I have just been reading a thread on this very subject.
The vast majority of buyers and sellers choose their conveyancing solicitor as a direct result of a recommendation by their estate agent.
Most of them have no idea the agent then receives a kickback from the solicitor, which can be as much as £300 pounds a go.
Estate agents invariably use a panel solicitor who could be based in Newcastle even though the property you are buying is in the South.
A panel solicitor can often consist of 1 qualified solicitor or legal executive supervising an office full of monkeys with headsets.
Panel solicitors are one of the biggest reasons for delays as they can take months to return papers and have to be asked repeatedly to answer enquiries fully.
Most Large highstreet chain Estate agent are targeted with these "bungs" therefore the panel lawyer ends up bombarded with work without the necessary qualified staff to cope.
As a result of this practice homebuyers are often pushed towards a service because it benefits the estate agent, not because it benefits them.
Agents and solicitors have to tell you if they've received a fee for your business the problem is they don't, so ask them. The solicitor at least has to admit it to you. If not they can be reported to the SRA
It is important that you aware of the payment of referral fees before deciding who to appoint. You should be able to make an informed decision before you decide to purchase.
It's not just lawyers paying estate agents for your business. Agents will often pressure you into using their Mortgage brokers and valuers in exchange for a fee. Sometimes as much as £600
It is important to remember that you don't have to use any professional recommended to you - it pays to do your own research online, read customer reviews and ask for recommendations from friends, colleagues or family.
A recent Which? investigation found that some estate agents are routinely leading homebuyers into using their in-house mortgage brokers, wrongly claiming they must do this to secure a home.
One agent even told Which's undercover researchers that using their brioker could secure them a lower price for a property.
While it's legal for agents to make a recommendation to a buyer, they are not allowed to penalise them if they choose to use their own lawyer or broker.
Under the 1979 Estate Agents Act, all offers made by buyers must be referred to the seller regardless of whether or not the buyer has got their mortgage from the broker recommended by the estate agent.
There is a clear conflict of interest in estate agents offering in-house services, such as brokers or conveyancers, to buyers. Estate agents are instructed by - and thereby work for - the seller.'
The main thing to remember here is Estate Agents are acting in their own best interests rather than either parties. Your lawyer always acts in your best interest.
Agents will whip everyone into a frenzy to get the transaction over the line ASAP just so they get their money banked in the required timeframe to hit their targets for bonuses etc.
They will blame the lawyer who asks the most questions as they see this as a delay instead of your solicitor ensuring you do not purchase a defective lease or title. That you don't have an extension that has been built over a sewer or that you don't have solar panels on your roof that you don't own.
With landlords cashing in on lease extentions and increasing ground rents it is essential that you have a conveyancer who knows what they are doing and trust them. Too many people listen to and believe what agents tell them. I am not saying all agents are guilty of this practice just the ones who take a bung.
Buyers who speak to in-house brokers also end up giving detailed financial information to the estate agent that can totally undermine their own negotiating position.
If the estate agent arranging your mortgage knows you can in theory afford as much as £270,000, you are not going to be able to dig your heels in arguing that you can only afford £260,000.
Meanwhile sellers can lose out because estate agents have an incentive to give preferential treatment to buyers who use their services, rather than the buyer who offers the best price.
My rule is Always use a law firm who refuse to pay the agent for work. (just ask, they have to tell you if they pay the agent) Never use one forced on you by an agent. Never use a mortgage broker recommended by the agent.
Sometimes an agent will even refuse to put your offer to the vendor unless you use their services. If you experience this tell the vendor, if you can't get hold of them shove a note through the door.
If the house is empty mark as private so the agent doesn't open it.
One question to ask yourself when choosing a conveyancer is "If they are any good, why would they give their fees to the agent?"
I am compiling a list of agents and solicitors that do not give or receive kick backs for the South East and Brighton. The list is surprisingly small!