An online agent that failed to get funding from the Dragons’ Den is now under new ownership and pitching itself as the UK’s first “no-fee” agent.
Its business model is to make its money from referral fees, meaning that to get a free service, sellers must use specific conveyancing and mortgage services.
House Tree, launched by Tom Harrington, tried to get funding from entrepreneurs on the BBC show in 2014 as the first pay-per viewing agent, charging £99 as an initial up-front fee, and then £35 per viewing for 12 viewings, after which viewings were free.
His pitch was rejected, with Dragon Peter Jones telling Harrington, then 24, that his business was destined for failure.
Harrington sold House Tree to entrepreneur Alan Simpson in October for an undisclosed sum.
Simpson has been involved in other property business such as quick sale firm Flying Homes.
He has now rebranded House Tree as a “no fee” agent. But is there a catch?
It is only potentially “no fee” at the end of the process with a refund of all or part of the money paid up-front.
The ‘free’ service would also only be available to a seller who is making an onward purchase and it would not be “free” to sellers making onward cash purchases, or who choose different conveyancers.
However, the vendor will get a full refund as long as they use all three services – House Tree’s stipulated conveyancer for both their sale and onward purchase, and also mortgage broker.
The process starts with the vendor taking out a ten-month interest free loan of £996 from provider Divido, or paying this amount by credit card.
This is paid to House Tree and is said to be the same amount the agent earns in referral fees from the conveyancing provider and mortgage broker.
A vendor would enter their property details on the House Tree website or can speak to an agent on the phone. They are then taken to a page where they are given the option to use House Tree’s mortgage broker and solicitor.
Technically the three services cost £332 each, with conveyancing through Convey Law for the sale and purchase and mortgages through brokerage Meridian Mortgages.
Customers don’t have to use every service, but not using one of them would mean the seller having to pay £332 to House Tree.
Once the transaction completes, and assuming the seller has used the stipulated providers, the referral fees are then used to pay back the vendor.
Sellers can also choose to pay £90 for professional photos, £395 for accompanied views, £95 for an energy performance certificate and £50 for floor plans.
If the home fails to sell during ten months of the interest-free loan, the vendor would need to repay it.
If vendors pull out of the sale they would still be liable for the loan.
Properties are listed on Rightmove and Zoopla, and House Tree helps arrange viewings and with sales progression.
House Tree does cover sellers for up to £720 of legal, estate agency and other fees, should anything go wrong with their onward purchase.
The agency has offices in London and Barnsley with 12 staff, split between agents and negotiators. Most valuations are done using Rightmove but staff can also visit homes to do a more detailed assessment.
Simpson said: “All agents, whether high street or online, will be getting these referral fees, so we are being more transparent about it.
“We hope that launching this industry-leading initiative will help home owners across the country get moving for less and set a precedent for more transparency across the industry.”
Yesterday, House Tree had 26 available sales properties listed on Rightmove.