Pushy Estate Agents - Dont Be A Victim

MortgageMamma

FINANCIAL HEALTH WARNING

CHOOSE YOUR OWN BROKER, DON’T LET AN ESTATE AGENT DO IT FOR YOU!

The first step in buying a property is to establish that you can obtain the funds to do so. You can carry out this research with your bank or building society, through the internet, or by using the services of a mortgage broker. A properly-qualified and skilled broker can be the best route to a suitable mortgage and the more independent they are in terms of product choices for both mortgages and insurance, the more likely you are to obtain the most appropriate products.

What an Estate Agent CAN do

Estate Agents often have “In-house” mortgage brokers or associated companies to whom they refer potential clients. This is an optional facility that they provide and, should you agree to meet with their recommended adviser, you should be provided with an “Initial Disclosure Document” detailing the range of choice available for mortgages and, if applicable, also for insurance products.

HOT TIPS

• Many estate agency groups are owned by financial service providers, including banks and insurance companies. They have a vested interest, and it is their aim to drive as much business as possible through their parent company. This lack of choice means that they may not be able provide you with the best products for your circumstances.

• Many have “Lending Panels” which are sufficiently broad that they can claim to represent “Whole of Market”, but which may have as few as two dozen lenders.

• Many have “Sole supplier” contracts with insurance providers, often paying the broker and/or the estate agent higher commissions but, frequently, costing the client more through charging higher monthly premiums than those that can be found elsewhere.


What an Estate Agent MUST do

They must act in the interests of their client, the seller (“The Vendor”). This is the party who pays them and with whom they have a contract.

Forward all offers in a timely manner, in writing, to the vendor, treating all customers equally, irrespective of where you, the potential purchaser, are obtaining mortgage and financial advice.

Establish your ability to proceed with the purchase at the price being offered. This can be done through the Agents’ own mortgage services or by obtaining formal confirmation from your chosen mortgage broker or mortgage provider.

Formally establish the identity of the purchaser and source of your deposit (or, if buying for “Cash” that the purchase funds are being provided from a legally acceptable source).

What an Estate Agent MUST NOT do

Must not demand personal details such as occupation or income. These are private financial matters and estate agents have no right to this information, which can prejudice your own negotiating position (bearing in mind that they are acting for the seller!).

Must not insist that your offer is “Qualified” prior to submission of any offer by making you speak to, or meet with, the Estate Agent’s recommended broker. As well as being contrary to the Estate Agency Act 1979 and contrary to the Codes of Conduct laid down by the NAEA (National Association of Estate Agents), there is also the danger that your negotiating position could be affected if your personal details are not handled with proper confidentiality.

Must not insist on seeing a “Mortgage Promise” or “Agreement in Principal” prior to the conclusion of price negotiations on behalf of the vendor. Once again, this is your personal financial information, which could affect the advice they give to the vendor on the level of offer that could be made and can therefore prejudice your negotiating position.

HOT TIPS

• Try and deal with Estate Agents who are members of the NAEA. You then have a certain degree of comfort in that they should adhere to the NAEA codes of conduct.

• Tell your adviser that you are about to make an offer to buy a home, so that they can provide you with support and advice.

• Only supply the information to Estate Agents that they are entitled to receive.

• Obtain agreement from the Estate Agent that any information supplied to validate your offer is treated in a confidential manner and not passed to other parties such as the vendor nor to the agent’s own financial services advisers.

• Challenge any attempt to suggest that your offer will be considered in a more favourable light if you are vetted by their own mortgage broker/adviser.

• Provide the contact details for the person who is providing you with mortgage advice, so that the Estate Agent can fulfil their responsibilities to the vendor in checking that you are making an offer within your means.

• Tell your chosen Mortgage Broker or provider if there is any suggestion of unfair practises by the Estate Agent, so that they can intervene on your behalf and, if appropriate, report the matter to the OFT (Office of Fair Trading).

• Remember that some Mortgage Advisers and Brokers can have conflicts of interest when they are employed by corporate organisations – they usually have to act in their employers’ interests, possibly at your expense

• Decide, in advance, where you wish to obtain your mortgage. It is your choice who to use. Do what you want to, don’t let someone else choose for you!

Useful Links: http://www.naea.co.uk
http://www.naea.co.uk/pdfs/naeacop.pdf (Section 5)
http://www.rogueagents.co.uk

Shambler

The estate agent that I am buying a house through kept trying to get me to see their FA even though I told them I had my own.

They seemed to imply that if I didn't see their FA it would in some way harm my application to purchase the property.

They even wanted to see my AIP just in case they could 'find a better deal' for me and said that they had access to mortgage lenders that my IFA might not have.

