Buyers ‘intimidated into dealing with inside advisers’ by real estate agents ‒ analysis

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Intermediaries have warned conditional selling is on the rise, with stories of clients being bullied into bringing in estate agents’ in-house advisers.

Allegations of conditional sales by estate agents surfaced again this week, with a host of brokers pointing the finger at Connells. Intermediaries have suggested that their clients have been told that they have a better chance of buying the desired property if they use an agent’s in-house adviser.

Connells responded to the allegations, noting that such practices were not company policy and promised to investigate any violations.

In its statement, Connells pointed out that it had only been notified of claims against eight of its 1,250 branches. He added: “Whilst the number is small this of course does not understate the seriousness with which we take this and if we receive a customer complaint directly it will be fully investigated in accordance with our complaints procedure.

However, some of the brokers publicizing claims against real estate agents for the practice say they have compiled recordings and emails to back up their malpractice claims.

Saving mom and dad

Jane King, mortgage adviser at Ash-Ridge Private Finance, said the issue “makes my blood boil”, adding that she had previously had to advise first-time buyers to bring their parents with them when dealing with estate agents, after the buyers had been intimidated to speak with the agents’ in-house advisers.

King argued that new-build developers were often the worst at insisting buyers use in-house advisers and lawyers, and said she had taken to calling the agent or developer concerned to “make it perfectly clear that the client will spend 10 minutes providing enough information for them to be verified, but that I will act on their behalf”.

“I think it shuts them up,” she added.

pick up the pieces

James Adkin, financial adviser at London Money, said it was a tactic used more regularly by agents, noting that he had recently seen it with his own clients who were being told by agents that they had to be “financially qualified” by an internal agent. advise before their offer can be studied and presented to the seller.

He also pointed to how buyers are pressured into an agreement in principle before they can make an offer, which he said was a tactic to determine the maximum amount a buyer could get from a lender and then advise the seller. not to accept offers below this level.

“Unfortunately, agents are the first step in the buyer’s journey and therefore often see the most vulnerable buyers,” he added, noting that it can then fall to regular brokers to “pick up the pieces” when things go wrong.

Not tolerated in the high end

James McGregor, director of Mesa Financial, said his company rarely encounters conditional sales, which he says could be because it operates in the slightly upper end of the market.

He explained: “This type of activity would not be tolerated nor is it in the agent’s interest to antagonize his client for a few pounds on the mortgage reference and risk losing £15 to £40,000 on his agency fees.”

McGregor said it was right for an agent to check the buyer’s position and make sure he has the finances in place or else he could waste everyone’s time, but that doesn’t justify a conditional sale .

Tackling the problem

King said she once had a client who wanted to file a formal complaint after an episode of conditional selling, but discovered the realtor was not registered with a realtor code, leaving little options.

King added: “I think the practice should be banned and estate agent owners and managers should be held responsible for ensuring their employees are aware that they are not permitted to do so.”

McGregor suggested that financial penalties for agents caught conditionally selling would be effective in eliminating the practice.

He explained: ‘I think the way to get this out is to enforce the rules and fine some agencies when it’s clear it’s happening. Obtain a verbatim written statement from the buyer of exactly what happened along with any written evidence. This would definitely change the internal politics of the agents.

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