Conditional selling is when an estate agent or sales rep pressures or incentives the customer to use their own mortgage broker, financial adviser, solicitor or in-house services.
Reports said that Jahidu Jaman, mortgage and protection adviser at The Mortgage Provider, said his client got an email from Connells saying their offer would have to be resubmitted, despite the offer being previously accepted.
Jaman said that the client had previously agreed to Connells in-house mortgage advisers, but the client then decided to opt for independent mortgage advice.
The email said that the offer was originally submitted to solicitors with other offers and the offer was “chosen based on the fact that you were using our in-house mortgage services”.
It continued that because of this, it would be able to “chase the sale progressively to a swift conclusion” and the solicitors were “in favour of this”.
“As the circumstances are now changing, we will have to resubmit the offer along with all others again and refer back to you as soon as we have a decision,” the email continued.
A spokesperson from Connells said: “At Connells, any complaint received is investigated with upmost priority. In this instance, the matter reached a resolution for the client within five hours.
“An investigation into this email is underway, and if there is an instance of pressurised selling, Connells will take full and appropriate action. Pressurised selling is neither encouraged nor acceptable.
“We are proud to be able to provide a range of services, assisting customers with all aspects of their move and providing a high standard of service.”
Conditional selling happening ‘more and more’ as purchase market dips
Nick Mendes, mortgage technical manger at John Charcol, said that it was hearing “more and more” that estate agents were pressuring clients to see their in-house mortgage services.
“We have heard of a range of reasons [for conditional selling], the latest being a ‘mortgage incomes stress test’, the reason being to avoid a potential buyer being disappointed that they can’t afford a house so they can pre-vet to ensure they see the right properties,” he said.
Mendes said that the practice has become more “widespread” as purchases have fallen compared to previous years, so estate agents were under pressure to sell other products to remain profitable.
“If I was selling my home, I would certainly think twice about using certain estate agents as their role is to secure the best price not limit potential viewings due to a prospect buyer not looking to use their mortgage broker,” he noted.
Mendes added that Connells doing another review into selling techniques was “beyond a joke”, the firm having previously come under fire last year for the practice.
He called for the National Association of Estate Agents or a different industry body to review their practices.
Mendes said that it was challenging to get figures on how widespread the issue is, and many examples were anecdotal.
“Prospective borrowers should be aware it’s their choice which broker they use, and sales are not subject to seeing an in-house broker. Estate agents mortgage advisers are often limited to a panel of lenders which means they haven’t got across to the whole of the market in terms of criteria and products to meet all circumstances,
“Speak with an independent broker who can help you in these situations and speak with the estate agent to remind them of which client they are there to serve,” he explained.
Conditional selling can lead to delays and poor customer outcomes
Jodi Spreadbury, senior mortgage and protection adviser at The Mortgage Broker, said that the above example was “appalling”.
She added that conditional selling can cause problems when estate agents try to force their solicitors onto clients as lenders do not let the same solicitors act for the sale and the purchase.
“If the estate agent has forced both buyer and seller to use the same solicitors, it actually causes problems later down the line and one side has to change, which results in delays. Also, estate agent solicitors do not tend to be on panel for all lenders,” Spreadbury noted.
She said she had a recent example where an estate agent forced a client to use their in-house solicitor for the sale. Around five weeks later, the client found somewhere new to buy and the sale solicitors were not on the panel so they were forced either to use two different firms or change lender which could lead to a worse rate.
Spreadbury called for more regulation, noting that conditional selling could lead to poor customer outcomes.
She explained that if you agree to buy a property and use their solicitors, but find out that the solicitors are not on panel for the lender, you can keep the solicitors and pay a worse rate.
The other option is to change solicitors quickly, submit the application and possibly pay upfront fees to the lender. The client then informs the agents that they are changing solicitors, who they say they will retract their offer and the client risks losing upfront fees they have paid.
Greg Stanworth, managing director and broker at Greenacre Financial Services, said that conditional selling “happens all the time”.
He continued: “The frustrating element is, even when we advise clients to provide the agreement in principle, they [estate agents] still will make the client speak to an in-house adviser and try to force them to use their in-house advisers.
“I had one this week and the broker in-house tried to force them to use them and quoted a product they weren’t even eligible for.”
Stanworth said that he told clients to provide his details if they are asked any questions regarding their finances and he would speak to the agent, confirm his client’s position and provide the agreement in principle.
“This normally is okay but sometimes some agents will still try and force the client into using the in-house advisor with silly sales tactics such as ‘your offer will be taken more seriously or more likely to get accepted etc’,” he added.
