LizardKing
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ClubMan said:
Cheers was not aware of the 0.1% stamp duty ... also I understand the cheapest may not be the best ...
Low cost Legal Fees
- Thread starter ninsaga
- Start date
Cheers was not aware of the 0.1% stamp duty ... also I understand the cheapest may not be the best ...
I just got an offer from solicitors of €850 plus VAT plus outlay.
HBowever, under Land registry Fees is €500 for Transfer, plus another €280 down as 'estimated fees payable to professional law searches'. All in all works out at just over 2,000!! Seems a bit expensive when basic fee given as 845 plus VAT!!
HBowever, under Land registry Fees is €500 for Transfer, plus another €280 down as 'estimated fees payable to professional law searches'. All in all works out at just over 2,000!! Seems a bit expensive when basic fee given as 845 plus VAT!!
That's more or less what I and others have been saying all along! Don't be mislead by headline figures that quote only the solicitor's professional conveyancing fee. The total (fee plus VAT plus outlay) needs to be considered. Certain charges are fixed and not negotiable or under the solicitor's control (e.g. the ones that you mention).
For house purchases with a mortgage over €250,000 REA charge a fee for the conveyancing of €499 + VAT and outlays irrespective of the purchase price of the property.
Sarah
www.rea.ie
Sarah
www.rea.ie
Firstly I thought AAM had a strict no-advertising policy?
Secondly, out of interest and just to elaborate on the fee of €499, can I ask a few questions? Do you have a panel of solicitors throughout the country? Are they actually paid €499 or is there an element of commission splitting to make up a higher fee?
Secondly, out of interest and just to elaborate on the fee of €499, can I ask a few questions? Do you have a panel of solicitors throughout the country? Are they actually paid €499 or is there an element of commission splitting to make up a higher fee?
I wasn't advertising - just advising the OP of our low cost legal fee package.
REA has a panel of solicitors in the areas where we have offices (Dublin, Swords, Newbridge,Bray, Gorey and Waterford) and that the level of communication/cooperation between REA and these solicitors is excellent as - unlike other firms linking to a panel of solicitors - all of these solicitors are connected real time to REA's IT systems so the integration of services from solicitor and broker are more streamlined.* Since 1996 REA has been using the mortgage commission paid by the banks to lower solicitors fees for our clients - so yes we use part of our commission to pay a market rate to the solicitors on our panel.
Sarah
www.rea.ie
REA has a panel of solicitors in the areas where we have offices (Dublin, Swords, Newbridge,Bray, Gorey and Waterford) and that the level of communication/cooperation between REA and these solicitors is excellent as - unlike other firms linking to a panel of solicitors - all of these solicitors are connected real time to REA's IT systems so the integration of services from solicitor and broker are more streamlined.* Since 1996 REA has been using the mortgage commission paid by the banks to lower solicitors fees for our clients - so yes we use part of our commission to pay a market rate to the solicitors on our panel.
Sarah
www.rea.ie
Re the advertising, that is not a matter for me to decide obviously, nor would I want to, although certainly my opinion would be that you are indeed advertising.
It's good to have the actual offer clarified for those who do not know that such low fees are available because of the large commissions involved and the splitting of same. Are such commissions are around 1% of the mortgage amount? So therefore It is therefore similar to that offered by other companies in the past, where there is a package offered between tied solicitors and brokers who can afford to advertise a 'lower legal fee' because in actual fact the commission is split between the broker and solicitor. Although I hasten to add, it may still be very attractive to people who cannot get all or portion of the commission back from their broker independantly.
It's good to have the actual offer clarified for those who do not know that such low fees are available because of the large commissions involved and the splitting of same. Are such commissions are around 1% of the mortgage amount? So therefore It is therefore similar to that offered by other companies in the past, where there is a package offered between tied solicitors and brokers who can afford to advertise a 'lower legal fee' because in actual fact the commission is split between the broker and solicitor. Although I hasten to add, it may still be very attractive to people who cannot get all or portion of the commission back from their broker independantly.
I think Primafinance do something similar to REA, I think they charge 600 Euros and I've also come across "easymortgages" who give you back 800 Euros if you arrange your mortgage through them. Not sure about all the exact ins and outs though. I've read here before that someone went to their bank and said they would try and get their mortgage through a broker because of the reduced legal fees and the bank then subsidised it (this way they're saving obviously) so that's another route to explore...
Petal said:
It's a fallacy that banks save if you go to them directly rather than through a broker - to process a direct application a bank has to rent or buy retail premises, hire and train staff, etc, etc, etc. When an application goes via a broker it goes directly into an underwriter/broker centre so all those initial costs are bypassed which is why lenders are able to pay brokers.
Sarah
www.rea.ie
Hi Sara, Hi Vanilla;
I am confused.
As a solicitor, I dislike offers of "low cost legal fees" in circumstances where it is not made clear to Joe Public that what is actually involved is a subsidy from the broker to the solicitor. I have always felt that cross-subsidisation arrangements such as this lack transparency, and that transparency is always a good thing for the consumer. Of course, it also puts a falsely low price on the solicitor's work, so in this particular context, I have a self interested reason for disliking it.
