Allegations of conditional selling by estate agents have surfaced once again this week, with a host of brokers pointing the finger at Connells. Intermediaries have suggested that their clients have been told that they stand a better chance of purchasing their desired property if they use an agent’s in-house adviser.
Connells has responded to the allegations, noting that such practices were not company policy and it promised to investigate any breaches.
In its statement, Connells emphasised that it had only been made aware of claims against eight of its 1,250 branches. It added: “Although the number is low, this of course does not minimise the seriousness in which we are taking this and if we do receive a customer complaint directly it will be thoroughly investigated in accordance with our complaints procedure.”
However, some of the brokers going public with claims against estate agents for this practice say that they have been compiling recordings and emails to back up their claims of malpractice.
Back up from Mum and Dad
Jane King, mortgage adviser at Ash-Ridge Private Finance, said the issue “makes my blood boil”, adding that she has previously had to advise female first-time buyer clients to take their parents with them when dealing with estate agents, after the buyers had been intimidated into speaking with agents’ in-house advisers.
King argued that new-build developers were often the worst for insisting buyers use in-house advisers and solicitors, and said that she has taken to calling the agent or developer concerned to “make it crystal clear that the client will spend 10 minutes providing sufficient information for them to be verified, but that I will be acting for them”.
“I find that shuts them up,” she added.
Picking up the pieces
James Adkin, financial adviser at London Money, said it was a tactic being used more regularly by agents, noting that he has recently seen it with his own clients who are told by agents that they must be ‘financially qualified’ by an in-house adviser before their offer can be considered and presented to the vendor.
He also pointed to the way that buyers are pushed to have an agreement in principle in place before they can put in an offer, which he suggested was a tactic to ascertain the maximum amount a buyer could get from a lender, and then advising the vendor not to accept offers below that level.
“Sadly agents are the first stage of the buyer’s journey and therefore often see buyers at their most vulnerable,” he added, noting that it can then fall to regular brokers to “pick up the pieces” when things go wrong.
Not tolerated at the top end of the market
James McGregor, director at Mesa Financial, said that his firm rarely comes across conditional selling, which he speculated may be because it operates in the slightly higher end of the market.
He explained: “This type of activity would not be tolerated and also it is not in the agent’s interest to upset their client for a few pound notes on the mortgage referral and risk losing £15-£40,000 on their agency fees.”
McGregor said that it was fair for an agent to vet the buyer’s position and check they have the finances in place, as otherwise they may be wasting everyone’s time, but this is no justification for conditional selling.
Tackling the issue
King said that she had once had a client who wanted to lodge an official complaint after a conditional selling episode, but found that the estate agent was not signed up to an estate agents’ code, leaving few options.
King added: “I think the practice should be banned and the owners and directors of estate agents should be held accountable to ensure that their employees are aware that they are not allowed to do this.”
McGregor suggested that financial penalties for agents caught indulging in conditional selling would be effective in eliminating the practice.
He explained: “I believe the way to cut this out is to actually enforce the rules and fine some of the agencies when it is clear this is happening. Get a written statement from the buyer word for word on exactly what has happened with any written evidence. This would definitely change the internal policy of agents.”
