Property Ombudsman and passing offers to vendors

Green_Jelly

Hi,
I posted a few days back about a problem that I was having with an estate agent, who was refusing to put my offer forward to a vendor, until their in-house mortgage broker had checked my financial information.

I have never been asked to do this by another EA so, being very suspicious of their right to do it, I today called the Property Ombudsman (the EA is signed up to their code of practice) to get their opinion.

I was told that EAs must, by law, put forward all offers, but that they also have a duty of care to verify the finances of the buyer.

I very specifically asked, at least three times, the guy to confirm that an EA could therefore choose not to pass on an offer if they hadn't verified the buyer's financial position. Each time he very clearly said that was the case.

It confuses me how this ties in with the legal duty to pass on all offers. The only way it makes sense to me is if the duty to the vendor overrides that duty to pass on, or whether they don't consider a non-verified offer to be an offer at all.

It would seem to me to open a significant loophole, where the EA gets to decide whether your offer is valid, and brings in a massive conflict of interest when they will get more commission if the house is sold to a buyer that has taken a mortgage through them.

I thought posting this would be useful to others, and I would also be interested in hearing any thoughts people may have.

poppysarah

Get a letter stating from your solicitor that you are able to buy this property. That way the EA doesn't ever need to know what level of mortgage you've got.

It's perhaps a way round dealing with an EA who doesn't want to pass on offers.

You could put it in writing and CC it to the vendor too.

tbs624

Interesting phone conversation

It would seem to me to open a significant loophole, where the EA gets to decide whether your offer is valid, and brings in a massive conflict of interest when they will get more commission if the house is sold to a buyer that has taken a mortgage through them.

You do *not* have to see their mortgage advisor and/or take out a mortgage through them in order for your financial status as a buyer to be "verified" by the EA

Green_Jelly

tbs624 wrote: »

You do *not* have to see their mortgage advisor and/or take out a mortgage through them in order for your financial status as a buyer to be "verified" by the EA

The problem I think is that they can decide whether they pass the offer on, on the basis of whether they are happy that they have determined your financial position.

There doesn't seem to be anything to stop them saying "we will only be happy that we have determined your financial position, if you provide our mortgage advisor with your financial information"

So, it would seem that, if they can withhold offers until they are happy that they have verified the financial position, they can basically withhold offers until I have met with the mortgage advisor and provided him whatever information he decides he wants to see.

In other words, you can only withhold offers unless X is verified, but it is up to your own discretion when deciding if X is verified.

I reckon that is a pretty big loophole.

googler

The problem is that you're assuming it to be the EA who's refusing to pass the offer on as their own decision.

However, what you're missing is the side of the conversation that's taken place between the EA and their client, and this has a bearing on your situation.

The TPO code of practice says that the EA can refuse to pass on offers which their client has specifically asked them not to pass on.

If their client, the seller, has specifically asked the EA to verify your finances by means of a conversation with their financial advisor, and you don't speak with him, then it seems the EA is acting under their client's instruction when they insist on this.

Without knowing what's been said between the EA and their client, no-one can give a definitive answer, I feel - not even the Property Ombudsman.

Green_Jelly

googler wrote: »

If their client, the seller, has specifically asked the EA to verify your finances by means of a conversation with their financial advisor, and you don't speak with him, then it seems the EA is acting under their client's instruction when they insist on this.

Without knowing what's been said between the EA and their client, no-one can give a definitive answer, I feel - not even the Property Ombudsman.

Yes, I understand what you mean, but my impression is that it is a bit more than that.

The Property Ombudsman guy didn't say that it depends upon the contract between the vendor and the EA.

He said that the EA is always under a duty to verify the buyer and if they haven't done that (to their own satisfaction), they are under no obligation to pass an offer on.

In my current case, and in many other cases, it may well be that the vendors have specifically asked for this, but it seems that even if they haven't the EA is under no obligation to pass the offer on.

That is what I think is a big loophole. If an EA decides to be unscrupulous, either by trying to gain financial information to weaken the buyer's bargaining position, or even to favour buyers that have taken a mortgage with them, there seems to be little that could be done to stop them, because they can always say to the buyer "we don't feel confident enough to pass on your offer".

In my opinion, it would be much better, if they alway had to pass on offers, but were allowed to say "we have verified those offers, but not this offer".

I can't see how it is in the best interests of the vendor to never know of an offer that is substantial higher, simply because the EA decides it is not fit to be put forwards (when, again, there is a conflict of interest).

Trollfever

Try the OFT:

http://www.oft.gov.uk/OFTwork/estate-agents/register/

Trollfever

And

However, the legislation does require an estate agent:

• to declare any personal interest that he or a connected person may have to a buyer or a seller ('connected person' means an employer, employee, wife, husband, brother, sister etc and includes partnerships and companies)
• to set out his terms and conditions clearly in writing (it does not have to be in the form of a contract) before his client is contractually obligated
• to treat prospective buyers fairly by not discriminating against them because they do not want to take any services from the agent eg arranging a mortgage, insurance cover
• to forward all offers promptly and in writing to the seller, unless the seller has indicated that there are some offers that he does not want to receive
• to provide his client with a list of all services offered to a buyer
• to be honest as far as offers and prospective purchasers are concerned ie not to misrepresent the details/existence of any offer or the existence/status of any purchaser
• to belong to an approved estate agents redress scheme.

http://www.oft.gov.uk/about-the-oft/legal-powers/enforcement_regulation/enforcement/estate-agent-complaints