A clampdown by the Law Society of SA on conveyancers paying commissions to estate agents is unlikely to succeed because the practice is simply too widespread, say agents. Nevertheless it is indicative of the pressure on conveyancers and estate agents to change practices which are seen as being non-transparent and which limit consumer choice.
Smaller firms are feeling pressure on two fronts - from efficient large firms which have turned conveyancing into a business, and from the effort by buyers and sellers to push down lawyers' fees and estate agents' commissions. Yet, for some lawyers, professional ethics and the independence of the attorney are more important than freeing the market from restrictions and special interests.
Also of interest in the article - Wash the Windows - which appears in the May 20 issue of the Financial Mail is the calculation that conveyancing fees amount to a massive R7bn a year. The article continues with a discussion of how the consumer has benefited from the poor image of estate agents and the deregulation of their commission structures. It ends with the need for the Estate Agency Affairs Board to use its funds to educate consumers, conduct research and to expand market development into the townships.
|What's wrong||How it affects the market||How to fix it|
|The seller chooses the conveyancer but the buyer pays the fee||Limits buyer's choice and ability to negotiate the fee||The seller chooses and pays|
|Conveyancers can't advertise like agents, banks and originators||Limits choice of sellers, who enter the market on average every seven to ten years;
Conveyancers promote business via secret agreements with agents, so market not transparent
|Allow conveyancers to promote themselves|
|Agents have pre-printed sales agreements||Gives agents the opportunity to protect their own interests above that of buyer's and seller's||Have a single agreement to be used by all agents|
|Agents pay for advertising||Agents use this for branding and pass the cost on to sellers through high commissions||Seller pays for advertising and controls budget|
|Agents own main advertising media||Gives advantage of a single shop window but restricts agents from advertising elsewhere||Broaden ownership, stop restrictive shareholder agreements|
|Agents control some mortgage originators||Limits buyer's choice of originator and possibly lender||Broaden ownership, make more transparent|
|Agents overprice; sellers among the most pampered in the world||Justifies high commissions, but allows mediocre agents to earn more than they deserve||Large agents set example and reduce their service|
Article on Financial Mail