Blog

Lawyers lead charge in settlement price war

Aggressive marketing by law firms has sparked a price-cutting war in Perth’s overcrowded conveyancing industry, saving home buyers and sellers hundreds or even thousands of dollars in settlement fees.

Settlement agents calculate their fees on the value of the real estate transaction up to maximums prescribed by Government regulations. 75% of agents surveyed oppose abolishing the regulations, claiming that the quality of their services would decline.

But the current practices cannot be justified according to Birman & Ride lawyer Michael Hodgkins, whose firm also trades as Flat Rate Settlements.

“Settlement fees should reflect the cost of service delivery, not the value of the property being transferred,” he said.   Flat Rate charges buyers $880 and sellers $550 regardless of the size of the transaction [Fees updated 18 June 2015]. Other law firms have adopted similar pricing models.

“At these prices a buyer of a $750,000 home would save over $1,100 compared to the regulated price,” said Mr Hodgkins. “At the top end of the market savings are far more dramatic. Demand for our services is booming as people have become more price conscious.”

Settlement agents are hitting back by discounting advertised fees. But some are compensating for the reductions with inflated charges for postage, telephone calls, bank cheques, titles office searches and settlement attendances, warns Mr Hodgkins.   “Consumers should carefully compare the total that they are asked to pay.”

Mr Hodgkins welcomed state government moves to consider deregulation, pointing out that WA remains the only state to control settlement agents’ fees.

“Agents use the regulated fee structure to avoid transparency and justify over-charging,” Mr Hodgkins said. “It’s no coincidence that WA conveyancing costs are higher than in the Eastern states.”

The Australian Institute of Conveyancing (WA) agrees, arguing that some agents rely on the statutory scale to compensate for their lack of marketing skills. According to the Institute, public confidence and consumer protection would be enhanced if agents focussed instead on better understanding key business factors.

Michael Hodgkins
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Related posts

We have introduced measures to ensure the safety of our team, clients and the community. All of our usual services will continue, with modified delivery……
Selling your property yourself, without using the services of a real estate agent, is known as a private sale. Pros and Cons The obvious……
Have a written agreement If you’re borrowing or lending money, particularly where family or friends are involved, it always makes sense to formalise your……
Popular posts

Our plain-English guide Buy your dream home without the drama has practical advice to help you complete the purchase of your new home.