The UK housing market looks set to get a major shake up soon with the launch of a cheap online estate agency service with the backing of the Tesco supermarket group. 

Spicerhaart, an estate agency in Bristol, is launching the new website iSold.com, initially aimed at sellers and buyers only in the Bristol area. Tesco will also advertise the service to users of its own website. 

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

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 but it is worth noting that Tesco already has a similar link up with the flower selling service Interflora. 

Back 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. 

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. 

At the moment, online-only estate agents account for only 2% of all property sales in the UK, compared with 15% in the USA. With the growing use of the internet by all generations and the effects of the recession meaning that people are trying to save money wherever they can, we can expect online estate agents to be a large growth business in the next few years.

This entry was posted on Sunday, March 7th, 2010 at 10:30 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.