Of course, there is a lot of talk in our sector about the collaborative nature of the UK property market and how we are all parts of a jigsaw puzzle that only completes when all the pieces are in place, but there are still some sections of our market who appear happy to sell that self-same jigsaw without all the pieces being there.
For instance, there’s no doubting this is a seller’s market, which means that prospective buyers, particularly those wanting to purchase for the first time, are in many cases being led – or more literally not being led – up the garden path by certain estate agents.
Pressure from estate agents and ‘advisers’ on buyers
Talk to any mortgage adviser, and we guarantee they will have a story or dozen to tell regarding recent attempts by agents to push a client into the arms of their financial services division, suggesting if they don’t use those services they will not see, let alone secure the property.
We receive anecdotal and first-hand evidence of this all the time. Agents have limited stock to sell, and when it comes to them, it tends to be offered on very quickly. It means they can be ambitious on values, achieve those values – although surveyors will often down-value – and get the property ‘sold’.
However, for certain agents, the money they are making on these sales isn’t enough for them, and they can often earn more if they push purchasers to their ‘financial advisers’ in order to secure the mortgage/life insurance commission, charge a fee, etc.
The problem they have is getting those individuals to their ‘advisers’. So, what better way to do this than by frightening them. By telling them that, unless they use their adviser, they won’t get to see the property and they certainly won’t have their offer put forward to the vendor.
A lot of the time this is targeted at first-time buyers who effectively don’t know any better, who might think these strong-arm tactics are part of the ‘cut and thrust’ of buying a first home. Who accept it when an agent tells them that they are selling properties to the first two or three people who view every time, and that they need to be part of this early group – and the only way to do this is by using their adviser.
Vendors are being ripped off too
And what about the vendor? Well, the agents simply tell them that those individuals who don’t use their advisory services are “not serious” or “are playing games”. The vendor accepts this version of events and is blissfully unaware that the right buyer for their property, the buyer who might be in the very best position, has not even been allowed to view or had their offer put forward.
We recently had a purchasing client of ours who went through this exact experience. They (thankfully) knew something was up and came back to us to check whether they had to go down the agent-adviser route.
At that point we were able to point out, what they would be getting from that adviser. Access to a limited panel of half a dozen lenders for their mortgage product; a hugely-inflated adviser fee for their trouble; a requirement to use the agent-adviser’s conveyancing service which was also extortionately priced; a range of life insurance policies with big premiums and big commissions. We could go on. Essentially, they would be sold to within an inch of their life all while feeling they have to accept everything in order to get to see a property they like the look of.
The problem is, of course, despite this being completely immoral, the agent couches it in terms which appear not to contravene any rules – and what can the prospective purchaser do? We suggested they knock on the vendor’s door and make them aware of the situation and what they were being asked to do, in the hope the vendor might vote with their feet. However, by then, that house might be already offered on, at which point it becomes much less of a concern to the vendor.
Be on guard
The main culprits are the big corporate agents bullying people into taking hugely sub-standard advice services with, quite frankly, crap mortgage propositions.
Which means we have to be on our guard here. The nature of the market is always competitive – that is a given – but these firms actively work to put the client in a worse financial situation than they would be if they came through reputable advisory practices.
Let’s therefore ensure consumers are aware of these practices and the consequences, and let’s ensure vendors do not instruct agents that ‘go after’ clients in such a way.
It’s a practice that should be consigned to the past but is very much evident in the here and now.