In house mortgage advisors

sugarlily

Hi I was advised to start a new thread with this so sorry if you've already seen...

Please excuse the liberal use of inverted commas in this post!!

I have just made an offer on a reposession property, and I was this morning called back by the agent (who also happens to be the agency's mortgage advisor. Bit of a conflict of interests in my book, as he knows exactly what I earn, can afford, and have in the bank, but what do I know, I'm only FSA registered!!).

The agent/mtg advisor has said to me this morning that the offer has been "provisionally accepted". What does that mean?

He then went on to say that the "corporate client", "would prefer" me to use HIM (ie this same mortgage advisor) for my mortgage, in order that they can keep up to date on the progress. Riiiiight.

He sort of implied that it would be in my interests to do this.

Then he said that if I did this, he would be able to stop anybody else viewing the property, (but it's a reposession, so the vendor would want to be open to offers right up to completion. Which again, as I see it, the further towards completion we get, the less they'll want to pull out anyway.)

I countered that as it is on sale with two agents, anybody who tries to view through this first agent, and gets turned away because of this "protection", will just tootle over the road to the second agent!

Am I missing something?

Should I be worried that something will be nudged towards falling through if I don't do as I'm told?

The two mortgage offers - the advisor's, and the one I've found, are very similar, except my one is fee free, but the agent's one comes with £600 of fees, plus the Mtg advisor's £400 fee.

Another thing I don't understand is, how has he not been able to provide me with this mortgage that I found myself? I thought they had access to everything. I suppose what I could do / even PREFER to do is get MY mortgage through him - ie, I get my lovely fee free mortgage, with only his advisory fee to pay in order that he smooths the transaction and stops other people viewing / making an offer / putting a horse's head in my bed... oh wait, sorry, got confused there.

Isn't that just a bribe / backhander???

UPDATE - TUES

Since then, the mortgage advisor's colleague advised me that another person outbid me and it would become a bidding war. I made one final offer, and then she came back to me and said that they were happy to accept my offer, but again stressed that if I went with their broker, they would "speak favourably" to the vendor about my situation to put them off the other guy.

nexus7

I'd used a supposedly independent broker a few years back, after looking at the offerings, I decided that I wanted a mortgage with a company he said he couldn't arrange a mortgage with.

In the end I applied and did it myself. I guess it was related to commission back then...

dunstonh

nexus7 wrote: »

I'd used a supposedly independent broker a few years back, after looking at the offerings, I decided that I wanted a mortgage with a company he said he couldn't arrange a mortgage with.

In the end I applied and did it myself. I guess it was related to commission back then...

In which case you didnt use an independent mortgage broker. Independent mortgage brokers are fee based and rebate any commission (if there is some). They can also recommend non-commission deals and providers that do not deal directly with brokers.

If he couldnt arrange a mortgage with a company or recommend that mortgage provider then he could not be independent (or you didnt employ him on independent basis).

Dogz111

The estate agent has no sway with a corporate client. They will look for proof you can get a mortgage, source of deposit and will only accept your offer once you can prove these.

Anybody can view and bid on the property up to exchange. If you are some way down its unlikely they would accept an offer slightly above yours, if it was significantly more you might loose out!

You will be pushed to exchange in 21 or 28 days so you will need to have everyone act quickly - it will be in your interests to push everyone hard to make exchanging happen as quickly as possible

If I was you I would ignore the estate agent - they are trying to feather their own nest. It make no difference where you get a mortgage from (broker or not) what matters is that you can complete. I'd go for the cheaper deal and tell the estate agent where to go - using bullying tactics is unprofessional and unfair.

Dogz111

Also, going with another agent is possible - I've done it because I didn't like the first agent I saw the property with. It ended up in a bun fight over commission between the two agents. The 2nd agent I went with got the commission in the end. Who ever you are dealing with sounds like a bad egg - I'd try and avoid if they are trying to coherse you to make a decision which is sub-optimal for you

The last 2 properties I've bought were repos and all went fine for me

sugarlily

Thanks! I did try to make an offer with a second agent, and the vendor refused to accept it - said I had to continue with the same agent!

Let_Us_See

"In which case you didnt use an independent mortgage broker. Independent mortgage brokers are fee based and rebate any commission (if there is some)."

The above is certainly not completely correct. To be classified as independent the adviser has to be offer the client the option of how the adviser is renumerated. This can be either by paying a fee directly to the adviser, or by the adviser receiving a procuration fee from the lender. Clients rarely elect to pay a fee to the adviser, and the procuration fee (commission)still remains the main income stream. In many cases advisers also charge an additional broking fee in addition to the procuration fee from a lender.

dunstonh

Let_Us_See wrote: »

"In which case you didnt use an independent mortgage broker. Independent mortgage brokers are fee based and rebate any commission (if there is some)."

The above is certainly not completely correct. To be classified as independent the adviser has to be offer the client the option of how the adviser is renumerated. This can be either by paying a fee directly to the adviser, or by the adviser receiving a procuration fee from the lender. Clients rarely elect to pay a fee to the adviser, and the procuration fee (commission)still remains the main income stream. In many cases advisers also charge an additional broking fee in addition to the procuration fee from a lender.

To call yourself independent, you have to offer fee basis. If the client chooses not to employ you on independent basis then you will not get an independent service. If you dont employ them on independent basis then they will not consider non-commission paying deals. If you employ them on independent basis they are not reliant on the commission and can consider any deal on the market place, including those that do not normally deal through brokers.

So, an adviser with independent in the title can work to whole of market basis if the client prefers (and I accept that most do through lack of knowledge and sites like this saying fees free is better when in reality it often isnt). However, the minute you choose not to use the fee option, you cease to get independent advice and drop to whole of market advice (which is a silly name as it doesnt really mean whole of market and in some cases, it can actually be a relatively small panel).

Let_Us_See

It is much simpler than that. To be classified as independent you have to offer a client the choice of how the adviser is renumerated - either by a fee from the client, or by receipt of a procuration fee from a lender. Whichever, the selected option the adviser is still offering independent advice. Being independent has nothing to do with sourcing a mortgage, but purely how an adviser is renumerated.

dunstonh

Let_Us_See wrote: »

It is much simpler than that. To be classified as independent you have to offer a client the choice of how the adviser is renumerated - either by a fee from the client, or by receipt of a procuration fee from a lender. Whichever, the selected option the adviser is still offering independent advice. Being independent has nothing to do with sourcing a mortgage, but purely how an adviser is renumerated.

Our compliance takes a different view in respect of presentation of the service. However, whatever you decide to use for naming internally, the fact is that unless you employ the adviser on independent basis (by fee - which can include commission offset but must be an agreed fee) you will not get independent advice. You are right that sourcing is not a classification of independent but it is a logical outcome. A whole of market adviser is only going to consider commission paying deals. A fee based independent does not rely on commission and can recommend anyone.

Let_Us_See

Perhaps your compliance dept should talk to the FSA? I am afraid what you describe is not only illogica, but incorrect.

Do you really believe an independent adviser can only ever receive a fee from a client, and if the client refuses to pay a fee, he is no longer independent?

The following is taken from the FSA's Handbook MCOB 4.3.7 and states "A firm wishing to hold itself out as independent will need to give a customer a purely fee-based option for paying its fees. However, the firm may in addition provide the customer with other options, such as fees and commission."

In other words an independent firm must offer a customer the option of paying a fee, and if the client declines, a fee and/or commission may be charged. In the latter option the adviser remains independent.