The homebuying process is one filled with both stress and excitement and once a mortgage is secured, the perception is that it’s just a matter of choosing a property. But there are an increasing number of estate agents who are exploiting inexperienced buyers by attempting to coerce them into using their mortgage services in return for preferential treatment.
Rebekah Commane spoke to one couple whose experience should be heeded by anyone beginning the search for a property
When it comes to buying a new home, awaiting mortgage approval is the element of the process that tends to cause most anxiety for potential buyers. Once that has been granted the perception is that the rest of the journey to homeownership will be relatively smooth and filled with the excitement of finding the right property.
Visiting an estate agent can be a very positive experience and they can really help you to find the right property but beware that an increasing number of aspiring homeowners are being unethically, and illegally, pushed toward using the agencies mortgage services, or risk losing out on their dream home.
The house buying journey
London based couple Steve and Karen* are currently going through the process of purchasing their first home and contacted What Mortgage to recount their story as a warning to others who are beginning their journey to homeownership to always be aware of their rights and not to be talked into anything they aren’t comfortable with in the house buying process.
The couple decided to make the move to homeownership this summer and, after being approved for a mortgage, began looking around for potential properties to buy.
Some houses on one well known estate agent’s website caught their eye and the couple went about trying to arrange viewings. However, they were told time and again that these houses were either under offer or had been sold, a situation that became increasingly frustrating for the pair as the properties continued to be advertised on the website for some time after their enquiries.
Having finally found some properties of interest that were allegedly ‘brand new’ to the market, the couple promptly arranged viewings.
Priority viewings
However, while they were en route to the first viewing, the estate agent telephoned to say that the house in question was no longer on the market and had been sold after ‘priority viewings’.
“Naturally, we were considerably confused by this and enquired as to the nature of these so-called ‘priority viewings’,” Steve told What Mortgage.
“We were told that if we agreed to use the estate agent’s own in-house legal and mortgage services we would receive benefits including priority viewings and a house being taken off the market as soon as an offer is accepted.”
As the couple had access to legal and conveyancing services from elsewhere, they had no need to use the estate agent’s offer and feel they were treated less favourably as a result.
Despite making a case for fair treatment, the couple were told they would not get priority viewings without signing up for the services.
Putting in an offer
“We eventually found a place that fit the bill of what we were looking for and put an offer in on the spot,” Steve continued.
However, the following day they were contacted by the agency and told that just one other equal offer had been made on the house, the only difference being that the other interested couple were using the estate agent’s legal services.
“We felt that this statement implied that the second couple would be preferred candidates and that the vendor would be swayed in this couple’s direction in order to receive a commission.”
Steve claims he was then asked to increase his offer, but refused to do so as they had offered the asking price. Their offer was accepted by the vendor 48 hours later.
Property still on the market
If Steve and Karen had been using the estate agent’s own legal services they were told the property would have been taken off the market at this point but because they were not, they were informed that the house would continue to be advertised for sale until the valuation had been booked.
“I moved as fast as I could to get the survey booked in – but within two days – I was again contacted by the estate agent letting me know that they’ve had to put another offer to the vendor – and this one was higher than ours. They, again, asked me to increase my offer. I refused,” Steve disclosed.
“My partner and I were both extremely worried that we were going to lose the house that we had our hearts set on, all because we didn’t want to be bullied into using the estate agent’s services we didn’t need.
“I was called a few days later, again by the estate agent, and told that the vendor had rejected the higher offer as they wanted to go with us, which made me question whether the alleged higher offer was just a ploy to make us increase our offer.”
Unethical practice, says NAEA
What Mortgage contacted the National Association of Estate Agents (NAEA) and was told that they had received numerous complaints regarding certain estate agents who have been attempting to persuade customers to use their services in an unethical manner.
They issued the following statement in response to Steve and Karen’s story:
“An in-house mortgage broker is a useful resource that buyers can consider using when looking at properties to purchase. The best mortgage deals, as with anything, can often be found when shopping around, but this can sometimes be difficult to do if time is tight. The benefit of an in-house mortgage broker is that it is usually located within the agency, or the broker can come to you, and can therefore be very convenient for the buyer. Ultimately, it all comes down to personal preference and you should never feel forced to use an agent’s ‘preferred’ services.
“Unscrupulous agents who make it difficult for buyers to offer or proceed to buy without speaking to their own mortgage service provider are acting against guidance issued by the OFT in the 2008 Consumer Protection Regulations. This guidance clearly states it is illegal for estate agents to put undue pressure on buyers to use their ancillary services, such as mortgages.
“Violating this legislation has severe consequences and could result in the agent receiving fines or even a prison sentence. Not only that, but the agent’s client – the property seller – may miss the best buyer for their property because the agent favours the offer of someone who will sign up with the agent’s in-house mortgage broker, rather than the one who has chosen to arrange their mortgage direct with the lender, or through another broker.
“Buyers must also be aware that not all agents operate under the same principles and unscrupulous agents can cause major problems for buyers. Before committing to any services from an estate agent, buyers should always check for recognised accreditation, such as National Association of Estate Agents (NAEA) membership. The NAEA has a section on its website where you can search and check that an agent is exactly who they say they are.
“There is a significant amount of financial and emotional investment involved when buying a home. To avoid overly aggressive sales techniques, it is important you choose an agent that will represent your best interests and make the process as smooth as possible. To ensure peace of mind throughout, the NAEA requires all its agents to adhere to a robust code of conduct and to meet the highest professional standards.”
