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 $900 and sellers $600 regardless of the size of the transaction. 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.”
“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 focused instead on better understanding key business factors.
Contact Michael Hodgkins on +61 8 9220 4455