There’s a joke among estate agents that they no longer sell houses – instead, they increasingly profit from mortgage broking and conveyancing services, causing buyers and sellers to lose out.
“It’s all about selling mortgages these days,” said Jenny*, who has worked in the industry for 10 years at a large chain based in the South East.
Jenny has come forward to blow the whistle on dodgy estate agent practices that leave customers thousands of pounds out of pocket. “They put this blind faith into their estate agent and that is being abused, pure and simple,” she said.
“Most people only go through this process two or three times in their life. They don’t know enough to understand what is being done to them.” Pressure to sell mortgages means both sellers and buyers are missing out.
Sellers are losing money because they are being deliberately put off high bids from buyers with independent mortgages, she said. “Most people for the sake of a couple of thousand pounds will go with the [offer] they’ve been told has more certainty,” Jenny explained.
“So you just put both offers to the homeowner and say: ‘This one offered £2,000 less but they are doing everything in-house and it is far more likely [the sale] will go through. If you go with the person who’s offered £2,000 more, they are using their own solicitors and their own mortgage services so we can’t make any guarantees.’”
Sometimes a vendor agrees only to accept offers “financially verified” by the estate agent, Jenny added, giving the estate agent free rein to reject independent buyers outright. And the tricks don’t stop there. Buyers at Jenny’s firm are told they can get a £1,000 “buyer’s incentive” discount if they use in-house mortgage and conveyancing services – but in reality this is shaved off their bid to the seller.
Buyers are also told they will become a “hot buyer” if they see the estate agent’s mortgage broker, giving them special access to a “premium buyer’s list” of houses only available to them.
Not only does the seller miss out with the limited pool of buyers, but Jenny warned that there was a sting in the tail for those who met the broker too.
“The information is not confidential. When you’re sitting in the middle of an office having a conversation with a mortgage broker, your details are not being kept secret,” she said.
“The data protection side of it is just terrible. Information is entered on a computer where it is held at head office – that’s fine – but when I as an agent go to a printer and find copies of someone’s paperwork and bank statements that a mortgage broker has photocopied and forgotten about, I can get my hands on so much of someone’s information.”
And, according to Jenny, many agents use that information to drive up buyers’ bids. “While we can’t tell [the seller] exactly what the buyer can afford, you can carefully say: ‘Oh, I think there might be more in the pot, do you want me to go back to them?’”
You can bounce back and forward several times until you reach that top figure, safe in the knowledge that you know what that amount is, she said.
Top tips | How to avoid being stung by estate agents
- Don’t get panicked. Estate agents try to whip people into a frenzy to secure the sale they want, not the sale you want
- Don’t get talked out of the best deal. Estate agents sometimes cast bids in a poor light for the wrong reasons. Ask for proof, ideally in writing.
- Don’t use estate agents that push mortgages. If they do, their tricks could leave you out of pocket.
- Extra advertising. If your property isn’t selling, estate agents might try to charge more. Think before agreeing – why hasn’t the agent done everything already?
- Don’t agree to verifying bids in advance. This might be seen as permission not to disclose some bids.
Mortgage lending is big business – so it is easy to see why agents’ focus has shifted. The largest mortgage broker in Britain is now an estate agent, Countrywide, which arranged mortgages totalling £12.2bn in 2015, generating £81m in income.
Meanwhile, Jenny’s employer makes £600 from each buyer who takes out a mortgage through the firm, as well as commission from the mortgage lender. It brokered £4.4bn of mortgages in 2014 – more than the £4.3bn it sold in property.
Further link to another article https://www.loveproperty.com/gallerylist/73687/how-to-spot-a-dodgy-estate-agent
Article from https://www.telegraph.co.uk/money/consumer-affairs/dodgy-estate-agent-tactics-leave-buyers-sellers-pocket/