Some Real Estate Agents Only Present Offers from Buyers Utilizing Their In-House Mortgage Broker

Some estate agents are being accused of deceiving home sellers by seeking additional financial benefits, experts warn.

 

Reports suggest that certain agents only present offers from buyers who have been "financially qualified" by their recommended mortgage broker. These brokers can either be in-house advisors or separate firms with which the agents are affiliated.

 

This practice, known as conditional selling, allows estate agents to profit from referral fees not only from mortgage brokers but sometimes also from solicitors.

 

Because estate agents act as intermediaries in the sales process, sellers may not be informed about offers from buyers using mortgage services unconnected to the agent.

 

Paula Higgins, CEO of HomeOwners Alliance, stated, "We've always believed that estate agents shouldn't profit from both the buyer and seller in the same transaction. There's a real conflict of interest. Although illegal, enforcement is lacking, so estate agents get away with this."

 

Higgins further added, "Sellers are being misled because they agree to buyers being 'financially qualified,' but they don't realize they're limiting the number of potential buyers, which isn't in their interest."

 

This tactic also disadvantages buyers who refuse to be "qualified by an agent's mortgage advisors," potentially losing out on homes they've made offers on.

 

"Conditional selling has been around for years, and we're regularly contacted by buyers who feel pressured to use in-house services or even find themselves unable to view a property or make an offer," Higgins explained.

 

"In one case, the seller lost £5,000 because the 'preferred' buyer backed out, forcing them to remarket the property for less."

 

Estate agents breaching their professional duties by not passing on offers for these reasons can face sanctions, according to James Munro, senior manager of the National Trading Standards Estate and Letting Agency Team.

 

Munro stated, "We view this practice as unacceptable and are aware that it is a significant problem causing considerable financial loss and emotional turmoil to buyers."

 

"Estate agents often go unnoticed and unreported," he added, "as offers on homes may be turned down for various reasons, and most prospective buyers assume that if an agent rejects their offer, the process has been honest."

 

Estate agents are getting away with these practices by writing clauses into their contracts with sellers that justify blocking bids, according to National Trading Standards.

 

Munro explained, "Agents can manipulate the offer process. One exception to conditional selling is if the seller expressly states they don't want certain offers."

 

However, Munro believes a judge would likely side with the seller if legal action were taken, stating, "If you went to a tribunal, the judge would likely decide that explicit consent was needed – and that an implied term of consent in a contract doesn't count."

 

Jeremy Leaf, a north London estate agent and former RICS residential chairman, advises buyers and sellers to be cautious of these tactics.

 

"We do hear of these arrangements, which may not be in the interests of the buyer or seller," Leaf said. "It is up to the parties to read the small print. The most obvious disadvantage is that the seller won't receive a better offer from a buyer who has made separate arrangements with a broker, whereas a buyer may waste time, money, and effort on a property they have little chance of acquiring."

 

Affinity Seven Law

Rochdale 

 

01706 711176