How to deal with an Estate Agent

watch out

watch out

Careful with those agents!

We often find our mortgage applicants are troubled by the actions of the Estate Agents that they have to deal with when seeking, viewing, and making offers on property.

We hear complaints of:

  • Agents refusing to take an offer without proof of mortgage
  • Insistance that the buyer uses the Estate Agents mortgage broker or solicitor
  • Continuing to market a property after successful offer
  • Refusing to put offers forward until the buyer has met the Agent’s Mortgage Broker
  • Insisting on details of mortgage and mortgage lender

What can and can’t Estate Agents do, and what is reasonable for them to request of you as the buyer?

We thought it would be useful to outline some of the rules that Estate Agents sign up to and how they effect you when you are trying to buy a property.

Everyone has heard a horror story about an Estate Agent and it is true that the house buying process is fraught with issues and can seem unfair or in some cases borderline criminal.

We should bear in mind however that no sensible business owner wants a bad reputation – that applies to Estate Agents as much as to any other business.

Two things are key to remember when you are buying a property.

1. The Estate Agent works for the vendor.

2. Estate Agents are not regulated by law unlike solicitors or residential mortgage brokers.

However, from October 2008 all Estate Agents were required by law to register with a redress scheme approved by the Office of Fair Trading. A redress scheme investigates complaints against Estate Agents.

It is worth looking at some of the details of the Code of Conduct of one of these schemes and how it affects you, the buyer.

For our purposes we have referred to ‘The Property Ombudsman’. TPO is one of the major schemes approved by the OFT, and has a wide list of members in the UK.

Insisting on use of recommended services

An Estate Agent should not discriminate against you if you decide not to work with the mortgage broker or solicitor recommended by them. Since the Estate Agent’s client is the Seller, we recommend that you keep all details of your end of the transaction separate from the Estate Agent to avoid conflict of interest.

The Estate Agents Code of Conduct says..

‘By law you must not discriminate, or threaten to discriminate, against a prospective
buyer of the seller’s property because that person declines to accept that you will
(directly or indirectly) provide related services to them. Discrimination includes but is
not limited to the following:

  • Failing to tell the seller of an offer to buy the property.
  • Telling the seller of an offer less quickly than other offers you have received.
  • Misrepresenting the nature of the offer or that of rival offers.
  • Giving details of properties for sale first to those who have indicated they are
    prepared to let you provide services to them.
  • Making it a condition that the person wanting to buy the property must use any other
    service provided by you or anyone else.’

Refusing to put an offer to a seller

Unless the seller has been very particular in their instructions to the Estate Agent, all offers should be passed on to the seller by their Agent.

‘By law, you must tell sellers as soon as is reasonably possible about all offers that you
receive at any time until contracts have been exchanged (in Scotland, missives have
been concluded) unless the offer is an amount or type which the seller has specifically
instructed you, in writing, not to pass on. You must confirm each offer in writing to the
seller, and to the buyer who made it, within 2 working days.’

Not removing the property from market

Although it seems unfair, there is no legal basis on which the seller has to remove the property from market once an offer has been accepted. In this matter the Estate Agent should take the Seller’s instructions.

‘When an offer has been accepted subject to contract (in Scotland, conclusion of
missives) you must consult and take the seller’s instructions as to whether the property
should be withdrawn from the market, or continue to be marketed. In the latter case, you
must so advise the prospective buyer in writing. The prospective buyer must also be
informed in writing should the seller later decide to put the property back on the market.
You remain under the legal obligation to pass on offers, as defined in 7a above.’

Gazumping

Gazumping is the practice of the Seller accepting an alternate offer having already accepted a previous offer. Not a pleasent thing to be the victim of, nor is the lesser known practice of gazundering where the buyer tries to obtain a lower price at the last minute.

The Estate Agent’s Code of Conduct says..

‘After an offer has been accepted subject to contract, you must promptly tell that
prospective buyer if the seller accepts another offer.’

Competing offers

When you put an offer in on a property and are told there are other, more favourable offers in, or about to come in, how true is this?

The Code of Conduct says..

‘By law you must not misrepresent or invent the existence, or any details, of any other
offer made or the status of any other person who has made an offer. If you know that the
seller has instructed a solicitor to send a contract to an alternative buyer, you must then
tell your prospective buyer in writing.’

Estate Agents insists on details of my mortgage arrangements

When we deal with a buyer we are quite happy to confirm for the Estate Agent that we are holding a mortgage decision in principle, or to advise them on the buyers financial suitability to purchase.

We do not advocate providing the Estate Agent with details of the lender involved nor the figures involved.

Our view is that the more affordable a property is for you, the higher you can expect the Estate Agent to push the purchase price. In any other barter situation you would not let the seller know how much was in your wallet and you should not here.

That said, is it obviously reasonable for the Estate Agent to take steps to confirm that you are in a position to complete the purchase. We believe our policy meets this need without compromising your postion as our client.

The Code of Conduct says ..

‘At the time that an offer has been made and is being considered by the seller, you must
take reasonable steps to find out from the prospective buyer the source and availability
of his funds for buying the property and pass this information to the seller. Such
information will include whether the prospective buyer needs to sell a property, requires
a mortgage, claims to be a cash buyer (*) or any combination of these.’

again we are happy to continue to update the Estate Agent

‘These reasonable steps must continue after acceptance of the offer until exchange of
contracts (in Scotland, conclusion of missives) and must include regular monitoring of the
prospective buyer’s progress in achieving the funds required, and reporting such progress
to the seller.’

The Estate Agent wants a deposit

Not necessary apart from specific circumstances such as new build property.

‘As a general rule, you should not take pre-contract deposits, which have no validity in
law and can give consumers a false sense of security. However, in the case of new home
sales, you may take into account specific instructions from sellers.’

The Golden Rule

This informs the Estate Agent’s thinking and is from the Code of Conduct.

‘When instructed to sell a property, your (the Estate Agent’s) duty of care is to the seller.’

for further details on The Property Ombudsman Code of Practice use the link below

The Property Ombudsman Code of Practice

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