Conditional selling is the practice of estate agents putting pressure on home buyers to use their own in-house broker, rather than an independent adviser.
This may be done in an attempt to capture the buyer’s mortgage business and the commission from the property sale.
Access Financial said buyers were sometimes told that their offer would not be put forward to a seller if they did not use the estate agent’s mortgage broker, which is against the sector’s Code of Practice.
It is also in breach of The Property Ombudsman’s Code of Practice for residential estate agents to carry out a conditional sale by pushing buyers to use their adviser services.
Free letter template to undercut conditional selling
Access Financial Services has created a free letter template for mortgage brokers to use which is intended to be sent to the estate agent. It lets them know that the practice is against the rules. Brokers can also provide proof that their client can afford the property purchase such as their own financial qualifications and an agreement in principle.
If the estate agent does not respond or continues to pressure the buyer, then Access Financial Services encourages brokers to report the firm to The Property Ombudsman. This will need to include evidence of the breach including the letter describing the pressure the buyer has been put under.
Rid the sector of conditional selling
Karl Wilkinson (pictured), CEO of Access Financial Services said while most estate agents operate within the Code, it was time to rid the sector of the practice.
Wilkinson added: “Our own brokers have experienced the effects of this conditional selling by a minority of estate agents. It can cause clients distress and, at times, it prevents clients from being able to work with brokers they have a long-standing relationship with.
“As well as helping our own advisers, we wanted to offer our support to others in the industry who continue to suffer from this dubious practice. Now more than ever, as we head into recession, it is important for both brokers and estate agents, to support each other so that buyers can benefit from the best advice.”
He said: “We often hear estate agents claim the need to financially qualify a buyer despite that buyer already holding an agreement in principle. While it is completely legal for estate agents to endorse the use of their in-house mortgage adviser, it is illegal for them to insist that a client uses them.”
