Agents worried about low instruction levels, high fall-through rates and the growth of online competitors should forget the “spray and pray” approach of panel-managed conveyancing.
Instead, they should concentrate on getting more deals through – and more quickly than the average, which has now risen to 16 weeks between offer and exchange.
Peter Ambrose, who founded independent conveyancing firm The Partnership, said: “We spend a lot of time talking to estate agents and the most common feedback we get is that they are frustrated by how long deals are taking, the difficulty involved and fall-through rates.
“The actual figure for the number of deals that fail is understandably difficult to pin down – it’s not something an agent will want to publicise.
“Indeed, recent accusations about the completion rates of ‘online-only’ agents definitely has a whiff of glass houses and stones about it.”
While the Government puts the fall-through rate at 35%, Ambrose says the general consensus is that it is somewhere between 28% and 35%.
He said: “This, when given the downward pressure on agent fees and reduced transaction levels per branch due to increased competition, makes revenue generation even more challenging.”
So what do agents do?
One of two things, according to Ambrose.
They either choose the ‘additional revenue stream’ approach and sign up to referral-based providers – conveyancing panel managers.
Or they focus on getting deals through more quickly – “As every agent knows, delays kill deals”.
It is no secret that Ambrose – whose firm directly employs all its own conveyancers – does not like panel managers.
The problem, he says, is that because they pay referral fees, they have to watch their other costs. They do this by exploiting technology, increasing workloads or employing cheaper staff, including off-shore companies – or all three.
“The usual outcome is higher caseloads being run by inexperienced case handlers, resulting in the frustration of poor communication and slower transactions,” he says.
So, how slow is slow?
According to Ambrose, the average time between acceptance and exchange is now 16 weeks, up from 12 weeks a few years ago.
This figure is likely to get worse.
“For agents competing with ‘online-only’ agents who are charging clients in advance, the ‘complete more deals’ approach will be key in demonstrating their competitive advantage.
For example, with a fall-through rate of 35%, agents will get seven cases through for every ten instructions. Reducing the rate to 20% will mean an additional sale will go through – with likely average commission at around £3,000.
But, says Ambrose, higher completion rates are usually achieved by a speedier process – and this means using firms which employ properly trained lawyers in sufficient numbers to be able to respond quickly, and which have invested in technology.
“Of course, this can only be achieved by charging legal fees that sustain employment levels and investment, which are typically incompatible with the panel managed ‘spray and pray’ model.
“It seems the choice is obvious.”
Of course, he would say that, wouldn’t he? But do you agree?
You might get lucky with a puppyfarm conveyancer but you (and your clients) probably won’t.
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We have used a local solicitor for a number of years now.
We have a super working relationship with him.
He has the same issues as every other out there.
He pays us £200 per transaction meaning we usually end up with £400 per client.
Why would I give away the leads for free when I can earn from them?
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To be clear – we are not arguing against referral fees.
Our business is based on working with agents who genuinely believe in what we do and promote us – this clearly has significant value to us.
What we are talking about is proportionality and agents working with lawyers that they genuinely rate – like yours “smile please” – we talk to too many agents who complain they are “forced” to recommend panel-based firms that they really don’t respect.
From our research, that falls foul of The Bribery Act 2010.
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Whilst I rate him to an extent. I still have major issues in how he conducts his business.
In over 20 years I have never managed to find a consistent, proactive solicitor.
The attitude of the legal profession needs a shake up.
Maybe then some agents will not take the fee from bucket shops.
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What we find surprising, is even where companies suggest they offer a modern and efficient service, they *still* use the same practices. Far too often they still insist on using the post and get themselves in a terrible mess when it comes to enquiries because they simply don’t track them properly.
Sadly, the inertia in the industry is really strong and you’re absolutely right about the shake up
Join us, Tim Higham of Trethowans and David Pett of MJP Conveyancing on our somewhat lonely crusade!
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Hi Peter,
Completely agree with your points made and keen to understand how the lonely crusade plans to shake up the market.
Looking to introduce myself and the business. My email is daniel@getmemoving.co.uk
Cheers,
Daniel Elliott
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How on earth do law firms allow a 30% fall through!? And why an average time of 12 to 16 weeks!?
Of my own 200-250 clients a year maybe 3 clients actually change their minds and pull out, it just rarely happens. If it does it is typically frustration at slow pace of the other party!! My clients simply do not change their minds….but then again, we have a strict policy of targeting a maximum of 4 weeks to exchange, so why would we want to give them or any party ‘cold feet’ to spot other properties to tempt them away.
My Team at Trethowans are recruited – and that comes with a higher salary, so what – for their experience/expertise, who chase down slow conveyancers, turning things around same day or within a few, and always offering solutions. We ask each other to treat client sales/purchases as if they are our own – to care. Not to mention it is a hilarious team to work in and a very non target/pie graph, never ‘squeeze money from clients’ firm culture.
If you don’t align with better conveyancing, your business can expect slow conveyancers to cause fall-throughs.
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With all the advances in technology why do things take longer than ever, perhaps a fee justifier?
As for referral fees and estate agent bashing which is quite correct, a recommendation should be just that with no conflict of interest.
Are conveyancing solicitors in bed with insurance companies, I can’t remember the last sale I dealt with, that didn’t need to indemnify against something.
Nothing like a kickback to help you sleep at night !
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Solicitors are not getting kick backs from indemnity insurers…that is a myth. Blame the CML Handbook.
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I am genuinely interested to know where that “16 weeks between offer and exchange” came from. I remember there being a white paper late 2016 that reported it took 12-14 weeks. I assume there is no distinction between leasehold and freehold sales?
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