What does the flood of failing estate agents mean for conveyancers?

Following the news that primary estate agencies in England and Wales had shrunk by 3.09% within a year, doubts have been cast over the fate of the current conveyancing sector.

It would seem that the successful conveyancer needs to consider a range of factors in order to succeed in the current market. Changing technology and proptech innovations could place the paper-based conveyancer behind those that constantly update and move with the increasingly technologically minded consumer.

Many conveyancers have started considering how they can use effective data to improve their speed of delivery and offer their clients a faster and more transparent conveyancing process.

A recent survey, by Property Platform, revealed that of the 2000 people, 36% found the “the legal processing of their property transaction” the most dissatisfying part of buying and selling a home. Improving technology and how it can create a more transparent communication process will be a welcome relief.

Conveyancers should begin to consider their route to market and how they find their work in the first place. For many traditional and small conveyancers, this may be through word of mouth, reputation, past clients or mortgage and estate agency referrals. However, in a market where large ‘digital’ and ‘bricks and mortar’ estate agencies are insisting on high referral fees, conveyancers could be seen as having to adapt or perish to the expensive systems these goliath organisations are creating.

The growth of digital agent juggernauts like Purplebricks have changed the market considerably. In many cases, these companies have inhouse conveyancers, or conveyancers will sign up with the company’s panel services to ensure they receive some of the conveyancing business. Often these systems are expensive, but when these companies have such a huge market share, it may be important to retain consistent business.

Many conveyancing firms will find paying estate agent referrals and joining a referral panel becomes the standard norm, viewing the cost of new and often guaranteed business outweighs the financial outgoing of the referral.

Although some view this practice as unethical and may cling to the traditional ways of finding business, many will benefit from the figurative nod of approval offered by huge ‘digital’ and ‘bricks and mortar’ estate agents like Countrywide and Purplebricks.

Within their own firm, legal service providers will also need to consider how they convert potential into actual business. Whether this is training conveyancers to adopt a more sales focused approach, or through outsourcing to experts that can improve business. Whichever method is chosen, the conveyancing sector can see that a new spend to accumulate model is now looming closely on the horizon.

Chris Harris, Managing Director of Practical Vision has commented: “Many online agents are growing their market share quickly and these estate agents are very effective at cross selling conveyancing and earning referral fees from panel management, however many bricks and mortar agents are struggling.

“Whilst it’s clear that some large estate agents appear to be losing their way a little at the moment, e.g. Countrywide is challenged whilst it refinances, many of the estate agency branches that are closing down are the smaller firms that do a mix of lettings and sales.

“Faced with new regulations regarding tenancy fees and a market that is slowly declining, the challenge from the cheaper virtual agents is tough for them.

“What this means for conveyancers is all down to where you originate your work from. If you are happily paying referral fees and have strong places on good estate agency panels, you might be happy, but if you are anti referral fees, you might be finding your friendly local agent that recommended you has vanished.

“I recommend that all firms regularly review their sources of leads, and also the drop off rate from those leads.

“Do everything you can to ensure you have a wide variety of sources of leads and don’t rely on one or two good recommendations.  A regular strategic source of clients’ plan, and how to grow it is easy to do. At Solve Legal Marketing, we have helped many firms grow their client base through a mixture of plans to grow direct contact from home movers but also via referrers.  If you don’t plan and execute the plan it won’t change.

“Secondly ensure that you maximise the leads that come to you. Whether they are return clients, word of mouth or recommendations, it can still be a lost cause if you don’t know how to monitor and maximise your leads to instructions. Many firms are great and achieve 65% plus conversion rate but commonly we see firms that are only converting 20% of their leads. We help those firms with training or outsourcing their quote conversion and significant financial improvements can follow.”

Whilst smaller, traditional conveyancers may suffer a similar fate to the ‘bricks and mortar’ estate agent minnows that have recently closed, the future for conveyancers willing to innovate and adapt could be considerably bright – maybe even a bit purple.

Have you seen larger estate agencies aggressively encouraging fees through referral panels and referral fees? Have you seen conveyancers struggling because of industry changes? Are you one of the conveyancers that have prospered because of these practices?