Independence and Estate Agent Referral Fees
Independence & Estate Agent Referral Fees
I recently came across an article with www.thisismoney.co.uk that reinforced my belief that we must, as solicitors, remain totally independent and ensure that we are acting in the best interest of our clients. The article talks about the Homeowners Alliance calling on the government to ban estate agents from offering potential buyers in-house financial services. The article goes on to state “Many estate agents across Britain earn extra commission by recommending a mortgage broker, conveyancer or solicitor to a buyer, but the Homeowners Alliance warns the practice as being “routinely abused in the interest of profit.”
They state that “this is because the estate agent will encourage the seller, their client, to accept an offer from someone who has agreed to use their in-house services in order to maximise profits” for the estate agent. Naturally, this is a conflict of interest with their client’s interest, especially if the offer being recommended for acceptance is lower or not the best offer for the seller.
The Homeowners Alliance warns that this is not a small sideline business operated by one or two agents. The article goes on to say “it says it is a huge problem that has been going on for years – and is launching a campaign to make the government take action, in the interest of both buyers and sellers.
The article goes on to state “recently, there was a report in the Metro newspaper about one agent who created a premium buyer’s list of potential house hunters who are taking out a mortgage with them, who then get the details of the properties before anyone else. The Homeowners Alliance is calling for in-house services for buyers to be banned.”
Personally, our independence has remained a crucial reason why I founded Matrix Legal in 2009. I have always been wary of entering to a referral arrangement with estate agents, paying them a fee for each referral, because of the risk they could exert influence on us, potentially forcing us to make compromising decision. This could act against the interest of our clients thereby compromising on the quality of our work and our professionalism. It is for these reasons that I have never entered into a referral fee arrangement with any estate agent, preferring instead to remain independent solicitors. Over the years, I have seen some of our competitors enter into such arrangements with estate agents resulting in them experiencing year-on-year growth – whilst this has at times challenged my belief, in the round I hold firm to our belief that we must remain independent and professional and if any business relationship or agreement we enter into compromises this, then we would withdraw from such relationship or agreement.
I do hope the Homeowners Alliance is successful in getting referral fee arrangements banned both between financial institutions/mortgage brokers and estate agents and solicitors/conveyancers and estate agents as well because it is a practice that seriously undermines the conveyancing process and the conveyancing professional. We remain independent and proudly so and this recent article and the campaign by the Homeowners Alliance has reaffirmed my belief that we must remain independent solicitors.
About the Author
Tariq Mubarak is one of the top property solicitors in England, and he has helped hundreds of clients achieve success with their property goals.
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