Cut out the middle man

Estate agents are under pressure to be more transparent over fees but why not sell your own house, says Stephen Pritchard

According to no lesser authority than the Office of Fair Trading, people selling their homes often do not realise how much it will cost to do so. The estate agent's practice of quoting their fees in percentage terms, rather than as cash, means that sellers are not prepared for the bills - usually in the thousands - they face.

According to no lesser authority than the Office of Fair Trading, people selling their homes often do not realise how much it will cost to do so. The estate agent's practice of quoting their fees in percentage terms, rather than as cash, means that sellers are not prepared for the bills - usually in the thousands - they face.

The OFT has called for estate agents to spell out their fees, in cash, before sellers sign up for their services. But rules to ensure this happens have yet to be implemented. In the meantime, sellers may feel that, given the dramatic rise in house prices over the last few years, they get a raw deal.

Estate agents typically charge around 1.5 per cent to sell a property as sole agents. For joint agency, where a home is advertised with a number of companies, these fees can rise to 3 per cent or more. According to research by We're Moving, a south-London based company that sells houses for a fixed fee, Londoners alone paid more than £500m in estate agents' fees last year.

We're Moving charges £1,500 irrespective of the value of the home. This would save £1,500 on a £200,000 home, rising to £6,000 on a £500,000 property. We're Moving is able to cut its costs by handling most dealings over the internet, rather than through high-street shops. And it is not the only company to do so. Since the dot.com boom, several companies have tried to break into the estate agency business by offering attractive commission rates. But relatively few have survived.

One company that has takes quite a different approach to selling homes. Propertybroker is not an estate agent in the conventional sense, but a packaged service for owners who are happy to handle their own sales.

The company is now in its seventh year, and operates over the internet and by phone. Director Kay Davis says that some clients do not even have internet access themselves, but are happy to set up their online entries by phone. Propertybroker does not charge a commission, but levies a fee of £137 for an entry in its website, digital photography and a For Sale board. The standard service is open to home owners within the M25 area, but Ms Davis says that they will send boards out to people further afield. Home owners can send in their own property pictures. An optional additional fee covers press advertising.

The For Sale board is important: estate agents calculate that as many as 60 per cent of sales come from buyers spotting boards on the street. But Ms Davis stresses that you do not have to employ an estate agent to put up a sign.

Agents, for their part, argue that they do much more than that. Two issues that deter home owners from selling a property privately are working out the right valuation for their homes, and dealing with viewings.

Naturally, anyone selling their home will be wary of letting strangers into the house. At Propertybroker, however, Ms Davis stresses that no viewings take place before the seller and would-be buyer have spoken over the phone; all initial enquiries are handled by Propertybroker's offices. "You do hear of people being sent round by estate agents without the seller knowing anything about them," she says. "Agents do not vet buyers in the way people often feel they do."

Whether a home owner is selling through a website, or by advertising in the local press, arranging viewings privately has the advantage of allowing times that are convenient for buyer and seller, rather than for the agent. Sellers can ask as many questions as they want to establish the buyer's bone fides, but one rule is always to take the caller's number and ring them back.

When it comes to the private seller's other main worry, working out a valuation, even estate agents admit this can be a black art. Websites such as Upmystreet.com will give some idea of local prices, as will looking at local agents' windows. Ultimately, though, the market will decide how much a property is worth.

Propertybroker's Ms Davis says it is easy to change the asking price on the web. Companies charging a fixed-fee have no axe to grind when the seller moves the price either up, or down.

Where estate agents undoubtedly earn their fees, though, is with difficult sales. According to Peter Bolton King, chief executive of the National Association of Estate Agents, commission levels have fallen as property values have risen in the last few years, from around 1.75 to 2.0 per cent to around 1.5 per cent now. Good estate agents, though, are working just as hard for their fees.

"A good agent will know who is looking for property and they will find you a buyer," he says. "But there is a lot that can go wrong between exchange and completion. That is where agents earn their money: checking on solicitors, on finance, and checking on the chain."