The pricing of estate agency and conveyancing services in Scotland

Abstract

This paper is concerned with an econometric investigation of possible monopoly pricing by solicitor estate agents in Scotland who have significant market shares in local housing markets there and who use Solicitors' Property Centres (SPCs) to advertise properties for sale. The exclusion of nonsolicitor estate agents from SPCs and the relationship between non-solicitor and solicitor estate agents was the subject of a recent Monopolies and Mergers Commission Inquiry. As an applied economic problem, the researchers sought to overcome fundamental data and practical difficulties to build a robust model of combined estate agency and conveyancing fee determination. The study concluded that SPC market share appears to be positively related to combined fee levels, house price appears to be the main determinant of combined fees (though not the only determinant), and, the relationship between SPC market share and combined fee levels found at a Scottish level has plausible regional variations. More research needs to be done to reinforce understanding of the fundamentals of these complex markets and more work is required to locate estate agency and conveyancing markets within the wider analysis of local housing markets.