Phil Priest of 4Corners Property shares his thoughts on the need for upfront information when it comes to speeding up the conveyancing process.
The time from offer to completion has doubled since 2016 inline with the fall through rates which are now sitting at over 30% and this is climbing each year. This has a direct impact on every company, person and client in every chain. At 4Corner Property we have reduced this fall through rate to only 2% allowing more completions to succeed but in a quicker manner too.
The idea being that if the information is ready and available, the fall through rate reduces.
Estate Agents would see lower fall through rates, if they are able to lock both the buyer and vendor in more quickly and get them to instruct their conveyancer to act within a few days. This early instruction and also request for searches, aims to prevent buyers offering on multiple properties and waiting to see which one comes to fruition. It highlights their commitment to the conveyancing process and the property.
In 2016 the average completion time was 12 weeks and fall through rates sat at 20%, this years figures indicate an average of 28 weeks from offer to completion and the number of transactions failing to complete track along this which is concerning for all.
The average estate agent fee is £3,000 per completed transaction. The average estate agency branch will agree on 10 sales per month with annual revenue pipeline of £360,000. By losing 30% of this throughout the year the potential loss in revenue sits at £108,000 but the cash flow is impacted greatly in its not taking more than twice as long to realise that revenue.
Currently the sale to completion timescale sits at around 28 weeks, if things go to plan. 4Corners Property have shown that you can shave over 5 weeks off that timescale if the buyer instructs the conveyancer (and pays for) searches to be requested at point of instruction. This also means that when searches are returned, there is more time to consider any relevant enquiries that need to be made.
The average return time for the local search in the UK is 4 weeks. If the searches are ordered later in the process, even by 6 weeks allowing for onboarding, draft contracts, mortgage offer etc to be returned to the solicitor, this means meaningful enquiries aren’t raised until week 10!
Some councils have experienced issues since Covid-19 and timings have risen in some cases to over 6 weeks for the local search to be returned, the impact on this is more delays in the chains and completions.
Data shows that currently conveyancers are sending enquiries at around 12 weeks, whereas early instruction of searches, means enquiries can be sent around the 4 week mark. With the time being saved, Phil estimates that a conveyancer can undertake 128 more cases per fee earner during the year, without adding to existing workload.
The average case load for a conveyancer in the UK is 70 live files at any one time. If they complete on these 70 files at an average of 200 days per file, there completion rate is
365 days / 200 days per transaction * 70 live case files = 128 cases per year per fee earner
Using the 4Corners system and the 4Moving pack being ordered upfront they can manage 323 cases per year without breaching their 70 live case files they manage
365 / 89 days per transaction * 70 live case files = 287 cases per year per fee earner
That’s an increase of 159 cases per year per solicitor, meaning 159 people move in to their homes allot sooner.
If the average fee per conveyancing solicitor charged is £750 x 159 extra files = £119,250pa in additional revenue per fee earner!
4Corners Property currently uses 15 solicitors firms and these have been cherry picked formed on relationships forged over several years.
There are three main factors that work for us and our solicitors:
- Respect for each other and our parts in the process. I’m very protective and proud of my legal partners and ensure that they earn good fee’s for the work they carry out.
- Understanding that we are on this journey together and ultimately our actions are for the benefit of the clients, trying something new but doing so together and monitoring the benefits.
- Communication with weekly updates provided to the referral partners has reduced call rates by 70% allowing them to focus on the legal work and not answering calls asking for updates.
It goes without saying that the lower levels of activity we experience in the summer holidays has remained and looks to continue being slow up to Christmas. The market is in transition where sellers price expectations are being normalised so many holding off until the new year to list their properties. Buyers are finding it harder due to mortgage rates and therefore prices offered aren’t inline with sellers expectations. With mortgage rates continuing to fall across the board, this is promising for the 2024 but lets not expect the hedonistic days like 2021 & 2022.
I think we have forgotten that 98% of Sellers want the security of a property sale completing over the final price (within reason) as they have their next move in mind.
The 4moving Pack is just part of the upfront information that has proven to speed up the time to completion for everyone in the industry. This highlights that we can alter an existing process for the benefit of all. The more relevant upfront information we can provide will only aid this even further in the future and aided with Log Books can only be a positive to reduce the time legal professionals have to wait for information to get the transactions processed.
4 Responses
It makes sense, buyers paying for matters upfront will commit them to a certain extent. Still, we have too many buyers out there who are a) slow to instruct b) don’t place money on account c) don’t come up with ID and fully completed forms d) don’t deal with mortgage AIP swiftly e) don’t deal with surveys swiftly. But then again, if agents are happy to push through whatever offer is coming…. Too many occasions do I see agent’s advising seller’s to accept offers from buyers who are not qualified, not in a position to move, cannot obtain a mortgage for a month or two, won’t instruct survey, from chain’s which are not complete and from chain’s where Probate has not been yet applied for
I completely agree, we see this from the time it takes some buyers & sellers to complete their onboarding with solicitors, sometimes several weeks, which adds time and stress to everyone involved.
The sellers have prequalified themselves through taking the invasive steps of advertising their home online and with agents. Working with ‘qualified’ buyers solves a fundamental issue, but the problem starts and ends with only accepting offers from those who are serious.
In my experience most of our buyers want to move in ‘yesterday’ and are therefore keen to deal with ID & funding requirements as soon as possible, it’s the delay in receiving the contract pack (or even just the OCEs) from sellers that often prevents us from applying for searches more quickly.
seems so simple and direct results. Why is every agent not asking for this?