British start-up Purplebricks also launched an operation Down Under in 2016 too, however they announced that they would be shutting up shop in Australia for good in May this year, with the final closure date still to be confirmed.

“After much consideration, we have made the difficult decision to close the Australian business,” a statement on their website reads. “We’ve been operating here for two and half years and, unfortunately, we have been unable to make the progress in the Australian market that we’ve wanted.”

There are other less well-known options available online too, such as PropertyNow and other internet hits. However, ensure you research the site you choose thoroughly before committing.

How do they work?

One upside of using a traditional agent to handle the sale of your home, is that most of the hassle is taken care of for you. However, when you opt to use an online service or hybrid agency, more of the onus falls on you, the homeowner.

However, what is included and what you need to do depends entirely on which company you decide to go with as some, such as Upside, offer appraisals in person from a local real estate agent, whereas others may expect you to arrange your own property appraisal or surveyance.

If you’re thinking about selling up, it’s always best to check what is included – and most importantly, what’s not – before you sign up.

What fees are involved?

Traditional agents operate on a commission basis, meaning they are entitled to a portion of the final sale price. Which, in the case of the Australian housing market where the average property price sits at around $1,027,962 in Sydney, can end up costing you tens of thousands of dollars.

But, in the digital age, new-fangled online real estate firms have ditched this model and instead charge clients a one-off fee for their services.

The standard commission rate sits at around 2.2 per cent, however this can often rise to as high as 3 per cent. In addition to the commission charged, there are often other, perhaps unexpected, charges that crop up for things like surveyance.

However, companies like Upside claim to charge their customers a one-off fee which covers all potential costs, including advertising, according to their website. In Upside’s case, the fee for selling your home with them is $8,900, of $9,700 if you choose to sell via auction. It should be noted that the fee will vary between companies.

Are you considering downsizing? Would you use an online-only estate agent service?

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

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