Radio presenter, property expert and chartered surveyor James Max has changed his mind about online agents – after backing one in the early days.
He did not disclose the name of the agency, but says in an article in the Spectator that it was back in 2006.
In the same article he says that the Purplebricks business model has “gaping holes” in it – and a marketing budget that is “way too flamboyant”.
Max, who presents Business Breakfast on Talk Radio each weekday morning, comes down firmly on the side of traditional agents.
He reveals: “I invested in a firm that set out to disrupt the market by offering a fixed fee selling model, not unlike the one used by Purplebricks.
“It did not end well and I learnt some important lessons.”
He was also an executive director of BNP Paribas Real Estate, now the owner of Strutt & Parker.
Max cites factors that sellers should consider when choosing whether to use an agent or not.
One is market knowledge.
A good agent will know the market and create competitive tension – “and with a percentage fee is motivated to sell at the best price possible,” says Max.
He also discusses fees: “Why would you fork out more than you have to? For most estate agents it’s no sale, no fee. Online agents have a fee regardless of success. They aren’t as motivated to sell.
“Then there’s the issue of getting the best price. If an agent isn’t motivated, why would they push?
“The simple answer is that online vendors are unlikely to achieve as good a result as a top estate agent.
“In a fast-moving market where everyone knows all of the deals going on there’s an argument for saving a few pounds.
“When markets get tricky? That’s when an agent earns their fees.”
He argues that online agents may charge less but if a high street agent gets only a slightly higher price, then the seller could be better off.
He says of Purplebricks that brokers’ recent ‘sell’ notes are not just because of over-expansion abroad: “The departure of the firm’s founder and the drop in share price is just another indication that all is not well.
“A good estate agent will tell you things you may not want to hear. That some of your internal decor is tacky. That your home looks like a total mess and needs to be cleared up or that your taste in wall art is putting off buyers. Or that a market has fallen away.
“That personal touch is what you need.”
He advises: “Prepare to work your agent hard. Don’t worry about the fee; think about what you could do with the extra profit when you sell well.
“A decent profit lasts far longer than bragging rights about how little you paid someone to get the job done…
“I know what I’d do, I suspect you do too.”