Page last updated at 15:18 GMT, Thursday, 4 March 2010

Tesco joins estate agency to launch online service

Man walks past estate agent's window
The service will by-pass the traditional High Street estate agent

A cheap online estate agency service is being launched with the backing of the Tesco supermarket group.

The estate agency Spicerhaart is launching the new website iSold.com, initially aimed at sellers and buyers in the Bristol area.

Tesco will advertise the service to users of its own website.

The Office of Fair Trading (OFT) recently called for the establishment of more innovative online estate agency services to help drive down prices.

"We are offering a full estate agency service without the High Street presence," said Steve Shore of iSold.

Flat fee

The online service will have two key features.

All dealings with both sellers and buyers will be conducted online or via the phone, with the overall business being kept separate from the Spicerhaart outlets in the High Street.

And instead of the standard estate agency fees, of between 1.5% to 2% of the selling price, a basic online selling service will cost £999.

As well as being advertised on the iSold website, homes for sale will also be advertised on property portals such as Rightmove and Zoopla.

Neither iSold nor Tesco would divulge the nature of the commercial agreement between them.

Tesco pointed out it already had a similar link up with the flower selling service Interflora.

'New business'

In 2007, Tesco briefly launched an online property selling business called Tesco Property Market, which allowed personal sellers to by-pass estate agents.

In return for a standard £199 charge the sellers were able to advertise their own homes for sale and put up a Tesco notice board outside their homes.

However, this meant that Tesco was deemed to be offering estate agency services and it quickly decided it could not make money if it had to comply with the requirements of the estate agency and property mis-description laws.

After just four months the business was sold in 2008 to Spicerhaart, though Mr Shore said the old business had not simply been rebranded and relaunched.

"This is a new business," he said. "We have carried out detailed financial analysis, to ensure it will work."

"We have been looking at it for some time, developing the IT behind it, and the property market is now picking up," he added.

Competitive pressure

Last month, the OFT called for the injection of greater competition into the estate agency business to help drive down prices.

Its main recommendation was that sellers should haggle with estate agents to agree a lower fee than the typical 2% that is often charged.

But the regulator also called on the government to change the law to make it easier for people to set up online home selling services, especially those aimed at people who wanted to sell their own homes themselves rather than pay an agent to do it for them.

"Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers," said John Fingleton, chief executive of the OFT, when launching its report.

At the moment, online-only estate agents account for only 2% of all property sales in the UK, compared with 15% in the USA.



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