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Agents 'missing out on income by not charging for referrals' - claim

A company is claiming that estate agents are missing out on substantial potential income by not charging for referrals of clients to financial advisers, lawyers and others.

Research involving 166 estate agencies shows that a culture of free referrals means that 62 per cent of agents do not receive a penny for any referrals they make, while 18 per cent say they had not even tried to raise income this way - or if they had, they had failed. 

The research has been undertaken by FBA, a company operating a platform for fee-based referrals between agents, lawyers, financial advisers and others.


The company suggests that the culture of ‘you scratch my back and I’ll scratch yours’ may have worked in the past but is now holding the sector back.

“The lack of trust is particularly concerning in a world where transparency and fairness are all-important. Estate agents who believe that they should only refer cases to people they know and trust, or those that rely on reciprocal agreements, may not be doing their clients any favours. The referral networks that some estate agents and property professionals have formed over the years may not give clients access to the best professional advice” says a spokesman for the company.

“The rapid growth in popularity of consumer websites for property buyers and sellers is creating an unprecedented level of competition in the sector and is causing significant disruption to estate agencies. The lack of awareness around alternative ways of working is adding to the problem and is indicative of a knowledge gap that is preventing estate agents from increasing their revenue through new money-making techniques” he says.

The company says agents have a range of potential fee-generating referral systems open to them including:

- reward-based referrals - receiving a cash reward or commission for any client work that is referred to another external professional adviser;

- referral agreements and specialist referral portals – some estate agencies have signed referral deals with specialist offerings in order to ring-fence additional advice capacity to meet consumer demand in key areas such as mortgage advice;

- operating advice supermarkets – access to a ready-made directory of qualified advisors;

- using online open market platforms - these could allow agents, financial advisers and others to upload details of each piece of case work to a platform inviting other registered members to bid for the lead.

  • icon

    EA's maybe be missing out on a small income in referral fees from solicitors in particular, but it's a very risky income. When Alexander Lawyers LLP (In liquidation) of Chelmsford went belly up abruptly in 2013 dozens of conveyancing transactions were left just hanging in mid air. And who did the clients quite rightly scream at? Not the senior partners of Alexander Lawyers, they had gone to ground. No it was the EA's who got it in the neck and it was the EA's who had to try and sort it out. And it was all because the EA's were lured into recommending Alexander Lawyers in return for a commission, a commission that was never paid. The Solicitors Regulation Authority gives a good account of the problems at:


    And in the Law Society Gazette here:


    Most of the smaller high street firms are fighting for survival. Best recommendation to the client is to go with one of his lenders panel. A small commission on the legals is more trouble than it's worth.

  • Kelly Evans

    Agreed. This is nowhere near as clear-cut as the FBA make out. You eloquently point out the potential issues much better than I ever could.

    Kelly Evans

    That was meant to be a reply to giles, but something went a bit wrong.

  • Alwis Anil

    Hi Giles,

    That is a bad scenario and very unfortunate for the EAs involved. Do you think that the selection of the firm was a factor? If the solicitors involved were vetted and managed with full understanding of their ability to deliver, would it have been a different story?

  • icon

    Alwis, yes of course the selection of the firm in the example I gave was a factor as even just a cursory check on the web would have disclosed an SRA prosecution in progress against the senior partner plus the fact that they had sent their own law firm bust twice before. (That was Merricks LLP and AWB Solicitors t/a Alexander Bosher Solicitors both in liquidation).

    But the fact remains that even if the most solid, respected and professional solicitor is used, something will always go pear shaped in the transaction and if you recommended them, in the eyes of the client you're responsible.

    It'll be great to hear from Rob Hailstone on this as he usually gives very good advice on what to look for in licenced conveyancers and solicitors.

  • icon

    Hello Giles
    The case you have highlighted is very unfortunate. All the more reason for estate agents to spread the risk by referring client work to a variety of professional contacts using an online platform to make the process easy to manage. The commissions on offer may seem small, but they can mount up over the course of a year. Using a platform to reach solicitors and other professionals, such as accountants (in the case of commercial property sales) could prove lucrative, as our research indicates.

    Ash Patel, founder of FBA.com

  • icon
    • 22 October 2015 17:39 PM

    I would prefer a rock solid local solicitor who picks up the phone ANY day over and above a referral fee of £50 or £100. They save me a fortune in my time that I can spend either here on EAT or out winning new business. When it forms such a trivial percentage of my overall business, why would I even bother.

    I am getting to the point where if a buyer says they want to use one of these conveyancing farms then I'll advise the owner against accepting the offer.

    I am also getting to the point where if the owner says they want to use one of them "because they are cheaper" I'll drop my fee by the difference.


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