Estate Agents: Unlawful restriction on freedom of choice of conveyancer

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Times are hard for a number of estate agents, and with a sharp fall in commission, a number of agents are focusing more on increasing their secondary revenue streams, particularly referral fees.

We all know that referral arrangements exist and are, at least for now, a fact of life. The question whether agents and linked conveyances are as open about these arrangements as they should, is less clear.

The pressure on agents to maximise secondary income has led to an increasing number of complaints about the unprofessional and unlawful tactic of ‘bad mouthing’ the vendor’s choice of conveyancer in an effort to ‘sell’ the service of their own pet conveyancer.

We have found ourselves the victim of this practice.   Three local agents have made unjust remarks about our service in an effort to deter prospective clients from engaging us.   We have written to each and have not had the courtesy of a response.

This conduct is abhorrent and is on the rise.   The objective is clear.  The agent is keen not to lose the commission that will be gained if the agent can steer the client to the agent’s pet conveyancer.  No regard is had to the wishes of the client or indeed the client’s rights. 

A truly independent conveyancer will undertake due diligence on the legal title without influence from the agent,  and may, for instance, advise the client not to proceed with the purchase if there is a major issue with the title.   The conveyancer may also assist the client to purchase the property at the current market price and not at the value advised by the agent.   In short the conveyancer will act independently to everyone apart form the client. 

The risk for the client who is pushed in the direction of the preferred conveyancer is that the service provided may be strongly influenced by the value to the conveyancer of the high volume of work it receives from that agent.    There will be pressure on the linked conveyancer not to upset the agent who is feeding it with regular work.   The conveyancer would be less likely to advise on issues that could delay or jeopardise the transaction. 

So what is the narrative these agents use to ensure a prospective client goes with their recommendation?

Firstly, its best to use “our conveyancer is local" - There is no great advantage in a conveyancing solicitor being local because nearly all conveyancing tasks are completed using email and telephone.  Just because the conveyancer is local does not mean the conveyancer is any good!

“We use them all the time" - by the very nature of the arrangement, which will not be disclosed,  this is true. However the agent will have no direct control over the pace of the transaction, nor the actions of the other conveyancers in the chain. 

"Our conveyancer  is quick" -  There is no conveyancer who can guarantee a quick service due to the fact that the transaction will only proceed as fast as the slowest party in the chain.   Conveyancers have little control over the delivery time of searches and mortgage offers, for instance. 

‘If you go with your choice of conveyancer you will have problems’  - if a client hears this he or she should run a mile. Though the agent may profess to know about very conveyancer under the sun, the reality is that the agent will have little genuine information on the conveyancer and will not be basing the opinion on any facts.   The very fact the agent has mentioned this should ring alarm bells straight away.  The best advice is to walk out of the agency and look to find an honest agent, or to go the choice of conveyancer direct who  we are sure will point you in the right direction. 

It is both morally and legally wrong to provide false information in the delivery of a service. 

The National Trading Standards' Estate Agency Team issued guidance on property sales in September 2015 which clearly sets out the duties which estate agents, must provide to consumers, what rights consumers and clients have and what redress they have.

The guidelines are far-reaching and legally enforceable and breaches can be prosecuted in the criminal courts, resulting in possible jail terms and unlimited fines.

In particular, unfairness in practice, as defined in the guidance, is defined as results arising from the following:

• Giving false or misleading information to consumers regardless of how delivered, whether verbally, in writing or via telephone. This would cover providing a client with misleading information about the clients preferred conveyancer.
• Exerting undue pressure on consumers including pressuring a potential buyer to use associated services for example to use a particular firm of conveyancers
• Not acting with the standard of care and skill that is in accordance with honest market practice and in good faith.

Furthermore it  is illegal under the Estate Agents Act 1979 for an Agent to force a client to use the Agent’s preferred conveyancer. 

Blame for this practice does not stop with the agent and a client faced with pressure should also report the Agent’s pet conveyancer. 

Both the Solicitor's Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC) make it very clear that its members are meant to ensure that their client has chosen them to act without pressure being exerted on them to do so.

