Pushy Estate Agents - How To Stay In Control

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

MissMotivation

Great Post. I agree with 99% of what you say, however, what about buyers that offer on property before they have even seen or spoken to an IFA? Believe me we see many prospective buyers that have no idea what they can afford to borrow and have had no advice whatsoever.....offering on properties! As an EA my job is to ensure that any offer being submitted to my vendor is fully qualified and that the buyer is able to proceed.

Many corporate firms will insist on a buyer seeing their adviser, I prefer to take each case on its own merit and if they have already seen an IFA a quick chat to them will suffice.

In many cases it's in the buyers best interests that the EA knows their position, especially in cases where there's more than one offer on a property.

MortgageMamma

MissMotivation wrote: »

Great Post. I agree with 99% of what you say, however, what about buyers that offer on property before they have even seen or spoken to an IFA? Believe me we see many prospective buyers that have no idea what they can afford to borrow and have had no advice whatsoever.....offering on properties! As an EA my job is to ensure that any offer being submitted to my vendor is fully qualified and that the buyer is able to proceed.

Many corporate firms will insist on a buyer seeing their adviser, I prefer to take each case on its own merit and if they have already seen an IFA a quick chat to them will suffice.

In many cases it's in the buyers best interests that the EA knows their position, especially in cases where there's more than one offer on a property.

Good point MissMotivation, and I agree wholeheartedly that a potential purchaser should be "qualified". However as you and I know, there are many ways this can be done

1. Through and IFA/Mortgage Broker independent from the EA
2. By a bank or building society
3. By the purchasers themselves, if they go direct they can produce an agreement in principle
4. By the EA's in-house Mortgage Broker

Purchasers should be made aware of all of their options, and also be made aware that the EA cannot hold their offer hostage until they have been "qualified". I have clients that come to me horrified that this has happened, clients that have been with me 12-18 months before they finally purchase - heartbroken and worried that they "have" to use another broker. Lying to purchasers is not acceptable practice - that post you have read above will be sent to every one of my clients from now on, and I hope other brokers use it too - even the estate agency ones.

MissMotivation

I find that on the whole most agents do not hold the offer "hostage" until the client has been qualified. I worked for a company who refused to put an offer forward unless the purchaser spoke to the in-house adviser......I was horrified and let's just say I didnt work there for long.

The way I train my staff is to explain to the prospective purchaser that the offer will be forward to the vendor BUT before offer is formally accepted we need proof that they can afford to purchaser either by way of an AIP/Chat with their IFA or a chat with our own IFA/Broker.

Generally anyone who is unhappy to do this has something to hide anyway. I just wish that anyone wanting to buy a property would do their homework first and see or at least speak to an IFA before even starting to look.....would save a lot of wasted time!

MortgageMamma

Yes I agree with you. I have had clients approach me numerous times saying they'd secured a property and I dont like breaking the bad news that they cannot afford

I know from experience though how easy it is to get carried away when you see a property you must have, and some people will panic and think it will be taken if they don't get their offer accepted and thats why the do things the wrong way round.

On the other hand I've had clients for 18 months before they purchased and I even went on viewings with them!

I've got to say though (and I may be a bit biased) but there have been occassions where I have been totally anonymous and I've heard people bragging about how good their broker is. I laugh to myself its almost as though using a broker is in fashion at the moment

MortgageMamma

Want to keep this at the top where its most useful. bump

wecanhelpu

Yeah it's so useful reading 2 estate agents having a conversation with each other.

:rolleyes:

Violet_Isle

Just because you don't think its useful doesn't mean other people won't. I found it extremely useful. Perhaps you could write something more useful?

ehs_3

I have to echo the view that a person should be careful when using an in-house EA broker. Even though the broker should be keeping your financial details confidential, some less scrupulous operators then go on to disclose the information to the estate agent with whom they work in partnership. Generally this is to tell the estate agent that the buyer can probably "afford" to look at more expensive properties or make higher offers.

A very good expose of this and other dodgy agent tactics were shown on the BBC Whistleblower programme last year http://news.bbc.co.uk/1/hi/programmes/4876542.stm

MortgageMamma

my toes curled when I watched that.

Phirefly

I made a point of seeing in-house mortgage advisors so EAs would look favourably on me even though I had no intention of using their services and already had my finances in place through an independent broker.

A few half an hours of my time spent paying lip service meant they knew I was a serious buyer and was always contacted immediately when new properties came on plus I was treated with utmost courtesy by all the EAs I dealt with. (Interestingly the ones I couldn't be bothered to play the game with were much less helpful)

It was also interesting to compare the products these mortgage advisors came up with to my own brokers recommended product and it reassured me we had the best deal on offer.