Despite playing a crucial role in property transactions, many Australian conveyancers struggle with undervaluation of their services and must adopt strategic measures to enhance their worth and maintain profitability, according to industry experts.
Join us as we dive into the heart of the Australian conveyancing industry, the dynamic array of voices, each offering unique insights.
Tony
We’ve spoken quite often, Chris, before about the value chain or where conveyances sit on the properly transactional value chain. For the benefit of the people in this room and interstate, can we just delve into that a little bit? Because you often held this view that the conveyances undervalue themselves.
Chris Tyler
I think the conveyances undervalue themselves but also I think the market undervalues conveyancing services. If you look at a million dollar transaction, who makes the money out of the million dollar transaction? Revenue New South Wales make $40,000. The real estate agent makes, I don’t know what the commission is, but say 15 to 20,000. The mortgage broker makes maybe an upfront of what three or four grand plus a trailing commission. The person who actually handles the legal transfer of the risk associated with that property will earn the less. The lease, sorry.
People spend more on styling their property and advertising for their property than they do on the conveyancing. So the conveyancing could be anything from 750 bucks to two and a half grand. But the fact is that that’s where it’s been set and unfortunately it’s a very difficult one to move up the chain. I think part of that is also historical. It goes back to when there was a scale of fees 30, 40 years ago and that scale was adhered to very conscientiously. That obviously was anticompetitive. But unfortunately now that the fees have come to a low level. And also the other fact is it’s a dollar amount, it’s not a scale amount as percentage amount. Transactions, if they were a percentage amount would be great because as values go up, as revenue has also achieved that as prices of properties have gone up, revenue collection has gone up because it’s a percentage.
Tony
Sue, what holds that back? Is it market-driven? I mean, do you have these discussions with your customers?
Sue Mosely
I don’t negotiate generally. It’s about knowing your worth. It’s from our side, it’s knowing your worth and being in a position of confidence to put that forward. There’s a lot of competition. There was a lot of competition way back when 2018, I think. We were lucky to pull five settlements a week and everyone was dropping fees. Everywhere you looked, everyone was dropping fees competing with each other and it’s been a hard long road back from that.
Tony
Yeah.
Sue Mosely
It comes down to the level of service you provide.
Tony
Is that why you are focused? Is that one of the key drivers of your focus around customer service? Is that the way in which you add more value and attract more customers? Is it word of mouth?
Sue Mosely
Word of mouth, yeah. A lot of return clients, word of mouth referrals. We are available seven days a week. We are available after hours. And no, it’s not just one person within our team. We take shifts so they’re always going to get someone who can assist them and work with them because we’ve got all these glories of technology that makes our workflow so much easier for us. So we’ve got so much more time to put into our customer service. So yeah, we’re worth it.
Tony
The things I see or observe at least anyway from the distance I have, but it doesn’t appear to be a structure, pricing structure that’s going to move quickly. So this is your reality for a little while at least anyway. So what do you do in your business to ensure that profitability needs to be where it is. We’ve spoken before about the technology that you deploy inside your business to make things smarter and faster and all that sort of stuff? Can you describe some of those for us?
Fiona Eastwood
Yeah, I think when you’re sort of talking about your fees, it is the education of the general public that doesn’t know what it is. It’s very time-sensitive if you’re buying or selling or sold or bought, so you don’t have the time to spend on the phone with them to explain the whole process and all the possibilities of what could come on. So as soon as you start engaging with that client to have a streamlined workflow or a streamlined process is key to reducing the amount of hours that you’re spending on the little things that the client probably doesn’t see the value add to or the compliance requirements is probably taking up a big percentage of our role right now. And to them, it doesn’t really mean anything nine times out of 10. Especially if you’re an Australian citizen, you always have been… It doesn’t matter to them but all of the paperwork and things that we have to do. So workflows to eliminate the risk is probably a big thing for us.
Tony
And your clients, I sort of see that I’ve got a tick a box.
Fiona Eastwood
Pretty much.
Tony
Is that how they see it?
Fiona Eastwood
Pretty much. Yep.
Tony
Yeah, yeah.
Fiona Eastwood
Yep.
