An online agent is offering brokers a £500 referral fee for a vendor lead – despite charging only £395 upfront to sellers.
The firm, so far quietly under the radar, is also now boarding estate agents into its business model.
Agent Online says it can afford to pay brokers such a hefty sum partly because it also charges sellers a fee on completion, and partly because £200 of the referral fee comes from a conveyancer, if the vendor opts to use Agent Online’s recommended firm.
Dominic Toller, director and founder of the Bristol-headquartered online agency, said the business is pushing hard to grow its network of referring brokers to about 1,000.
An attraction for them is that as well as getting a fee for referring possible vendors, Agent Online asks for the broker’s assistance in financially qualifying potential buyers – typically, people looking for mortgages and other financial services.
Toller said: “We started Agent Online three or four years ago when we began looking at going down the Purplebricks and Emoov route – but we realised early on that we would have needed very deep pockets.”
He said the costs of customer acquisition were very high for these types of online or hybrid agents – “But we have kept our costs incredibly lean. As an online/hybrid agent, we are not currently looking to take over the world, but we are going to steadily grow.”
Agent Online charges a headline £395, which includes photography, floorplans, and listing on Rightmove and Zoopla for 12 months. Extras, such as one accompanied viewing, can be added for £45.
However, the £395 is an element of its ‘part and part’ package, where the sum is paid before any marketing; a completion fee is then agreed when the property sells.
The terms and conditions emphasise that the completion fee is still payable if the property sells to a buyer introduced by Agent Online up to a year after it has been disinstructed.
There is no guidance on the likely total cost of the ‘part and part’ package but it is likely to be a little pricier than the standard £995 upfront fee that is also charged.
Toller said that brokers are showing great interest in the referral offer – and that it makes total sense to them that Agent Online shares its revenue with the broker that introduced the vendor.
He also said that the business is attracting estate agents to join it – even though this has yet to be promoted.
He said: “It helps someone to set up on their own in a very cost-effective way. That someone could typically be an experienced branch manager wanting to run their own business, and have their own local branding.
“They can use their own name, but come under our umbrella and use our software, systems and services – for example, the viewings booking service or sales progression.
“We haven’t pushed this much, but already about half a dozen agents have joined us and we are in talks with a number of other firms.
“It works because it allows them to choose what price to offer a vendor, and removes a great deal of the agent’s fixed costs but enables the agent to retain control.
“It is proving particularly attractive to agents that need to reduce their costs at the moment in order to remain profitable.”
Agent Online currently has some 100 properties on its books.
Toller said: “From a marketing awareness perspective, Purplebricks has done an outstanding job building its brand, but it has been a very costly exercise.
“We have chosen not to try going down that route but rather work with the local agent’s existing brand. We do not charge upfront fees to agents that want to work with us and there is a very low monthly licensee fee.
“The online/hybrid agency market has had its beginning, and we don’t know how it will progress. But what I would say is that estate agency won’t go back to being what it was.”
Comments (11)
Dominic Toller, ex LMS….. need I say more? Legals are probably being supplied by his old ex Breeze and Wyles mates… and we know how good they were….
We work with outstanding estate agents, removals, mortgage adviswers and surveyors. Not in a million years would I seek a referral fee from any of them. Complete excellent network flor the public. Align with quality and your business grows and grows.
Dear Property Industry Eye,
You used to contain some great articles. Now anybody with a press release, an online agency ‘idea’, and some belief that they are going to sell thousands of homes where everyone will pay a few hundred to them to become millionaires seems to be the staple of choice.
The online market is what 6pc/7pc – we are told that around 10pc of the market uses to sell their home privately by themselves which online agency is effectively. So they have made very little inroad into the estate agency market and I believe not one of them has made a profit – so it’s not even a viable business proposition it’s a how quickly does investor money run for.
So why don’t we recharge ourselves, and get back to industry news that actually counts for the majority of the market, estate agents, who are the dominant players in the market and who I fear will be leaving your news round very soon with this kind of daily dross.
Madness
Give up
So it’s not £500. It’s £300 and a further £200 IF the vendor uses their conveyancer.
£500+VAT for a referral fee? I thought GetAgent.co.uk was a rip off with their fee’s! NetAnAgent.com seems to be the only PropTech company (Apart from the online portals) to generate anything of substance, and the fee’s capped at £450+VAT upon completion!
How these agents make any money is beyond me.
Okay, quick bit of advice from a dinosaur…you have 96 properties for sale, 12 of which are marked as sold. If you haven’t taken the money already, you have a pipeline of less than £5K. You’re in trouble pal. This will not work. I may have said this before (LOL) but if you’re charging less than £1k to sell a home, you’re not going to make any money, fact. But good luck!
Hello,
Thank you for your message. To clarify, Agent Online charge a marketing upon instruction of £395. Each vendor will then pay a ‘Completion Fee’ which the licensee agrees with their client prior to the commencement of marketing. The completion fee is on a no sale, no fee basis and can vary depending on local market conditions.
LeonF
“Agent Online charge a marketing upon instruction of £395. Each vendor will then pay a ‘Completion Fee’ which the licensee agrees with their client prior to the commencement of marketing.”
That being the case, your website is grossly misleading.
“Agent Online, National Online Estate Agency with fees from £395!”
“List for just £395″
NOWHERE on your site does it say that a “Completion Fee” is charged.
NOWHERE.
Suggest you sort this fundamental breach of CPRs 2008 before someone makes a complaint to NTSLEAT, TPOs or ASA.
Whenever a business comes from the angle of cost saving and business generation primarily, it saddens me. Our business is built on customer service and marketing. Put the customer first in all your thoughts and you will have a long term business that continually grows through recommendation and reputation. This is just another way to dilute quality into quantity by focusing on the wrong things.
When is someone going to open an call centre agency that provides a better service that High St? We might get on board with that as it would help our business then. Just hate it when we get this type of agent in one of our chains.
Hello EAM172
Thank you for your message. I understand your frustration with ‘Online’ agents and their inability to carry out sales progression even in its simplest form. However I think you will find from many of our 5*star reviews that our sales progression is nothing less than outstanding.
In relation to putting the customer first, this is our number one focus. Which is one of the reasons why we don’t offer an pay upfront option nor do we offer a no sale, no fee option. As we believe both options either promote for an agent to achieve a quick sale to secure their fees or neglect recent instructions to pursue a new listing to gain from the upfront payment. Hopefully time will tell that our offer is a good equilibrium between the two existing models.