If  a client considers  he or she has been caught up in one of these referral arrangements and have been deprived of a free choice of conveyancer our advice is to complain to the Agent and also to the Regulator of the pet conveyancer. 

We will be happy to provide you with advice on you options. 

And finally….  Do keep in mind that it will probably cost the client  more - ( between £100 and £200) by engaging the pet conveyancer because most of these arrangements work on the basis of the referring agent’s referral fee being added to the fee paid for the conveyancing transaction. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Quote, Unquote

Buying or selling a house can be stressful, time-consuming and expensive at the best of times, but make a wrong decision with your conveyancer and the process becomes a lot worse… 

It all starts with a quote writes Will Clayton, New Business Adviser with MJP Conveyancing. 

In an extremely competitive and sometimes rather murky market place, finding an accurate online quote, understanding it and recognising which quote represents the best value for money is a treacherous business.

To this end, we have some advice on exactly what you should expect from an online quote and some of the common pitfalls that befall first-time buyers and experienced property investors alike when looking for an online quote.

What should my quote include?

• Searches – whether you are purchasing with a mortgage or without, it is always important to gather as much information as possible about the property you are buying.  All firms will charge for the cost of the searches, alongside an administrative fee for reporting to you on their legal content. Always check that they have been included on your purchase quote! Contrary to popular belief, Chancel Searches are no longer required by major high street lenders and so don’t necessarily need to be included on your quote. A standard search pack should include the environmental, water & drainage and local authority searches.
• Land Registry Fees – The Land Registry charges a fee in order to register your ownership of a property based on its value. However, for first-time registrations the Land Registry doubles its fee – so, for those of you buying a New Build, it is important to remember that you should be charged at a higher rate. Many companies will not include the higher rate in their initial quote.
• Additional Fees – The more work involved in a property transaction, the more your conveyancer will charge for their time. So, it is important to provide as much information as possible when requesting a quote to ensure you are being given the full fee. New Builds, Shared Ownership properties, leaseholds and Help to Buy Schemes will all garner higher fees due to the increased workload. Most firms will also charge for additional administrative procedures; purchasing with a Help to Buy ISA,  receiving a gift to help fund your purchase and Declarations of Trust will also carry additional charges. Making your conveyancer aware of these elements before you accept the quote will allow you to assess the full cost of your transaction and plan accordingly. Ask the right questions and you can avoid those dreaded ‘hidden fees!’
• Third-party fees – SRA-regulated solicitors should break down their costs fully to show exactly what fees they are charging and what fees they are paying to third parties (for example, to search providers). Some firms will try to hide fees within their disbursements. If you feel your quote is unclear, ask the solicitor to break down their quote fully for you. Transparency should be the norm, not the exception!

  

How to choose the right conveyancer?

• Speak to someone. Many people obtain quotes online and simply choose the cheapest quote they can find. As shown above, the initial quote you receive may not always be accurate. Call a firm you are interested in, tell them as much about your transaction as you can and ask them to generate you a bespoke quote on that basis. Obtain in writing their assurances that their fees are fixed and that the quote you have received is accurate.
• Do your research. If a quote seems too good (or cheap) to be true, it probably is. Aside from the tips above, check what their existing clients have said about a firm. A 1* Review does not necessarily render a firm useless, but a string of 1* reviews will normally give you a good indication of the service you are going to receive. There is usually a balance to strike between cheap and value for money; lots of positive reviews can help you to separate an online ‘factory’ conveyancer from an efficient and cost-effective firm.

This is not a definitive guide but it will certainly help you judge whether a quote is accurate and help you to assess its value; do your homework, ask the right questions and you will save time, hassle and unnecessary expense further down the line!

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at william.clayton@mjpconveyancing.com

Referral Fees - Good or Bad?

There is nothing more entertaining than watching two conveyancing lawyers engaged in an argument over the use of referral fees within the property market.   There are always plenty of sparks and it is clear that feelings around this subject run high.  

So what are referral fees?

