Click your way through any number of homes for sale on various property websites and you’ll find a fair few that come up as ‘POA’ – a decision by both vendor and estate agent I’ve always found utterly perplexing. To me it somehow smacks of, ‘If you have to ask, you can’t afford it’ and given that most potential purchasers are going to nail down their search in the first instance by price, then it seems even more bizarre.
The notion of price is incredibly important in our marketplace, and while some may still persist with the maxim that ‘you know the price of everything, but the value of nothing’, I’m going to say that the price is a rather important factor in any purchasing decision I’m going to make.
For mortgage advisers, I’m fully aware that price may not be the be all and end all when it comes to recommending products to clients, but it’s still going to figure high up on the agenda for all clients. I appreciate that a client choosing purely on price, and not for instance taking notice of a lender’s poor service or their true ability to secure that loan, may come back to bite them in the behind when they don’t exchange and/or complete on time, but I’m also certain that should the alternative be far too costly, they’re probably going to take their chances with the cheaper option.
In all walks of financial services, and our market, the cost is clearly made up of many different aspects. I often see direct-to-provider propositions selling their services on the basis that the client doesn’t have to ‘pay a middle-man’ – be that an adviser or a packager, or in our case a distributor. That may be the case, but even in such situations there’s no guarantee that the price is going to be any cheaper, plus the client is obviously just going to one source of business rather than being able to access the entire market, or at least a much bigger part of it.
Conveyancing is an area of course which has its fair share of players who are paid out of the fee paid by the client. It’s often said that ‘you pay peanuts, you get monkeys’ as if you can’t source quality conveyancers at a price less than that of our rivals. I don’t buy this for one second because a significant amount of the cost of conveyancing these days is via the panel fee that the panel manager takes. Add on a significant amount to this charge and quality conveyancers are going to look expensive regardless.
I’m often reminded of that graphic which shows how much a gallon of petrol costs, what specific part goes where in terms of duties, taxation, suppliers, petrol stations, etc, and it tends to show that the amount of money you’re actually paying for the petrol itself is pretty low, but add in the other interests and it soon mounts up.
That’s really the case with conveyancer distributors – of course we have different legal firms on panel but it’ll be obvious to all advisers that many appear across every single one. One thing that will be different is the price – and let’s not forget here that the service the client will get is going to be absolutely the same, regardless of which distributor is used to access the firm. That difference comes from the level of panel fee charged and set too high it can take what is ostensibly the best solicitor, with the best service and price, up and out of the picture completely. Try telling an adviser or their client that price isn’t important in this scenario.
The point to make is that not all distributors are the same, not all their charging structures are the same, indeed, not all panel fees are the same. However, if it’s the same solicitor on each platform, their service will be the same, and therefore the cheapest option is only going to be good news for the client (and I suspect you, the adviser). Make sure you’re using those distributors who are not piling on the pounds when it comes to panel fees because, in that situation, no one wins and we would definitely argue that the price is far from right.
Harpal Singh is managing director of Broker Conveyancing