Mortgage brokers have reacted to the BBC’s Panorama investigation which exposed the dubious practice of ‘conditional selling’ by estate agents.
Anyone who has purchased a home through an estate agent may well have been made aware of the agency’s in-house mortgage adviser. It is not unusual or wrong for an estate agent to recommend this or another service.
But if an estate agent were to imply or state a potential buyer must use this mortgage broker for their offer to be considered or accepted, then this is ‘conditional selling’ and is contrary to the profession’s code of practice.
Today, mortgage brokers have welcomed BBC’s Panorama’s investigation, which exposed two cases of conditional selling. But they feared the reports on the documentary were just the tip of the iceberg.
Ken James, director at Contractor Mortgage Services, speaking to the Newspage agency, said: “While the programme successfully brought public attention to a serious issue, many of us know Panorama only scratched the surface.
“Much of the investigation relied on anecdotal evidence and secret filming in isolated branches, leaving viewers without a full picture of how widespread the issue really is.
“For customers, the programme was a timely reminder to ask questions, shop around and understand their rights. No buyer should feel forced into a deal that doesn’t serve their best interests.”
Estate agents were also concerned about the practice. Sophie Pollard, director at MyHaus Brighton, was speaking to Newspage. She said: “It’s good to see this issue getting proper public scrutiny, because it’s something many honest agents have seen and been frustrated by for years.
“Good agents should be able to recommend trusted mortgage brokers, conveyancers, or surveyors that are going to help the sale. The problem is, what should be helpful has turned into something else entirely when people are pressured, forced or misled into using these extra services.
“That goes completely against the principle of acting in the client’s best interests, which is what should be at the core of estate agency.”
Advice for buyers looking for a mortgage broker
So, how can you protect yourself as a customer? If you are buying a home, and your estate agent makes any suggestions – whether veiled or open – that your offer will only be accepted if you use their broker, then alarm bells should ring.
Of course they can recommend the service of their in-house, or any other, broker. However, you should check the competition first and, as Ken James advised, shop around.
Speak to friends, relatives and neighbours for recommendations of mortgage brokers. Make sure you also understand how their fee structure works.
You can also check out our guide which explains how to find the best broker for you.
The same applies with conveyancers. Stephen Ward, director of strategy and external relations at the Council for Licensed Conveyancers writes a regular column for what MORTGAGE and urges readers to do their research when looking for a conveyancer to help you with the legal side of your house sale. He explains more about referral fees and how to research the best conveyancer here.
Meanwhile, there is work going on to ensure consumers are protected from conditional selling in the future.
Emily Franks, director at Emily’s Mortgage Services, told Newspage she had started a petition to stop the practice. She added: “It’s time estate agents were regulated like everyone else in the process. The ‘code of practice’ is clearly not fit for purpose.”