They take several different forms.  The most common is the introduction fee.  This involves  for example a solicitor paying an estate  agent for referring a client looking for conveyancing services to that solicitor.  The fee can be anything up to £300.  Another common one is the  marketing fee.  This where a  a solicitor pays an intermediary for a ‘lead’, that is a name and contact number, to enable that solicitor to contact the potential client direct.  Its not just estate agents who refer work on for payment.  Insurance brokers also do it and can receive substantial payments for referring clients to panels of solicitors run by  third parties who also take a payment. 

Referral fees have already been outlawed in the area of litigation but still remain lawful in the property industry. 

So what are the perceived  benefits?

To begin with those referring will argue that by having control over the choice of solicitor albeit for payment, the referrer can keep control of quality and ensure the client receives the best service.  There is some credibility to this argument as agents and brokers are in making the referral putting their reputation at risk if the conveyancer fails to deliver.   The problem arises however when you bring conflict into the equation and question the motive behind the referral.  Is it as it should be to ensure the best possible outcome for the client or is it more sinister than that?  Is it because the introducer is out to maximize his return on acquiring that client?  In other words the introducer may be focused solely on the money.  In this case there is a real danger the client will be directed in the direction of the highest bidder. 

The other fundamental flaw in all of these arrangements is that the client if left to pay for the referral.  The client may not be aware of this even though there is a professional duty on the part of the lawyer to disclose the existence of the referral fee.  So this is how it flows.  The agent for example may direct a client to a conveyancer and tell the client the conveyancer is good and will only charge say £450.   The agent is more likely than not to keep from the client that out of that £450 the agent will receive a ‘kick back’ of say £150.  So in the end the client is paying £150 more than if she or he had gone the the conveyancer direct.   

The conveyancer may argue that if the client had come direct the fee would have still been  £450 because without the arrangement the conveyancer would have to spend more on advertising to generate new work.   It is unlikely therefore that profitability of a forward thinking conveyancing business would improve if referral fees were banned.  Instead these businesses would have to pay a high price for more general marketing initiatives. The only difference and one that means a lot to many practitioners is the latter situation would leave the lawyer to practice without ties and with integrity and professional independence fully intact. 

The difficulty many practitioners encounter is the inability to compete for clients on a level playing field.  Brokers and agents have access to the client at the very outset of a client’s desire to sell and or buy.   The conveyancer does not get a look in!    The opportunity presented by conveyancers to offer to the public direct Home Information Packs when they were obligatory, helped but as we know the present government in its wisdom did way with these.  It is clear that if lawyers could get to the potential client first the client would have a far greater opportunity to avoid pressure from agents and brokers alike and perhaps be left to make a more informed choice.  

Sadly I can not see any future government having the courage to bring in reform would provide this opportunity and for this reason right or wrong referral fees are likely to be here  for many years to come. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

There is more to a joined up relationship between estate agents and conveyancers than better communication

It was interesting to see and read the Conveyancing Association’s Conveyancer/Estate Agent Practice Guide launched in the hope it might help to improve communication between conveyancers and estate agents, and in the process, provide clients with greater confidence in the conveyancing process.  I applaud the initiative and wish it well.

As to whether I consider it will succeed, I am I must say highly sceptical.  

The Guide makes some obvious recommendations such as agreed timings for regular phone calls and updates, giving estate agents access to online case tracking and monthly predicted exchanges dates.  Not rocket science, and for a well organised and paid businesses with time and resources to devote I can see practices of this type helping to ensure a transaction can proceed quickly and efficiently.

I question however whether with such a complete difference in culture between how a conveyancer and agent work it is in fact possible for these measures to  succeed.  

My business operates a sophisticated case management system which not only provides clients with 24/7 access to progress, but also, on sale transactions, the sale agent.  I say sophisticated because the agent does not need to sign in on each individual transaction, but has one log in which lists all transactions to which the agent is tagged.  Moreover, the access provides the agent with a full picture of all activity on the file, file notes, correspondence etc.  Despite having desktop access to progress, guess what, yes we still receive daily telephone calls from agents.

The reason for this is that most agents have a deep rooted obsession with using the telephone to seek updates and are not remotely interested in taking a few seconds to log in to find out what is happening.  Why is this?  My theory is that it has a connection with the constant pressure some agents are under to hit targets, and it seems to me that the use of the telephone in the office is how certain agents demonstrate to their superiors that they are working hard to ensure those targets are attained.   

