Estate agent working for seller and buyer

Thrugelmir

swinstan wrote: »

We employ estate agents to advise us about the best possible price we can expect in the prevailing market.

I've never sold a property on that basis. Certainly never been told to accept an offer because it's the best offer you are likely to receive. Some properties stay on the market for years as the vendors refuse to budge on the selling price.

DesertCamel

It's not a particularly clear cut situation.

Consider that in a small town in particular, you are likely to have a small core of professional landlords and property developers. They buy lots of property and let them out.

Any given Estate Agent that lets property for one of these investors (A) may also be marketing a property for sale for another client (B).

As soon as A, the investor, makes an offer on B's property, then arguably the estate agent should declare the relationship to B that they have with A. But what difference will this make? If the estate agent doesn't market to, deal with, or seek offers from their existing landlord clients for a property on their books, then they haven't done their best for the client to market the property and obtain the best price.

In an ideal world, perhaps every seller would have, literally, their own agent who only acts for them on their property so there can never be any perceived conflict of interest. But that is of course an unrealistic hypothetical.

I will fess up now that I am a (former) EA and on more than one occasion, I've had potential buyers effectively try to bribe me into helping them have their offer accepted by saying things like "of course if we secured the property, we'd appoint you to let the units out. There'd be some good fees in it for you". And I was once literally offered £500 in an envelope for my 'help'. The point is that at the end of the day, you cannot stop these situations from coming about and you just need to be able to trust your estate agent and feel that they are professional enough to act in your interests and nobody else's on that particular instruction.

AdrianC

swinstan wrote: »

Thanks eddddy, for some useful information. You've got the exact point of my question. I feel like I have been taken for a ride. And even though I was willing to accept the lower price, another £5k would have been very welcome. We pay estate agents a substantial fee for their services and expect them to act in our best interests. We were not informed of any confict of interest and that's my main grievance. Again thank you.

You are employing the agent to find you a proceedable buyer.
You are, I presume, paying them a %age of the sale price as their fee? Let's say it's 1.5%.

That extra £5k is £75. They do have an incentive to get the best price. BUT... they don't get a single penny unless they can broker that sale. On a £150k sale, their 1.5% fee is £2,250.

Would you rather sell, or would you rather the sale fell through over £5k? Selling for the higher price may simply not be an option. The buyer may well not be willing to pay that extra £5k. Whether they can or not is irrelevant - whether they want to or not is the question.

You think it's because of a conflict of interest - the agent's lettings division might (yes, might - you say you "suspect") be up for some extra fees when the tenant, your buyer, moves on. I have to say - that's giving them FAR more machiavellian credit than they're due.

swinstan

Whilst I wouldn't disagree with many of these comments, the question for me was about the professional relationship between EA and client. The issue is about honesty and disclosure rather than about price and whether I sell or not. I am fortunate in that I can opt out from the sale without significant impact.

AdrianC

You forget one detail - your putative buyer, the outgoing tenant, is NOT the EA's client.

They're not the EA's client for your purchase - you are.
They're not the EA's client for their tenancy - the landlord is.

eddddy

AdrianC wrote: »

You forget one detail - your putative buyer, the outgoing tenant, is NOT the EA's client.

They're not the EA's client for your purchase - you are.
They're not the EA's client for their tenancy - the landlord is.

I think that either you or I have misunderstood.

My reading is as follows:

1) The OP is selling a vacant property to a BTL investor using an EA.

2) The BTL investor (buyer) has already instructed the same EA to show prospective tenants round the property (before contracts are exchanged).

So the EA is clearly working for both buyer and seller.

I don't think many EAs would do point 2 for a 'stranger'. Which suggests that the EA and the buyer might have a good business relationship already.

Guest101

How is this an issue, it's common for EA to have a book of LLs who may be interested in a BTL purchase.

AdrianC

Ah, yes. I clearly have. I read it as the buyer was currently tenant in a property that the EA was managing, and the lettings side had already conducted viewings there.

I'm still unexcited about the potential problem. I presume that the EA is marketing the property more widely than simply to this one buyer? If another potential buyer comes forward, will the EA put them off? I doubt it - it's easy to find out, though. Just get a third party to phone and enquire about the property. At the end of the day, it's not the EA that chooses which buyer's offer to accept...

HouseBuyer77

Guest101 wrote: »

How is this an issue, it's common for EA to have a book of LLs who may be interested in a BTL purchase.

It seems that if the EA sells to this particular buyer the property will be let by the buyer using the EA as agent.

So if they sell to this particular buyer the EA will be receiving fees for managing the property. In would be in the EA's financial interest for the OP to sell to this particular buyer over others even if the EA's commission for the sale is lower.

The fact the EA is using their access to the house to show around prospective tenants for the potential buyer certainly indicates a somewhat cozy relationship between the two...

Guest101

HouseBuyer77 wrote: »

It seems that if the EA sells to this particular buyer the property will be let by the buyer using the EA as agent.

So if they sell to this particular buyer the EA will be receiving fees for managing the property. In would be in the EA's financial interest for the OP to sell to this particular buyer over others even if the EA's commission for the sale is lower.

The fact the EA is using their access to the house to show around prospective tenants for the potential buyer certainly indicates a somewhat cozy relationship between the two...

The estate agent isn't selling anything, they are marketing the property. If the price isn't right, the vendor doesn't sell, if it is right, whats the issue?