Purchasing or Selling a Property? Beware of Referral Arrangements
17th October 2017
“There’s no such thing as a free lunch”
These days there are increasing arrangements between estate agents and the legal profession. But, there really is no such thing as a free lunch when it comes to selling and buying property.
There are dangers with this type of referral arrangement which are not beneficial to the public:
1. The job of the Lawyer is to protect the interests of their clients and observe client confidentiality. With referral arrangements, one has to be careful that protocol is not disregarded to secure another introduction from the agent.
2. Take care when signing agency agreements as there is the risk they may contain small print whereby if you do not use the agents recommended Lawyer, that an amount of money is taken off the offer you get for the property you are selling. This happens because the agents lose out on referral fees. Remember you own the product being sold not the estate agent.
3. Lawyers fees are competitive therefore when a fee is paid to the estate agent for the referral the work could be carried out by unqualified personnel or within a team meaning the file gets passed around.
4. Work can be sent to large organisations some of which are not local and there is no element of personal service. Furthermore, you do not build up a relationship with your Lawyer and may not ever meet them. Most people prefer to establish a working relationship with their lawyer for the future years to come.
5. You can end up paying much more for the work as the referral fee to the estate agent has to be built in somewhere. Therefore, small print can include lots of add-ons in addition to the basic fee e.g. further charges for dealing with the mortgage work (which is all part of the purchase process), further fees for dealing with mortgage redemptions (which is part of a sale process), very enhanced bank charges, file opening fees etc.