This is also highlights a failing with some agents, that is the apparent reluctance to do anything to seek a better understanding of the conveyancing process. It’s all well and good setting time aside each week to talk and update, but if the agent in question, who can often be quite young and inexperienced, has no idea what you are talking about or the pressures you are under, it’s a complete waste of time and effort.   It’s clear that there can only be effective communication if there is a complete understanding of the process on both sides.

The concerning aspect is that there does not seem to be an appetite to learn and to obtain a better understanding.  It was not too long ago that we sent a circular out to local agents inviting them along to a free seminar designed to provide an overview of the conveyancing process and of the main reasons for delay.  It may not come as a surprise to learn that not one agent had the courtesy of replying let alone attending.

The difference in agendas between an agent and a conveyancer also present a hurdle for better communication.    The agent’s first objective is to find a buyer and once found to make sure the transaction proceeds quickly so there is no delay in collecting the agent’s large and not insignificant fee.  Some agents are more active than others and do assist in helping to obtain documents and to help with the fixing of completion dates.  The agenda even with the help some provide,  still remains the same, the transaction must complete as early as possible so that payment can be collected to enable a target to be reached.   I accept the bi-product of this is that the agent’s input helps the client to ensure the transaction is progressed quickly.  The sceptic I am suspects however this is a secondary rather than primary motive.

Compare this agenda with that of the conveyancer.  The conveyancer’s duty to the client on the sale is to make sure the contract is issued quickly and there is a prompt response to inquiries.  If there is a purchase the conveyancer is under a duty to the client and if there is a mortgage to the lender to ensure the title to the property is good and marketable.  Yes, it is also helpful to be paid for the service supplied, but unlike the agent this is a secondary and not primary objective and one that cannot always be achieved as quickly as some agents demand. 

I also believe there is some resentfulness between a conveyancer and agent due to the massive gulf between the fees each can charge.   If this gap could be bridged then this I am sure communication and cooperation would improve instantly. Most agents’ fees run into thousands whereas the average fee for a conveyancer could be around £500.  I wonder how many agents would refrain from chasing a conveyancer if their budget for the transaction was £500 and not £5000.  I also wonder how many agents actually realise and appreciate how much a call a day can eat into the profit margin of the conveyancer.    

So in conclusion I do support the idea of looking at measures for improving communication, but I do challenge the belief that this can be achieved without first bringing about a major shift of understanding on the part of the agent.    The agent needs to understand and acknowledge that agendas are different and that the time the agent expects the conveyancer to devote to the agent for updates is often difficult to justify in relation to the fee the conveyancer is able to charge.  Dare I suggest that if the agent was prepared to pay the conveyancer an extra fee for the updates and for collecting the agent’s fee whether this would be a step in the right direction?

David Pett  - Solicitor and Director with MJPConveyancing 

Demand more for the fee you pay to your estate agent

I always make a big effort to manage my clients expectations when  taking on new instructions. I do this because some clients may be buying a home for the first time and other clients arrive on our door step with  a distorted expectation stemming from discussions with the estate agent.  I am not sure why some agents believe that conveyancers  have attended Hogwarts.  I am certain however that by providing a client with misinformation about the conveyancing process some agents simply do not do their clients any favours. 

You pay your estate agent a small fortune to market your property and perhaps the time has come for us all to expect the agent to do more than put a ‘For Sale’ board up and place a few advertisements in the local newspaper.  A simplistic view I know and I must qualify the preceding and following observations by acknowledging that not all agents are the same.  There do exist pro active agents who often prove very helpful. 

So what could the agent be doing to help to speed up the process of a house sale?

To begin with it would be good to know that your agent has some knowledge of the legal process behind selling and buying a home.  How many agents have actually taken the time out to spend time with a conveyancer to understand the steps involved and more importantly the reasons why delays can arise.   If an agent devoted the same amount of time to learning about conveyancing as some agents  do in chasing a conveyancer for updates there would be vast reduction in the the number of interruptions conveyancers receive each day and a massive improvement in turnaround times. 

