Frequently Asked Questions - General
Why is a law firm selling real estate?
The simple answer is that consumers want a one-stop-shop for real estate matters, and lawyers are the only professionals who can provide that service. Of all the service-providers in the real estate sales industry, only
lawyers possess the skills and qualifications to perform every role from the very start to the very end of a real estate sale.
How is Lawyers Real Estate able to charge such low fees?
There are numerous reasons, but these are the main ones:
First, the selling of real estate has become much simpler and cheaper with new technology, particularly the internet.
Second, while costs and overheads have dropped for
estate agents, these savings have never been passed on to consumers. Even worse, percentage-based commissions have grown
as the average price of real estate has risen, so that the commissions and fees charged by
estate agents are well out of proportion to the services delivered.
Third, purchasing habits have changed, and purchasers now self-qualify before making enquiries.
Because the internet is the preferred searching tool of most property seekers, the expensive and labour-intensive
escorted inspection (long
regarded as an unnecessary imposition on vendors and purchasers alike) has been eliminated.
Fourth, our application of technology to the sale and conveyancing processes has allowed us to eliminate the
inefficiencies and over-servicing
that characterise the established real estate industry, and enabled us to pass the benefits and savings on to our clients.
Is it normal for a law firm to sell real estate?
Property lawyers have been around for a lot longer than
estate agents. Before
estate agents were permitted to sell real estate, all real estate
sale contracts were prepared, negotiated and finalised by
lawyers.
But
lawyers have always remained involved.
Estate agents are licensed to perform just some of the functions performed by
lawyers, so whenever things get difficult the
lawyers are immediately called in.
Lawyers Real Estate started when a law firm responded to the demand for an uncomplicated, cost-effective and all-encompassing real estate service. It was a simple matter of marrying modern technology to standard property law and conveyancing services.
Is there a conflict of interests when a law firm sells real estate?
This is often a rhetorical question, asked by
estate agents in a desperate attempt to separate the role of estate agent from the role of
lawyer.
Estate agents try to convince consumers
that the
estate agent has a distinct role, that the
lawyer has a different role, and that bringing the two together somehow constitutes a conflict of interests.
Ironically, one of the reasons we developed our real estate sales service was to eliminate the
conflicting interests inherent in the existing real estate industry!
The measures we take to the eliminate the conflicts of interest that exist in the real estate industry include:
- Valuations - Every vendor client must obtain their own independent valuation from an accredited valuer. This is because there
is a conflict of interests where the person who is advising as to the value of the property also has an interest in the sale of the property. (See this posting on the Australian Real Estate Blog, about an estate agent who confirms that estate agents should NOT provide valuations: "Why I Like This Estate Agent")
- Independent Legal Advice - Every purchaser is advised to obtain independent legal advice from their own lawyer. The person who is advising and assisting
the vendor with the sale cannot also purport to advise the purchaser of that property.
- Vendors Meet Purchasers - Vendors and purchasers are encouraged to have personal contact before the sale is finalised. Estate agents
often play the parties off against each other, giving false information to each in order to bring about a sale. By encouraging the parties
to meet we place them in a position to "compare notes" about what they have been told. This fosters good relationships and removes the opportunity
for the deceptive practices that characterise the industry.
- Inclusive Advertising Costs - Vendor paid advertising is eliminated by having advertising costs included in our fixed fee. Vendor paid advertising is
exploited by estate agents who promote themselves at their client's cost. For example, many estate agents still encourage clients to advertise in local newspapers, knowing that
such advertising is useful only to the estate agent whose logo, personal photo and agency details make up a large part of the advertisement.
Do the other estate agents hate you?
Yes, and understandably so, as their comfortable and lucrative monopoly is now at an end.
Estate agents find it extremely difficult, if not impossible, to operate
on a fee-for service basis.
Also, the nature of real estate services has changed. The role of the
estate agent in connecting people with properties has been replaced by internet portals such as
www.Domain.com.au, www.realestate.com.au and others.
To the extent that the internet, the mobile phone and digital photography have become the final nails in the coffin of the
estate agent monopoly, they have
also become the tools with which we have modernised the real estate sale process.
Some
estate agents have tried to emulate us, as they can see the truth in our slogan
"...the new direction in real estate", but they are not qualified to
provide the full scope of services (including the legal and conveyancing services) associated with our product. In addition, the
escorted inspection is no longer
an effective means of controlling clients, and has become an expensive burden for
estate agents as well as an impediment to the lowering of overheads.
