ESTATE AGENTS REFERRAL FEES AND THE TRUTH

[Itmakessense]

I think it is time to make as many people aware as possible about the current state of affairs with our beloved Estate Agents. (tongue quite painful in cheek!)
Currently the majority of estate agents are charging referral fees to solicitors and the majority of solicitors are paying them from your fees charged for your legal work. Some of the lawyers make up the fees with some hidden or stealth charges. SDLT charges, Client anti money laundering, and other arrangements where they can enhance your billing to cover some of the fee they pay to the greedy Agents who are already getting paid a hefty sum to sell the property.
It is common now for an agent to refuse to show a prospective buyer the sellers property unless they use the agents chosen lawyer. Bribery and corruption would be my description of such an act. trying to pry the customer from their current lawyer because the one they have will not pay them.
Estate agents have to, by law disclose to you that they are receiving a referral fee and how much it actually is. The lawyer who pays the referral fee is duty bound by the SRA rules to disclose to the client that they are paying the agent and how much they are paying.

This actually does not happen in most cases.

If the estate agent tries to move you onto their preferred lawyer or lender you should refuse. If they then tell you the seller will not sell if you use your existing lawyer then they are lying.

At that point you should advise the seller what their agent is doing because they are in breach of contract to the seller (their client)

You should also inform your lawyer what has taken place. You should then report the agent to trading standards so that they can be taken to task and fined.

It is quite astounding how many client's actually fall for this and are coerced to change their recommended or preferred and even long term lawyer because of a greedy agent. This is especially prevalent in large chain estate agents.

One new thing agents are now doing is charging extortionate amount for Anti money laundering check. AML actually cost the agent approx £3 to £4 and we are seeing charges to the client of £70 to £100 plus vat.

THE WAY FORWARD
Do not be bullied by the agents! They are driven by targets and greed.
Estate agents do not need a single qualification to set up their business, unlike the lawyers.
Do not believe the agent's when they are lying to everyone and copying in all parties about the other side pulling out if you don't exchange by this date etc. This is a tactic to scare you into chasing your lawyer and actually stopping them from carrying out the complex legal work. Your lawyer is the only one acting in your best interest. The agents only act in their own best interest.
Ask your lawyer if they are paying the agent and how much. You may be surprised that as a buyer who has nothing to do with the agent who is selling for the seller that the agent is actually receiving 300 to 400 of your money too!
The agents suggested lender pays them too! And financial advisers and brokers!
So next time you are looking for a house find an agent who does not pay referral fees and find a Lawyer who refuses to pay referral fees. Then you know your legal costs are exactly that. And that they are being used for the purpose you thought they were instead of paying a set of panel lawyers employing unqualified monkeys with headsets with a single qualified person overseeing them all and signing everything off. Some of these panel lawyers are so busy it takes them 3 months to return the papers for basic enquiries!
It is a conflict of client interest for your lawyer to pay the agent! They are then in each others pockets and debt.
Wake up and smell the coffee! You know it makes sense.

My exH was an estate agent for a small independent, and they didn't indulge in this sort of caper. Most of the other agents in the town did do it though, and backhanders were absolutely rife. They were all in each other's pockets, and don't get me started on the derelict properties and the doer-uppers. They would mysteriously sell very quickly and cheaply to local property developers. Literally within a few hours of going on the market. It was almost as if the agents told the developers and agreed a price in advance...

I was a sales negotiator years ago. We were always encouraged to refer purchasers to the in house mortgage broker or conveyancer and yes, we earned commission for any conversions. We were trained to ask if they wanted to be referred but never pushed.

But in my recent experience as a seller and buyer, I was never forced into using people. I had my own conveyancer and just said no thanks. Not a problem.

Sounds like you've had an unfortunate experience OP.

We had this when we offered on our first home last year, they said the vendor would give the most consideration to those using the in-house broker! And that they could only accept our offer if we agreed to use that broker. I knew that was bollocks and told him so, and we offered anyway, and it was accepted. But the estate agent refused to deal with me and would only speak to my DH because he hadn’t liked my tone 🙄

It is common now for an agent to refuse to show a prospective buyer the sellers property unless they use the agents chosen lawyer

I think what you meant to write there was 'it is extremely rare.'

You've obviously had a bad experience, these things happen, in all different industries, but try not to get carried away.

Can't say I've experienced this. Had my own mortgage broker and solicitor sorted from pretty much the beginning. Estate agent asked if I wanted a quote from their 'partners' once offer had been accepted - can't actually remember if they said about commission, or if I just assumed that was the case. Either way they weren't bothered when I said I had my own lined up thanks. And nothing was mentioned about solicitors etc on viewing with any agent.

If you are even vaguely organised, (which you should be making such a big purchase!) It isn't likely to be an issue. If solicitors are an afterthought you are more likely to get rushed into using just anyone. Much better to have had time to find someone you trust.

You are extremely wrong. There are some decent agents out there but the majority fit into this category. Especially in the cities. Brighton is awful and it is not my personal experience it is the experience of hundreds of people who talk on local social media about it.