I did send an email around not too long ago inviting agents to a free training session.  The idea was to provide an overview of the selling and buying process.  Surprise, surprise I did not receive one acknowledgement let alone an acceptance! 

If you sell a home there are what are known as transaction forms to complete.  These set out details on the property such as council tax banding and particulars of the items you are leaving in the home.  These are forms which normally take a client sometime to compete and there are some clients who need help in completing the forms.  I have never understood why the selling agent does not hold a stock of these forms so hand to clients when it comes to the marketing of the property.  It would save so much time and allow the conveyancer to send out the contract pack much quicker. 

Helping the client to get  together to pass to the conveyancer the warranties, guarantees and planning and building documents would also make life so much easier for the conveyancer.  We spend so much time on chasing clients for forms and documents and this is often the source of major delays. 

Once the transaction is up and running the agent should not telephone/email the conveyancer every day seeking an update.  Rather than helping these constant interruptions only serve to cause delay.  We have ploughed several thousands of pounds into developing a state of arts online tracking systems which clients love and which is accessed by our clients around 13,000 times each month.  The system also allows the selling agent on sales to receive the same updates but to actually get an an agent to use it is simply impossible.  The mentality is why should I access an online system when I can try and get the information by telephoning.  Agents seem obsessed by the telephone.  

Last month our support team took over 4000 call of which 70% were from agents.  These calls involved over 150 hours of manpower which we could have used far more usefully in progressing transactions. 

The other way agents could help and is to give up on creating a blame culture.  Some agents enjoy playing one party to a transaction against the other.  Why?   All it does is to fuel unnecessary stress and make the whole process even more painful. 

The agent could play a far bigger role in helping the conveyancer when it comes to fixing a completion date.   This can often prove to be a logistical nightmare and trying to get the agent to call the other agents involved to come up with a mutually acceptable completion date would help to save so much time and wasted energy. 

I suppose what I am trying to say is that if there was a closer working relationship between the agent and the conveyancer, and a better understanding of the selling and buying process on the part of the agent,  the time it takes to sell a property could be much shorter and less stressful.  Is this likely to happen in the future?  I very much doubt it.  Agents are not going to change when there is no need to do so given the very high fees they charge. Why do more work than is necessary?

Perhaps some conveyancers who pay agents for referring home sellers to them are partly to blame.  Would they really wish to do anything that could rock the boat?

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Buying and selling a property in England or Wales should carry a “Health Warning”

The legal system used to convey a property from one person to another has not changed since 1925 and as it currently stands as a Seller or Buyer each time you enter a transaction you are running the risk of sustaining a financial loss.

In a world where the focus is on consumer protection there are no safeguards offering protection when a transaction breaks down before contracts of sale are exchanged.

If you are selling a property or buying a property either party in that transaction can, as the law currently stands, pull out of the sale/purchase at any time up to the exchange of the contract of sale.

This means that the seller who had accepted an offer by a buyer, who has instructed a Solicitor, and invested time and emotion into the progression of a transaction could after months of marketing the property, find that the buyer has, at the last moment, decided to pull out.

During that period it is probable that the property has come off the market meaning the seller has lost numerous opportunities to find a serious purchaser.  This could, in a market where in certain parts of the Country, falling prices are still, result in a loss to the seller.

The loss to a buyer is often a lot worse when a buyer puts an offer in, it is accepted, Solicitors are instructed, a survey is arranged, only to then find later in the process that that the seller has  decided to pull out of the transaction. The buyer has no recourse against the seller, the fees incurred up until that point, often ranging between £1,000.00 and £1,500.00, are lost. There may be exposure to additional loss, if as in certain parts of the country, house prices are increasing.

I often come across incidences such as this and I share a couple of my experiences:-

“I paid for a survey costing £500.00. It came back disclosing faults. I tried to re-negotiate the offer price but the seller did not want to know. I had to walk away without my £500.00 and without a house”.