In the end I had to tell them no over 6 times!

I am quite disgusted with their behaviour, it has given me and my partner alot of unwelcome stress.

MortgageMamma

Your story is whole who reason why I have published the above guide. As a mortgage broker who is not connected to an estate agency, I am also disgusted at the way some of my clients are treated before they come to me. Some of my clients are with me 12-18 months before they even find a property to buy and get quite upset when they are held hostage by unscrupulous estate agents. I'm not saying all estate agents are like this, just most. I hope you have benefitted from the above information.

Redbedhead

We had this on the house we have just lost. They insisted that prior to everything proceeding that we had to see their broker. When H said we didn't need to as our mortgage was sorted they told him he had to. He passed it over to me (as the more bolshy one) and I called up and advised them in no uncertain terms that I would not be seeing their advisor, that I would provide them with a certificate from our mortgage company and that they had no right to try and force us to do it.

I am still debating reporting them to the FSA for their behaviour.

homer_j_3

I work in an EA and think that I am in a position to talk about this. MM knows me well and knows that I am not the norm EA MA.

The EA does have to submit all offers that are received unless the seller has specifically stated that they want the EA to reject offers automatically outside a certain criteria,

The EA has to tell the seller whether or not the buyer has been financially qualified and that they are in a position to proceed. If this has not been possible due to the buyer not being able to provide proof of funds or mortgage and will not talk to the qualified individual who works for the EA then this has to be relayed.

Any EA worth their fee will make this clear and suggest that the property is markerted still until survey has taken place and they listen to any other offers that may come in as for all they know the buyer may be a complete waste of time.

Even if you get a AIP the EA will probably still offer you a comparison service as unfortunately there are many advisers out there that charge fees, give bad advice and often do things for their pockets rather than their clients.

My advice would be to go with the adviser that has taken the most time to understand your needs and requirements, detailed why the product is suitable and better. If you go to see an EA MA and have an Agreement In Principal within 30 mins then alarm bells should be ringing!!

MortgageMamma

Thanks for that mate. I know you know me well enough to know that I wont tar all EA advisers with the same brush, but the pushiness and holding clients hostage is not acceptable. There are some excellent advisers out there that got their initial broking experience in an estate agent. I think a broker really comes into their own when they work in an enviroment where they don't have targets, and realise as you say that taking the time to properly fact find and understand a client, therefore giving them the best possible service is the best way to secure future business and build a solid client base

homer_j_3

Yes I understand that and as I said, I am not the norm and to be fair I dont think the chain I work for employ fly by night wide boy advisers, howeve,r a lot do and put pressure on.

My post was to say neither way is better or worse as it comes down to the individual who is giving the advice and there are as many sharks in the "one man - small company" as there are in the EA world.

There are frustrations from EA side with none EA advisers not being able to fulfill their role as there are frustrations from the otherside when the adviser has to battle with the EA. They also see fee charging adviser who have recommended Northern Rock for every deal that walks through your door.

If you understand the process of what the EA does and what they have to do then you will know that to avoid complaints they have to ensure that the sale doesn't fall due to the finances.

Its good that you have issued some guidance for dealing with EA's but there has to be some understandin why EA's do this and that they are not breaking their rules by asking for financial qualification.

My advice to any buyer is to always get a contact number for the seller in case you have any questions. I would then put the offer through the EA and then wait for them to tell you that the offer has been accepted or rejected. If they start getting all "we can't tell you until you have seen our mortgage adviser" then you need to ask the question "if your mortgage adviser can confirm that I can borrow sufficiently to buy this property - will it be accepted?" If they say we cannot tell you until you come in then get straight on the phone to the seller and ask them the question and make a complaint to the EA.

You are allowed to put offers forward without financial qualification. You are allowed to know whether the offer has been accepted or not without qualification. If you cannot get this information from the EA then go to the seller and ask.

AndyWallace

Quite a good thread and it's the age old problem of losing out to an estate agent because it's an easy pitch for them once they've agreed a sale. "Wouldn't it be better to keep it all under one roof, we don't want you to lose the sale because...."

I used to have a lot of this after doing a load of work and it's very annoying. Moreso with FTB's. But, it's a dog eat dog world and if you tell your client that the agent will only ever use Northern Rock you won't be far from the truth.

Andy.

MortgageMamma

Easy way to combat the problem is to issue all clients with a document, like the one I've put above to show what the EA can do, cant do, must do, and will try to get away with

Added to which, like Homerj says not all EA advisers are sharks, but the clients need to know the advantages of using someone independnet of the EA and weigh up what is right for them. Bribery tactics and holding offers hostage is not acceptable and does nobody any favours. A prospective purchase can be qualified in many ways.