Property Tips by Chartered Surveyors from the Haynes House Manual series
Major Estate Agencies’ Sales Tactics Exposed by BBC
Two major estate agencies have been found to be using deceitful sales tactics and breaking industry codes of conduct by BBC Panorama.
An under-cover BBC reporter has revealed how a major estate agent’s client feels her home was sold at a lower price because the estate agent prioritised a buyer from whom they stood to earn large fees for arranging the mortgage.
This apparent conflict of interest can arise because arranging mortgages can be as important financially to estate agents as the primary commission income they earn selling houses. Where agents can additionally sell conveyancing services to buyers it can also boost their income. This practice is known as “conditional selling” and is forbidden by the Code of Practice for Residential Estate Agents.
From a seller’s point of view getting a good offer from a cash buyer is normally ideal because the sale can usually be a lot quicker and there’s less chance of problems arising later with mortages and valuations etc. But of course cash buyers by definition don’t need mortages. So the estate agents don’t stand to earn extra fees and could therefore be tempted to prioritise other more lucrative buyers even if this means their seller client ends up getting a lower offer.
Lisa Webb, consumer law expert with Which? Magazine commented: “This absolutely should be against the law” and “I think these estate agencies really ought to be investigated by the authorities for because this should not be happening.”
According to the 1979 Estate Agents Act this sort of discrimination against prospective buyers who don’t use other services is classed as an “undesirable practice” . But financial journalist Iona Bain says these rules need to be updated and “There’s clearly a grey area here, whereby estate agents are able to accept one buyer that will use the in-house broker and turn everybody else away” .
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Ian Rock’s Rightsurvey property tips are taken from the Haynes House Manual series.