“I paid £850.00 for a survey on a different house. It came back with clear findings. After several weeks of phoning the Agent and the Vendor asking for a Contract and other related documents I was informed that he seller simply changed his mind and did not want to sell. I was left having to meet the cost of the survey and Solicitors charges of £400.00”.

So what can you do to try and avoid having to meet the cost of an abortive transaction?

If you are a seller it is advisable to ask the selling agent to find out whether the buyer has a mortgage, whether the buyer needs to sell another property before the purchase can complete, and whether the buyer is willing to pay to lodge with the agent a deposit to enable the property to be taken off the market and the transaction to proceed to exchange within a set period of time. This latter arrangement is quite prevalent in areas where house prices are continuing to rise.

I have come across other transactions where the seller has said to the buyer that if the transaction does not complete within a certain period of time the price of the property will increase.

If you are a buyer it might be worth speaking with the selling agent to find out how long the property has been on the market, whether there has been any prior transactions and if there have to try and ascertain the reason for their collapse. The Agent may be reluctant to give this information but you should push for it. It is also advisable to find out whether the seller has a property to purchase since this might also delay the transaction and give greater scope for failure.

There is need for the current and archaic system to be re-formed.

Then use of deposits by both the seller and the purchaser would be a way of securing some degree of commitment to the transaction before major expense is incurred. Alternatively, perhaps the time has come to look at how the selling and buying process works in Scotland and adopting this as a model.

Finally on this subject I share with you an experience that I recently came across where a seller decided that he was not prepared to sell his property to my client because he lived at the property for many years and was not happy that my client was intending to let the property out rather than use it as a ‘home’. It is regrettable that the seller did not disclose this to my client before a survey was undertaken, legal costs incurred and we were on the verge of exchanging contracts of sale! 

 Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Estate Agents commission monopoly under attack

In my last blog I discussed the increasing gulf between the fee of the solicitor and the commission charged by the estate agent, and posed the question whether at a time when the property market remains in turmoil this could be justified.  

At about the same time news broke of an announcement by the Department for Business, Innovations and Skills (BIS) of proposed amendments to the Estate Agents Act relating to web-based 'intermediaries'.  The changes if implemented will mean  the intermediary will no longer be  treated in the same way as an agent and will  make it easier for  sellers to advertise their home online direct to buyers.

The intermediaries, such as Tepilo, run by TV property guru Sarah Beeny,Sellmyhome.co.uk and HouseSimple allow property sellers to advertise their homes online for a fixed fee far below the commission charged by estate agents. The providers of these services do not perform any other role during the sales process yet the Estate Agents Act treats them as agents and requires them to perform the same checks on properties as agents. This has made it difficult for them to compete with the likes of Rightmove through which the majority of estate agents advertise property.

If the restrictions on these businesses are relaxed it is clear that the consumer will be presented with a wider choice and fees charged by agents may begin to tumble as competition increases.  The typical fee charged by an intermediary is around £450 ( Tepilo is free).  Compare this to the commission charged by agents where commission can run to many thousands of pounds. A recent Which? report found estate agent fees range from 0.75 per cent to 2.5 per cent, with 1.8 per cent the average fee. Selling a £300,000 property on this basis would cost £5,400.

It is fair to say Estate agents clearly provide a more comprehensive service than intermediaries, including offering complaint processes and redress if needed. However any change that will help to put pressure on agents to charge a fee  that is more proportionate to their input will be welcomed.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Can the fee of an estate agent be justified?

It often makes me choke when I learn how much the estate agent is to be paid in commission on the sale of a property.   Often fifteen times more than my fee and for much less effort.   On top of this the agent may also be receiving a referral fee of around £200 to £300 from the solicitor he or she has recommended. Yes, you could accuse me of jealously, and yes, perhaps I should seriously think of a career change. 

It is also I suppose a sad indictment of my profession when one looks at how the Law Society has allowed such a situation to arise.   Solicitors were at one time paid according to a national fee scale, so depending how much a property was worth their fee would be calculated accordingly.   Unfortunately an inept professional body combined with outside competition has led to many solicitors undertaking property transactions for less that the cost of a family ticket to gain entry to Alton Towers.