I like (well I thought I liked) the REA business model because my understanding was that it involved hard, up-front disclosure of mortgage broker commissions, in that they were fully refunded to the client. My understanding was that the REA fee was, therefore, the genuine full cost of the service (including broker and solicitor).
Has this business model changed? I would be sorry if it had. A lower headline figure might sell better, but I have always admired the idealism of the REA business model (as I understood it).
rgds.
I am confused.
As a solicitor, I dislike offers of "low cost legal fees" in circumstances where it is not made clear to Joe Public that what is actually involved is a subsidy from the broker to the solicitor. I have always felt that cross-subsidisation arrangements such as this lack transparency, and that transparency is always a good thing for the consumer. Of course, it also puts a falsely low price on the solicitor's work, so in this particular context, I have a self interested reason for disliking it.
I like (well I thought I liked) the REA business model because my understanding was that it involved hard, up-front disclosure of mortgage broker commissions, in that they were fully refunded to the client. My understanding was that the REA fee was, therefore, the genuine full cost of the service (including broker and solicitor).
Has this business model changed? I would be sorry if it had. A lower headline figure might sell better, but I have always admired the idealism of the REA business model (as I understood it).
rgds.
Sorry Sarah, I'm definitely not the expert on any of these issues, I am just looking at all the different options and whatever works out the cheapest in the end for me suits me. I'll explore all the different options once I've gone sale agreed on a property (might well end up with REA) I'll keep you all posted!
Surely it's potentially a fallacy? Surely some institutions can manage this so that it is not a loss maker?Sarah W said:
Not necessarily - they may not have a retail branch presence and they could always outsource the activity or operate it part time at arm's length?
Again surely this is one possible model but not necessarily the rule. I don't see how this all necessarily means that a financial institution can't potentially manage/arrange things so that they can deal directly with applications and yet make money.
MOB said:
Hi MOB,
I understand your sentiments but the bottom line is what's best for the client and the new package saves on both cash and cashflow. I'll give you an example.
Lets assume a mortgage of €350,000. Under the old package the REA fee would be €3495 + VAT (€4228.95) to include the solicitor's fee but excluding outlay. This would have been paid on completion and within 90 days the client would have received the commission refund of €3500 meaning a net cost of €728.95. Pretty good but the delay in receiving the commission was a problem, especially for first time buyers.
Now they pay €499 + VAT or €603.79 on completion which saves €125.16 but more importantly they don't have to wait for the refund. Clients can of course opt for the old package if they prefer but when we introduced it we offered it to all existing clients who had signed up on the old terms and everyone decided to switch!
Sarah
www.rea.ie
In the interests of complete clarity, then, assuming the mortgage amount of €350,000.00 and taking it that the client pays €499 plus VAT towards legal fees, what commission or fee does REA get ( I assume there is a range depending on the financial institution) and what fee does the solicitor actually get?
hi Sarah,
If I understand you correctly, there is a V.A.T. cost of €733.95 under the old arrrangement, but a V.A.T. cost of only €104.79 under the new. The V.A.T. saving of €629.16 is certainly a compelling argument in favour of the newer business model (if I understand it correctly); A win-win scenario in fact.
However, you can understand why a practising solicitor might feel miffed that the legal fees are advertised as being as low as €500.
It creates a false impression that this work can be viably done for this kind of money.
An advertisment which stated "you pay x toward legal fees, we pay the rest" would be more accurate, though I accept it is not as "soundbitey" and appealing to the consumer.
I share Vanilla's curiousity as to what your panel solicitors actually get paid, but I respect that there may be an element of commercial confidentiality to this.
rgds
If I understand you correctly, there is a V.A.T. cost of €733.95 under the old arrrangement, but a V.A.T. cost of only €104.79 under the new. The V.A.T. saving of €629.16 is certainly a compelling argument in favour of the newer business model (if I understand it correctly); A win-win scenario in fact.
However, you can understand why a practising solicitor might feel miffed that the legal fees are advertised as being as low as €500.
It creates a false impression that this work can be viably done for this kind of money.
An advertisment which stated "you pay x toward legal fees, we pay the rest" would be more accurate, though I accept it is not as "soundbitey" and appealing to the consumer.
I share Vanilla's curiousity as to what your panel solicitors actually get paid, but I respect that there may be an element of commercial confidentiality to this.
rgds
ubiquitous
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There is no VAT saving arising from the above proposal. If there is, it is almost certainly illusory and would be highly likely to be deemed invalid by the Revenue if/when it comes to their attention. The VAT code prohibits taxpayers from making VAT savings by cross-subsidising VAT-exempt receipts or activities (in this case commission receipts) with VATable receipts (eg legal fees). To get around this, it is necessary for the provider of the legal service to account for VAT on the full commercial value of their service. Presumably the panel solicitors do this when billing REA for their services?
I hadn't thought of that. However, that would reduce - but not abolish - the V.A.T. benefit. Remember, it is only the legal fee which is liable to V.A.T., so if you assume a "full value" legal fee of €1,000, the V.A.T. cost under the new business model would still only be €210.00.
ubiquitous
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True.