OUGD504 - Studio Brief 2 - Problems Identified With Current Private House Selling Processes

One specific problem identified with current private commission free platforms is that it still costs between £300 and £600 just to advertise within their website.

"In return for the website posting your photos, and matching you with buyers, you will pay anything from £300 to £600. At the higher end of that price range, your property details will also be advertised on the big portals like Rightmove and Zoopla, which dominate the market."

House web is the largest current platform which specialises in advertising properties without the need for an estate agent. The problem is that they state to have sold just over 15 thousand houses within their 21 years of establishment. This is a clear indicator that the private house selling market is a failing enterprise at the moment, there has to be a drastic solution put in place to have any chance of competing with the current competitors such as Rightmove or Zoopla who advertise using estate agents from all over the country. Their has to be some kind of benefit offered to the buyer to convince them to use private house selling rather than buying through an estate agent.

The average high-street estate agent fee is 1.3% including VAT, according to conveyancing firm MyHomeMove. 

However, the percentage charged as an estate agent fee can vary from less than 1% to as much as 3.5%, depending on a number of factors including how many estate agents are selling your property.

Quote taken from - http://www.which.co.uk/money/mortgages-and-property/home-movers/guides/selling-a-house/estate-agent-fees-and-contracts

estate agents charge on average 1.3% the price of the house, with a £200,000 house the price to pay estate agents would be £2600.
£300,000 house - £3900
£400,000 house - £5200
£500,000 house - £6500

estate agents charging 3.5% at the highest end of the spectrum
£200,000 house - £7000
£300,000 house - £10,500
£400,000 house - £14,000
£500,000 house - £17,500

estate agents charging 1% at the lowest end of the spectrum
£200,000 house - £2000
£300,000 house - £3000
£400,000 house - £4000
£500,000 house - £5000

One solution could be to offer £1000 off the price of any house to the buyer whilst only charging the sellers £1500 once they have sold their house. £500 profit margin on each house sold.

Once any seller has sold their house they will save anywhere between £500 and £16,000

The app/platform could drastically undercut the buying and selling fees of any estate agent whilst still being extremely profitable, and also drastically saving the money of its users. It would also become a very appealing service towards the user as it will be completely free until a house is sold or bought.