Estate agent update and the truth

itmakessense

I think it is time to make as many people aware as possible about the current state of affairs with our beloved Estate Agents. (tongue quite painful in cheek!)

Currently the majority of estate agents are charging referral fees to solicitors and the majority of solicitors are paying them from your fees charged for your legal work. Some of the lawyers make up the fees with some hidden or stealth charges. SDLT charges, Client anti money laundering, and other arrangements where they can enhance your billing to cover some of the fee they pay to the greedy Agents who are already getting paid a hefty sum to sell the property.

It is common now for an agent to refuse to show a prospective buyer the sellers property unless they use the agents chosen lawyer. Bribery and corruption would be my description of such an act. trying to pry the customer from their current lawyer because the one they have will not pay them.

Estate agents have to by law disclose to you that they are receiving a referral fee and how much it actually is. The lawyer who pays the referral fee is duty bound by the SRA rules to disclose to the client that they are paying the agent and how much they are paying. 

This actually does not happen in most cases.

If the estate agent tries to move you onto their preferred lawyer or lender you should refuse. If they then tell you the seller will not sell if you use your existing lawyer then they are lying. 

At that point you should advise the seller what their agent is doing because they are in breach of contract to the seller (their client)
You should also inform your lawyer what has taken place. You should then report the agent to trading standards so that they can be taken to task and fined.

It is quite astounding how many client actually fall for this and change their recommended or preferred and even long term lawyer because of a greedy agent. This is especially prevalent in large chain estate agents. 

One new thing agents are now doing is charging extortionate amount for Anti money laundering check. AML actually cost the agent approx £3 to £4 and we are seeing charges to the client of £70 to £100 plus vat. 

THE WAY FORWARD
Do not be bullied by the agents! They are driven by targets and greed.
Estate agents do not need a single qualification to set up their business, unlike the lawyers.
Do not believe the agent's when they are lying to everyone and copying in all parties about the other side pulling out. This is a tactic to scare you into chasing your lawyer and actually stopping them from carrying out the complex legal work. Your lawyer is the only one acting in your best interest. The agents only act in their own best interest.

Ask your lawyer if they are paying the agent and how much. You may be surprised that as a buyer who has nothing to do with the agent who is selling for the seller that the agent is actually receiving 300 to 400 of your money too!

The agents suggested lender pays them too! And financial advisers and brokers!

So next time you are looking for a house find an agent who does not pay referral fees and find a Lawyer who refuses to pay referral fees. Then you know your legal costs are exactly that. And that they are being used for the purpose you thought they were instead of paying a set of panel lawyers employing unqualified monkeys with headsets with a single qualified person overseeing them all and signing everything off. Some of these panel lawyers are so busy it takes them 3 months to return the papers.

It is a conflict of client interest for your lawyer to pay the agent! They are then in each others pockets and debt.

Wake up and smell the coffee! You know it makes sense

sienew

itmakessense said:

Estate agents have to by law disclose to you that they are receiving a referral fee and how much it actually is. The lawyer who pays the referral fee is duty bound by the SRA rules to disclose to the client that they are paying the agent and how much they are paying. 

This actually does not happen in most cases.

It is disclosed in pretty much every case. It's just that most people don't read the small print.

People - often wrongly - assume the agent is their friend or working in their interests so take their "expert" advice without question.

jimbog

sienew said:

itmakessense said:

Estate agents have to by law disclose to you that they are receiving a referral fee and how much it actually is. The lawyer who pays the referral fee is duty bound by the SRA rules to disclose to the client that they are paying the agent and how much they are paying. 

This actually does not happen in most cases.

People - often wrongly - assume the agent is their friend or working in their interests so take their "expert" advice without question.

The secret is to let the estate agent think they are succeeding with that and then take your own decisions that are in your own interests 

itmakessense

The legislation from Trading Standards states that they have to make it known that they are receiving referral fees. It is not enough to bury it in the small print. It is supposed to be in bold in the terms for all to see. This is why I am saying everyone should ask the agents how much they are getting. Combine with asking the lawyer what they are paying. If the agents says they are not receiving and they lawyer states they are paying then the agent has lied and committed and offence which is punishable. The chance of the lawyer lying is miniscule.

Woolsery

itmakessense said:

So next time you are looking for a house find an agent who does not pay referral fees....

Good luck with that! If people are seriously looking for a property, especially if it's something a little out of the ordinary, they won't be inclined to be that picky.

But as others have said, one can string agents along and change one's mind. Those of us who've had a good experience before probably know which solicitor we'd use anyway.

Van_Girl

I've always just told the EA I have a solicitor in place already, they tend to just accept that and life carries on

I'm not sure why an agent would refuse to show someone a property because they don't go with their solicitor - no one is usually asking about solicitors at that stage?

I've been pushed to see the EA's in house mortgage broker before, which I sometimes have done just for interest, though I've always used the same broker and don't plan to change

freesha

Have you posted this before? Or elsewhere? I have read this before 

deannagone

Rather a lot of posts over the years where prospective buyers post on here saying "EA are insisting I use their mortgage broker" or "EA are insisting I use their recommended solicitor" before they'll pass on my offer or take my offer seriously.

They always get told its a commission issue on here. 

Flugelhorn

Van_Girl said:

I've always just told the EA I have a solicitor in place already, they tend to just accept that and life carries on

I'm not sure why an agent would refuse to show someone a property because they don't go with their solicitor - no one is usually asking about solicitors at that stage?

I've been pushed to see the EA's in house mortgage broker before, which I sometimes have done just for interest, though I've always used the same broker and don't plan to change

I agree - I have been offered a referral to a solicitor and just declined it saying I have my own in place. Once tried to view a new property but was told would have to speak to financial advisor first about mortgages etc - explained was cash and they couldn't seem to cope with that, I didn't hear back and looked elsewhere 

TripleH

Ask for the agent to confirm in writing that you 'must' use their recommended solicitor and 'must' use their broker as it is a legal term of sale.

See how many change their language to vague terms or back down when they have to put it in writing.

That or a note through the property door 'dear x, I'd love to look at your property and think it highly desirable  sadly your agent refuses to let me see it.

eddddy

TripleH said:

Ask for the agent to confirm in writing that you 'must' use their recommended solicitor and 'must' use their broker as it is a legal term of sale.

See how many change their language to vague terms or back down when they have to put it in writing.

That or a note through the property door 'dear x, I'd love to look at your property and think it highly desirable  sadly your agent refuses to let me see it.

The problem is that some estate agents will have told (gullible) sellers that it's much safer / better / faster if a buyer uses a recommended solicitor and recommended broker.

So the seller is persuaded to sign a written agreement saying that only people using the EA's recommended solicitor and recommended broker should be allowed to view, and/or only offers from buyers using the EA's recommended solicitor and recommended broker should be passed on.


But perhaps it's still worth kicking-up a fuss if you're caught by this - and potentially complaining to the Property Ombudsman, or the Property Redress Scheme. Or just play the game - and maybe pretend you'll use them, then change your mind once the offer is accepted.