Referral fees may not be good for your wealth, conveyancer warns agents

Estate agents could be much better off not being paid referral fees by conveyancers, it has been claimed.

The partner of a conveyancing firm has said that referral fees can affect the quality of service and lead to a high fall-through rate.

Angelo Piccirillo, of AVRillo, said: “It depends on how the firm is set up, how much they have invested in IT systems, structure, staff, and how high the referral fee to the estate agent is.

“Solicitors are not great managers on the whole. They are lawyers, so why should they be?

“This means they will jump at the chance of doing work with estate agents at whatever cost.

“The result: they take on work which they cannot afford to do because their profit is reduced by payment of their referral fee out of their overheads, as these never come out of the client’s costs.

“In turn, many conveyancing solicitors make little money, and are amongst the poorest and the most overworked in the profession.

“The higher the referral fee, the poorer and less motivated the solicitor can become. The firm will lack the money to re-invest in developing systems and staff, and are able to provide less manpower to get the job done.”

He went on: “High referral fees risk being unhealthy for both estate agent and solicitor, so they need to face the elephant in the room when entering a referral agreement.

“Can the solicitor afford to pay the referral fee? How much can they afford without compromising on quality and ability to spend the right time on being proactive?

“Do not sacrifice a high referral fee against the potential of the solicitor not having time to push the deal, and end up with abortive rates into the 30 percents.

“The discussion should be frank and with no threat of the solicitor losing a referral if they speak honestly. This not only helps the solicitor but the estate agent too.”

He said that both estate agent and solicitor should prioritise their main objective, of moving the client safely, at speed and without negligence – bearing in mind that almost 50% of all claims against solicitors are property-related.

Piccirillo told Eye that his own firm does pay referral fees to estate agents, but not always.

He said: “Some agents just want to ensure that we help them with their pipeline. Last year, we achieved a 9% abortive rate compared to national abortive rates which over the years have varied between 30% to 40%.”

Last year, his firm won Best Conveyancer of the Year in the Times and Sunday Times estate agency awards.

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  1. smile please

    Referral fee or not service is pretty standard throughout the industry (pretty poor). Corporate solicitors from the like of LSL Sequence and Countrywide are by far the worse though.

  2. phoenix

    It seems to me that the suggestion is one of like it or lump it. Apparently, you shouldn’t expect to generate any income stream from referrals as doing so could lead to service levels dropping. Hmmmmm…too much business…what a lovely problem to have.

    Conveyancers have always with struggled to accept the fact that they are in a service industry and this post illustrates that once more. We as agents should expect decent service from any firms we work with and certainly from those we chose to put our names to by refereeing them. Discussion, agreement and accountability on both sides but we are all in business so why should we be expected to do something for nothing?

    1. smile please

      Beggars belief really!

      Conveyancer: “Hi we would love to work with you and get a great working relationship”

      Agent: “Yep no problem, what referral fee do you pay?”

      Conveyancer: “Errr maybe a couple of hundred pounds but i warn you, you will not get great service, We really want them for free”

      What other industry do they expect leads / guaranteed business for free???!!!

      1. phoenix

        Amazes me really, just emphasises the difference in mind set of both sides in this case. I don’t think this chaps view is totally symptomatic of his industry as I’m chased pretty hard, pretty regularly by law firms wanting our business, but it is a little arrogant I think. Apparently the cancellation rate of cases instructed to him is only 10% (mine is an extraordinarily high 14% YTD !) and has nothing to do with the agents diligent initial and ongoing progression, checking and monitoring of the entire chain from offer to completion. Now, if he’s saying he will take all that of my hands…..

  3. Paul H

    If we are asked for some recommendations then we give the names of those we have dealt with previously who have shown a good level of competence.Each to their own I guess, but I prefer not to take a fee. I’d rather that fee be passed on to the client within the conveyancing quote given and keep the whole thing at arms length.



  4. IndAgent

    It works well for us. We pass clients to a local solicitor who charges fairly and works especially hard for our clients as he wants the flow of work from us. Sales progression is much easier with one firm handling a bulk of the pipeline, and as a side benefit, the £100+VAT fee we receive for each referral pays approx half a full time salary per month. Why wouldn’t you? It saves the solicitors having to advertise their services resulting in the same outgoings for them and an income stream for us.


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