Eventually the real estate industry will adjust to
"...the new direction in real estate" and we will be one of many law firms offering
this modern form of real estate service.
How does Lawyers Real Estate make a profit?
We don't have to write off losses from "no sale, no fee" arrangements (see the next FAQ), we don't have to cover the costs associated with
escorted inspections, and
we don't have to share fees with a "listing agent", "selling agent" and agency director.
We provide a full standard service in return for a pre-determined fixed-fee, that's all there is to it.
Why don't you offer "no sale, no fee" deals like other estate agents?
No sale, no fee is a gambling game played by
estate agents in order to lure clients. Like any gambling game, the odds can be shortened if you know
how to load the dice.
This is where the
deceptive practices are brought into play. Over-quoting, under-quoting, vendor conditioning and a variety of scams are
used to ensure that a sale comes about one way or the other. (See these postings on the Australian Real Estate Blog, about "private auctions":
"The Dummy Bid Lives!" and
"The "Private Auction" – A Haven For The Dummy Bid")
And if the estate agent can't bring about a sale,
commission rage emerges.
If an
estate agent is prepared to bet his or her own money on a sale, you can be sure that there will be a sale one way or the other. (See our discussion on conflicts of interest above.)
Does a lawyer need an Estate Agent’s Licence to sell real estate?
No. A
lawyer's Practising Certificate issued pursuant to the
Legal Profession Act 2004 allows a
lawyer to operate a trust account, and to perform all aspects of the real estate sale transaction, including the preparation of sale documents, negotiation and closure of the sale, and all legal and
conveyancing work
associated with the completion of the matter.
An
Estate Agent's Licence allows the
estate agent to perform a few of the functions of the
lawyer (but the estate agent must always seek guidance from the
lawyer on contracts and other legal matters) and to operate a trust account. In other words,
an
Estate Agent's Licence is necessary only where a person offering to negotiate the sale of real estate is not a qualified
lawyer.
Another way of looking at the situation is to say that a conveyancer requires a Conveyancer's Licence to perform some of the functions of a
lawyer, but
a
lawyer can perform all of the functions of a conveyancer without also having to hold a Conveyancer's Licence.
Is Lawyers Real Estate a member of the Real Estate Institute of Victoria (REIV)?
No. Lawyers Real Estate is a law firm, and is a member of the Law Institute of Victoria. The
Real Estate Institute Of Victoria
represents
estate agents, and has been established to protect and advance the interests of
estate agents.
Can conveyancers sell real estate?
No.
Conveyancers
are not
lawyers and are prohibited from offering
legal advice
or preparing real estate sale documents. The conveyancing industry in Victoria has fallen into disrepute because of widespread illegal conduct. The State Government has already started an enquiry into the conveyancing industry, in the wake of the loss of $9 million by a Geelong conveyancing company.
An estate agency has told me that they are a “quick sale expert”.
Getting a quick sale, if that is the only goal, is easy. You simply ask a low enough price for the property and it will sell. However, if you want a quick sale and a fair price the situation will be different, as these are often mutually exclusive.
How do estate agents get quick sales?
Our experience (we have a lot of previous experience in conveyancing for vendors who have sold through
estate agents
) is that a quick sale is often achieved where the
estate agents
tells a vendor that the property is worth a low figure when it is really worth a lot more at
current market value
. The bargain price will attract plenty of interest from purchasers who know the market, and if the vendor accepts an offer midway between the agent’s original quote, and the
current market value
of the property, both the vendor and the purchaser will believe that they have done well. Of course this process is both unethical and illegal, as it involves a
conflict of interests
and misleading and
deceptive
conduct.
I have heard that auctions and set-sales result in quick sales.
This is partly true, but partly deceptive. Any sales scheme, method or scam that sets a date on which the vendor is supposed to make a decision on the offers available on that day will probably result in a sale on that day. The deceptive aspect is that the sale takes place on that day because the vendor feels obliged to accept the best offer available, whether it is a good offer or not. Enormous pressure is brought to bear on the vendor in terms of advertising costs, the investment of time and effort, and worry as to “What do we do next?” if the property doesn’t sell. The
estate agents
will also exert pressure, because a failed auction is a common cause for vendors switching agents - a lost vendor is a lost commission!
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