So how can an estate agent justify such a large fee?  It is true that the cost of advertising and employing staff is high.  It is equally fair to concede that difficult to sell property can often create a long running financial burden for the agent.  However there can be no justification for an agent calculating a fee based on a percentage of the value of the property.  This is outdated and has no relationship with effort or ‘value for money’ considerations.

I would perhaps be less harsh in my view if I could be convinced that most agents deliver a high and efficient service for the home seller and buyer.   My experience suggests the opposite.    There are a large number of agents who consider their role is nothing other than to advertise property, to introduce a potential buyer to a seller, and to then look to the solicitor acting for the seller to collect their fee at the end of the transaction for immediate banking.    These agents are not keen to assist during the sale transaction and spend most of their time playing one solicitor off against another.

I am sorry but I expect an agent to be more pro-active and to do everything possible to assist the seller and the selling solicitor in making sure the seller’s experience in selling their home is pleasant and stress free.

There are a number of administrative tasks during a transaction that an agent could undertake. They could help with the delivery and signing of documents such as the contract and transfer.  They could play a larger role in collecting replies to inquiries and also helping to coordinate exchange and completion dates.   On the whole there are plenty of ways the agent could in collaboration with your solicitor help to speed up the process and to put it bluntly do more to justify the high fee charged.

At present our experience is that many agents actually contribute to delay through constantly calling the office for pointless updates as well as giving home sellers unrealistic expectations about how long the process will take to complete.

I did have an attempt to stand up to local agents.   About six months ago I said I would only collect the agent’s fee from the client and meet the extra work and cost of passing this money onto the agent if the agent paid me £50.     I did add that if the agent referred a couple of clients to me each month I would waive the fee.  What reaction did I receive?   Well it was if World War 3 had broken out.  ‘What right do you have to demand payment?’  ‘You are not allowed to do that!’ ‘We will report you”.    It was as if I had committed a crime.    The agents just did not get it.  For a fee of around 1% of their fee (or some referrals) I was offering to continue to collect their fee from the client (even no there is no obligation on me to do so) to preserve their cash flow and to minimize their bad debt.    They could not see that given how my fee structure had been squeezed the extra cost to me of collecting and accounting to them was beginning to impact on my bottom line.

All but one agent refused to pay and I now tell clients that they must pay the agent direct.  It’s a shame more solicitors do not recognize that this custom of collecting and paying the agent’s fee is no longer financially sustainable.  In a climate where the likes of Ryan Air  are looking to cover the cost of any extra administrative task however small  surely its time to break away from outdated and unnecessary conventions?

At the end of each transaction we send out a client feedback questionnaire and on this we ask the client to give a rating on their agent.   We always send the completed form to the agent and invite comment.  Not one agent has come back to us.  It seems the majority of agents just do not care.

Will anything change?  This is unlikely to happen as long as homeowners continue to pay scale related commission.    As long as the agent continues to receive such high fees why would the agent wish to change anything?  

Three good reasons for not instructing a solicitor recommended by an estate agent

You might not know it, but you could be paying more for legal services when moving home because of the recommendation received form your estate agent.   The reason for this is that many estate agents have ‘arrangements’ with solicitors under which they receive what is known as a ‘referral fee’  or as it is often described, a ‘kick back’.

Many of the solicitors who operate in this way do not absorb the referral fee in their fee but add the fee on to the fee they quote you.  This means that you could very well be paying as much as £200 more for the service than you would have otherwise paid had you shopped around and gone to a conveyancing solicitor direct.

Is this legal?  Well at present yes providing the estate agent and solicitor tell you about the arrangement before you make the decision to instruct the solicitor.  The question is how many of those involved actually disclose the referral fee.  Sadly I do not believe it is many.

It also raises the question whether instructing a solicitor recommended by a ‘tied’ estate agent will ensure you receive the best service available.  My experience is that where such arrangements exist the solicitors instructed are normally part of some ‘factory’ operation and in the main the service levels of those firms is very poor.  This could mean you will find yourself having to constantly chase and inevitably the move will take longer.

