Referral Fees - Bribery Or Marketing Spend?

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Timestamps
0:00 Introduction
0:39 Why Are Referral Fees Paid?
1:45 Who Pays Referral Fees?
2:44 What Does This Mean For The Client?
3:48 What Can I Do To Avoid Paying Extra For Referral Fees?
5:07 Does Harrison Clarke Pay (Or Accept) Referral Fees?
In any kind of property transaction, there will be a team of advisers and experts working to de-risk your purchase. These experts can be made up of a wide range of people, including solicitors, estate agents, mortgage brokers and surveyors, like ourselves.
These experts have been around a while, and know just how profitable their services can be. In fact, they’re willing to pay big money to make sure their firm is the one receiving the business, which is done in the form of referral fees.
But why, and how are referral fees paid?
And more importantly, what impact can this have on customers?
Why Are Referral Fees Paid?
Referral fees are exactly what they say on the tin. They are a fee paid to receive referrals from a specific company or body. Most companies consider the payment of referral fees to be part of their marketing budget. The people running the companies know that greasing palms is a great way to attract business without having to go to the trouble of building sustainable relationships, or sometimes even bothering to offer a good service. Instead, they just pay a referral fee to quickly and easily generate business.
So Who Pays Referral Fees?
A referral fee can be paid by and to any professional adviser who forms the client team on a property purchase. But the most common arrangement is that an estate agent receives referral fees from solicitors, mortgage brokers or surveyors in exchange for recommending them to their customers. In fact, some estate agents even insist on purchasers using their recommended advisers if they buy a property through them. Side note - this is incredibly unethical, and very likely illegal too, and you don’t have to stand for it.
What Does This Mean For The Client?
Of course, you might not be bothered by this arrangement. All part of doing business, right?
Except, who is really paying the referral fees? As we’ve seen, up to £2,090 (including VAT) could be going to a single agent if a buyer uses their conveyancer, mortgage broker and surveyor. And more advisers don’t want to pay this out of their profits. So instead, they add it on to the fees they charge the customer.
How Harrison Clarke can help?
Given all that, it probably won’t surprise you that we at Harrison Clarke don’t pay referral fees for recommendations. Not have we ever! Our recommendations come because we have great professional relationships with other advisers who know they can trust us. Even our clients are happy to recommend us.
By the way, big shout out to anyone who has recommended Harrison Clarke, thank you! You’re all amazing!
If you want to speak to someone on our expert surveying team, we’re always happy to chat. We can help guide you through your property purchase from beginning to end, without rinsing you for any extras.
For further guidance and useful tips and information on the range of surveying services we provide, you can read our blogs and watch our videos. These are available on our website and our UA-cam channel.