In the last issue I wrote about the fees you can expect to pay when buying your first property. These are for services provided to you by your conveyancer or that they have purchased on your behalf to ensure that they have all the information they need to advise you correctly and fully on the property that you plan to buy. Stephen Ward, Director of Strategy and External Relations at the Council for Licensed Conveyancers, explains:
Lately, though, referral fees have been in the news when it was reported that some estate agents have been accused of withholding “best offers” from sellers, and giving preference to buyers who are financially qualified by mortgage brokers they have relationships with. This is a very worrying practice and one that we expect will be stamped out by estate agents. But what are referral fees and how might they affect you when you buy your new home?
WHAT ARE REFERRAL FEES?
Referral fees are fees that are paid by some conveyancers or mortgage brokers to estate agents for recommending or referring clients to them. Generally speaking, that is money that would otherwise have been spent by the lawyer to market their services to potential clients. Referral fees are common and are allowed by regulators. However, the CLC requires that conveyancers make you aware that in return for a referral or recommendation, your conveyancer will pay a fee to your estate agent. Ultimately, the cost will fall to you, the client.
THE IMPORTANCE OF SHOPPING AROUND
It is important to say that many people who use conveyancers endorsed by their estate agents are happy with the service. Estate agents are unlikely to recommend conveyancers who do not provide a good and efficient service. It is in their interest as well as yours that your transaction progresses as smoothly as possible, after all.
However, our advice to anyone is to do some shopping around to find the right conveyancer for you. You are not obliged to take a recommendation from your estate agent on which conveyancer to use.
There are comparison websites available that can help you narrow down your choices, some of those link to Trustpilot or Google ratings and reviews, so you can get advice and insight from beyond friends and family.
When it comes to choosing your conveyancer, CLC regulated firms are required to clearly display information on their websites which should help you to make an informed choice about what they offer.
This should include:
Cost information in a prominent place. Lawyers are required to provide examples of their fees that cover a broad range of services and transaction types including conveyancing.
Service information including information on conveyancing timescales and possibly third-party feedback.
Regulatory information. You should be able to easily identify who regulates the firm you are hiring. For lawyers regulated by the CLC, this includes displaying the CLC Secure Badge in a prominent place on their website. This allows you to verify the regulated status of the practice and to ensure that the website is genuine.
Complaints process. All lawyers must display details of their complaints process, including access to the Legal Ombudsman and redress information.
Referral details. While lawyers do not need to disclose specific details of referral arrangements on their website, they must say if they enter into such agreements and the average fee, or range of fees, that they pay.
Conveyancing is crucial, and with fees ranging from £500-£1,500 or more, it’s important you’re confident in the person handling what could be the biggest purchase you make in your life.
Think about the service you need from them. Do you want to be able to check the progress of our transaction, upload the documents you need to provide or answer your conveyancer’s questions outside of office hours? Do you want to be able to speak to a local conveyancer face to face? Do you want a conveyancer who specialises in the kind of property you are buying? You need to think about these sorts of questions as well as just the price of the service.
Recent legal sector research seemed to indicate that consumers were more likely to be happy with the service they receive if they shopped around for it first.
REGULATION
When choosing who to handle your conveyancing, you should also check that the firm you are considering using is regulated by one of the legal sector regulators. Particularly if there is a mortgage involved, you will need a regulated lawyer/ firm to do your conveyancing for you. Regulation ensures that, should something go wrong, you will be protected and have a clear way to seek redress. If you are buying or selling a property, you can find more advice on the topic as well as a list of CLC-regulated conveyancers at clc-uk.org.
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