Instructing an agent with a ‘pet’ solicitor may also impair the solicitor’s ability to offer independent advice. The agent will have a vested interest in the sale completing. Once an agent has agreed a sale, they will want it completed so they will put pressure on the connected solicitor to complete without regard to your best interests. If your solicitor discovers a problem and considers he should advise you to withdraw, will he be prepared to do so if the agents on whom he relies for work tell him not to?

My advice is not to rely on your agent’s recommendation.  Shop around, visit websites, read the reviews on the service offered and do not be tempted by deals offered by some agents to ‘wrap’ your legal fees in with the agent’s fee.  Perhaps even choose your solicitor before you put your house on the market because many solicitors like us know which are the 'good' and 'not so good' agents.    And before you ask, no we do not get a ‘kick back’ for recommending an agent!

David Pett Partner MJP Conveyancing Solicitors 

New energy rules for those selling and buying homes

The rules on the display of energy ratings (Energy Performance Certificates (EPC)) for homes have changed.

Those advertising property such as estate agents must now (as from the 6th April) :

• Include the 1st page of the EPC for all sales and lettings properties in printed and electronic property particulars.

• Have ordered an EPC prior to marketing and to produce  it within 7 days of marketing

If you are looking to market or let your property it is important for you to make sure your agent is complying with these requirements. 

Your agent must include a copy of the entire front page of the EPC document and not just the EPC graph as has currently been the case.  This includes any literature containing particulars of the property to be marketed including electronic communications such as emails.

Property particulars are defined as including at least two of the following elements:

• a photograph of the building or any room in the building,
• a floor plan of the building,
• the size of the rooms in the building,
• the measured area of the building, or,
• the proposed rent in relation to a building being rented out,.

This may therefore (depending on how the new rules are interpreted) extend to the pictures and particulars of your home that appear in the agent’s window or in the local paper.  As for rentals the new rules seem must clearer and there seems no getting away from the requirement to display in any advertisement the front page of the EPC.

Almost all lettings adverts will include a property photo and the rental price, and thus it will be hard to avoid this.

The size of the EPC extract shown in the particulars must be sufficient for the details to be read – don’t allow the agent to print it very small nor to try and circumvent the rules by simply adding a link to the EPC.

Interestingly the first page of the EPC contains the full address of the property.   Agents do not normally like to display the full address in literature as this provides marketing opportunities for competitors.   Unfortunately there now seems no way around it and the address must remain within the published first page of the EPC.

What about properties appearing on agent’s websites?  Arguably as there is a picture of the property and often other particulars such as room sizes etc the first page of the EPC ought to be reproduced possibly in full rather than through clicking on a link.  

Rightmove it is reported recently emailed all of its agent clients and made the claim as quoted below:

"Rightmove is a property advertising website and the information displayed on Rightmove by all our member agents takes the form of property adverts and not property particulars. This is clearly stated at the bottom of every page on Rightmove that displays the details which have been provided to us by the agent about a specific property and will continue to do so.

It is our view that the new regulations do not place any additional obligations on Rightmove, although you may wish to consider separately how the new regulations might affect your own company website. We do, however, understand that some of our member agents may wish to display the EPC as part of the property advert on Rightmove. Rightmove does provide the functionality for you to do this if you so wish."

I do not necessarily agree that is correct; looking at the new rules and the elements that must exist for the publication of the EPC it is difficult to see how one can in this way distinguish ‘adverts’ from publication of property particulars.  Rightmove publishes pictures and particulars of property and this is no different from details published in newspapers or in an agent’s window.

Let’s not forget the purpose that lies behind the rules, and that is those looking for a property to buy should be able when searching to have immediate access to the energy rating for that property.

The problem is that as with the fated Home Information Pack some agents are reluctant to go to the expense of ordering and paying for an EPC until they know a buyer has been found for the property.  They view these requirements as an unnecessary hurdle to the marketing of the property.

My advice to those selling and renting is to always ensure that any agreement reached with an agent to sell or rent you home includes a clause that the agent orders and pays for the EPC. If you are buying always insist on seeing the EPC before viewing a property and if the EPC’s first page does not appear in the particulars of sale wherever these might appear always ask for an explanation.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk