Agents accused of ‘breaking the law’ with ‘conditional selling’ tactics

Given that it is currently a seller’s market, many corporate agents are allegedly using people’s eagerness to buy and the sheer strength of demand in the market to sell in-house advice.

A growing number of independent mortgage brokers have expressed concerns in recent weeks to skyrocketing conditional selling practices at certain corporate estate agencies, most notably Connells – it is claimed.

The negotiators at these agencies are accused of essentially intimating to prospective buyers that their offers to purchase a property will not be put forward for consideration to the seller unless they agree to additional in-house services offered, such as mortgage advice or legal services.

It is alleged that agents at Connells or Countrywide groups, specifically Bairstow Eves, Frank Innes and Burchell Edwards, are claiming that they must ‘financially qualify’ buyers even though ‘all the customers in question had agreements in principle’.

Eye has approached Connells for comment.

Rhys Schofield of Peak Mortgages & Protection says that he has a client prepared to go on the record about this practice and is building a case to present to the Association of Mortgage Intermediaries.

He commented: “I won’t mince my words: many agents are repeatedly breaking the law and don’t give a damn about it because clients are too scared to complain for fear of missing out on properties.

“Connells in particular crop up time and time again on the broker forums. In fact, I have been collecting evidence for a contact to take to the Association of Mortgage Intermediaries meeting next month and have an inbox of unethical and in some case illegal examples from other brokers as well from our own clients.”

Another broker, Rob Peters of Simple Fast Mortgage, goes so far as to call ‘conditional selling’ a cancer.

He said: “There is a filthy cancer in the estate agency world, which needs to be addressed. I speak not only as a mortgage adviser but also as a regulatory compliance expert, which means I’m passionate about protecting consumers, and often brought into firms to assist them with getting the right outcomes for their customers.

“The key issue is that some estate agents appear to be misleading potential buyers, and at the potential financial detriment of those selling a property. Buyers are being told their offer to purchase the property will not be put forward for consideration to the seller unless they agree to additional in-house services offered, such as mortgage advice or legal services.”

Lewis Shaw of Shaw Financial Services commented: “I’ve had numerous cases of estate agents trying to push financial services onto my customers; in the last three instances, they’ve all been part of the Connells or Countrywide groups, specifically Bairstow Eves, Frank Innes and Burchell Edwards. They’re pushing this idiotic line of ‘we have to financially qualify them’ even though all the customers in question had agreements in principle.”

Jonathan Burridge, founding adviser at We Are Money, remarked: “This has been a problem for as long as I have been advising. It is not legal to insist that a buyer uses a specific mortgage broker, solicitor or surveyor, but it can be strongly suggested that such a route would be “beneficial”. The buyer has the option to make a fuss, but that will most probably mean their interest will not be pursued and they will lose out on the potential purchase.”

Scott Taylor-Barr, financial Adviser at Carl Summers Financial Services, points out that by law estate agents cannot make it a condition of passing on offers to the seller that the buyer must use services offered by you or another party.

He said “You must not discriminate, or threaten to discriminate, against a buyer because that person declines to accept that you will (directly or indirectly) provide related services to them.”

Taylor-Barr also highlights the fact that agents must put all offers to their seller client “even if the buyer has not been financially qualified at that stage”.

 

Agents warned to avoid ‘conditional selling’ following claims against Connells

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26 Comments

  1. RealAgent

    I think this needs to be qualified somewhat. There is NOTHING illegal about Connells or anyone else financially qualifying a buyer, in fact I would argue that is crucial that a buyer is financially qualified. It is illegal to insist buyers must use a mortgage arranged by the estate agent to buy a property, and if these “brokers” suggesting impropriety have evidence of that I suggest they submit it through the correct channels.

    The reality is that these mortgage brokers are complaining because they are trying to ring fence their customers from getting alternative quotes and expecting that an estate agent “accept” their word that a client can purchase the property. I could produce a AIP online right now and it would be worthless.

    I’m sorry but to those brokers throwing accusations around you have two choices; buy offices of estate agents to get you to the point of offer or get better at looking after your clients.

     

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    1. Sensible Money

      So then RealAgent there IS something illegal about conditionally selling.
       
      TPO – 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 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.
       
      TPO – You must put all offers to your seller client even if the buyer has not been financially qualified at that stage.
       
      TPO – Aggressive Behaviour. Here are some illustrative examples of aggressive behaviour or practices. It is not an exhaustive list. In each case, the test is whether the average consumer’s freedom of choice or conduct is (or would be likely to be) impaired and, as a result, they take (or would be likely to take) a different transactional decision
       
      TPO – Pressuring a potential buyer to use associated services, for example, to take out a mortgage through the in-house mortgage advisor or to use a particular firm of solicitors or licensed conveyancers.
       
      TPO – By law you cannot make it a condition of passing on offers to the seller that the buyer must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a buyer because that person declines to accept that you will (directly or indirectly) provide related services to them. 
      Secondly, yes we do have evidence.
       
      Thirdly, it’s nothing to do with trying to ring-fence customers, it is about questioning why isn’t a valid AIP sufficient when it’s coming from a local independent broker who already has all the customer’s documents etc.
       
      Fourthly, it’s nothing to do with alternative ‘quotes’; for a start, you don’t ‘quote’ a mortgage (your parlance shows a lack of real understanding) you illustrate a mortgage, and if it was to do with ‘quotes’ then how can a small panel (circa 30 lenders and one insurer with loaded premiums) broker possibly have a better ‘quote’ than an independent with over 100 lenders and the whole of market non-loaded insurance premiums?
       
      Finally, you’ll find that coercion is illegal in the UK and that by saying something along the lines of ‘if you don’t use our broker you may not get your offer accepted’ for example is an act of coercive behaviour, or the failure to pass along an offer if not using the in-house broker, or having an offer accepted to be told when you say you’re using your own broker and sols that the agent is going to see if the vendor wants to reject the offer if you’re not using in-house services, this is AFTER they had been financially qualified by the in-house broker, so they knew they were good for the money…
       
      BUT maybe you’re right; it’s because those agents and brokers are just so very good at their job the only way they can win business is by forcing people into it. All good businesses do that don’t they…  

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      1. RealAgent

        No one is disputing the ILLEGAL practice of insisting someone use an estate agents mortgage services or they cannot buy a property, but what you and these other brokers are trying to do is suggest that somehow an AIP that YOU produce is somehow beyond reproach and should be good enough. I can show you countless examples of when this wasn’t the case. To your first points, we did have a mortgage advisor encourage a “client” of theirs to submit a complaint to the TPO because we insisted they were financially qualified by one of our financial advisors before we agreed a sale to them and we were entirely exonerated. To your third point, are you seriously trying to argue it isn’t about protectionism??…If you are trying to argue that an estate agent that has probably never dealt with you should except your professionalism as good enough, well I am afraid you have an ego somewhere off the scale. To suggest that I do not have an absolute right as an estate agent to insist that before I commit my seller to a buyer that may be unable to proceed or dedicate the man hours to progress a sale that will fall apart because the questions I needed to know were not asked just because you say so is arrogant beyond belief. Regarding your comment about my lack of understanding, well I think that says more about you than me.

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        1. EAMD172

          I’m afraid that you are wrong. We are legally obliged to put every offer in to the seller as soon as possible and in writing. You cannot demand that a buyer is financially qualified first by your broker. You can ask, but if they decline you still have to put the offer forward as soon as possible. It is of course up to you hoe much gravitas you give to an offer when you discuss it with your client. As an Estate Agent I am more than capable of establishing whether a buyer is financially capable of proceeding with a purchase, but if you are saying that many aren’t and have to use a broker to do so, then perhaps they need training. It doesn’t alter the law. If you wanted to offer £150m on Abramovich’s property I’m sure it would be out forward to him and treated with the relevant importance. Interestingly I wonder if the estate agents you are talking about know how to properly check a chain as we find that many agents just take information on face value without checking the information; this is usually far more important that getting a buyer with cash, or a AIP, to discuss their finances with a broker. Unfortunately we are not paid extra commission for checking chains so no-one forces that issue!!!

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        2. Sensible Money

          That’s precisely the point – you do not have ANY right whatsoever. Your lack of understanding is the exact problem with the industry.

          It’s scary to read the nonsense you write. But, no, it’s not about protectionism. It’s about playing by the rules.

          And yes, you should take a broker’s word for it, especially when there is an AIP produced. Are your in-house limited panel brokers so good? The number of times I’ve seen clients who, after having spoken to in-house advisers, come to me and have been told either a) they can’t get a mortgage and I’ve then proceeded to get them a mortgage or b) been given the wrong advice based upon their circumstances. So don’t go down the route of “oh, our people need to know” because it’s BS.

          I’m assuming you either haven’t read the TPO code of conduct or, if you have, don’t understand it.

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      2. Liz Shore Way

        Sensible Money Perfectly put, and highlights exactly what is wrong with this kind of practice.  Thank you

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  2. #ImpressiveConveyancing

    Whichever estate agent does this, they should be shut down, end of, and the owners barred from owning another agent or having a stake in any estate agents. This is because it will have been going on for some years before, and that is colossal. Fines won’t do it.
    That also means the estate agent trade body has failed too, and they need fining, and any other organization who should have spotted this.
    But there will also be major class actions by vendors who may have lost unknown buyers too.
    Let’s see what happens, but it is shocking conduct, and that is an understatement – there is no place whatsoever for estate agents like this in the home moving process. They taint the industry. Fines won’t do!

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    1. RealAgent

      And which estate agents ARE doing this? The article doesn’t mention an illegal insistence that a buyer USE a mortgage supplied by an estate agent it is suggesting that they shouldn’t be financially qualified; in fact this whole article is a press release designed to solicit support to stop estate agents “muscling in” as these mortgage brokers see it.

      WhenTaylor-Barr says “also highlights the fact that agents must put all offers to their seller client “even if the buyer has not been financially qualified at that stage” I’m not actually sure that’s correct and if it is I am putting an offer forward on Abramovich’s house today. £150K cash, put it forward guys.

       

       

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      1. Sensible Money

        Again that’s where you’re bang wrong.

        The TPO states – 9.

        Offers

        9a 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 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.

        10. Financial Evaluation

        10b You must put all offers to your seller client even if the buyer has not been financially qualified at that stage.

        There’s the link to the code of conduct – It may pay to read it…

        https://www.tpos.co.uk/images/Codes_2019_a5/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A5_-_Effective_1_June_2019.pdf

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      2. ScottTB

        As Sensible Money points out in their reply to you; my quote in the article is a direct lift from the Code of Practice for Residential Estate Agents.

        Your comment is somewhat proof of the point the brokers are trying to make – agents are either unaware of the Code, have forgotten the contents, or are willfully ignoring it.  The argument is that agents have signed up to a Code of Practice and it would appear that some are not following it, brokers are only asking that agents stick to the rules within the Code of Practice.

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        1. RealAgent

          Offers do need to be submitted to sellers and in writing I accept that, but there reality is, if your attempt as you seem to be inferring is the benefit of your client, then you are doing them a disservice.

          I will not accept that a potential buyer has been qualified unless my mortgage advisors have verified their situation and I will advise MY client of the fact that we have an offer from someone that refuses to be independently verified. In a market place where there are several offers for every property you can see where that will go. That said, I will not insist a potential buyer uses them and I certainly won’t make it a condition of purchase for the reason stated previously so I really dont see how your issue can be anything other than protectionism.

           

           

           

           

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          1. Sensible Money

            Case in point.

             

            I had a corporate agent call me that a buyer had made an offer. They had already been to speak with said in-house broker, and told they were not eligible for a mortgage previously.

             

            Broker said they could not get a mortgage due to circumstances and that the offer couldn’t be accepted – the agent then proceeded to call and say the client couldn’t buy the property as their in-house had said they couldn’t get the mortgage.

             

            Had the client listened to them they wouldn’t now be buying said property – the in-house wasn’t aware of criteria with a particular lender which meant that the client could buy.

             

            On that basis, you would have let a buyer walk out the door as your broker would’ve said incorrectly they weren’t able to get a mortgage.

            As things stand, the customer is well on the way to buying that property with a mainstream mortgage lender.

             

            Now how about that for financial qualification.

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  3. Chrisstew

    I have first hand experience of this practice costing the Bank/ Insurance co/Defaulting borrower £10 -£12,000.

    My wife and I have a multi million pound buy to let portfolio. I began my Estate Agency career in 1977 so am pretty conversant with all the in’s and outs but for the past 10 years have just dealt in lettings.

    I viewed a vacant Corporate sale property (AKA Repossession) through William H Brown Guide price £285,000 I offered £288 with  a view to going to £290,000 if pushed with a £100,000 cash deposit.  They would not submit my offer unless I spoke to their FA with all of 2 years experience. I explained that my own FA that I have worked with for 25 years, knows my whole portfolio and can confirm that finance is in place. The upshot is that I withdrew the offer as not prepared to detail all my property and finance details.

    I did complain to the regional MD and the response I got from the local office was an apology stating that they have procedures to follow. They did put forward the offer to cover their backs but did not explain why the offer was withdrawn.

    As per public notices displayed the property sold for £278,000.

     

     

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  4. AJL20

    I’m aware of several examples of this, across several Connells branches. I find it hard to believe that, for a company with the scale and organisational hierarchy of Connells, this can be anything other than a endemic cultural practise, just that some branches are more relentless with it than others.

    In one recent example, a client of mine was told they wouldn’t be favoured as a buyer unless they used the Connells broker AND conveyancer. For the purpose of getting the deal done, they agreed but with the plan to change both providers once the offer was accepted (they tried be just as devious). Their offer was accepted but, as soon as they changed their broker and solicitor, the acceptance was revoked and the seller switched buyer in favour on one that did use Connells’ associated services.

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    1. RealAgent

      Well I hope for your sake its belt and braces evidence because to come on to a public forum like this and make that accusation is brave.

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      1. EAMD172

        And (genuinely and without any malice) I hope your files are all up to date and all offers have been submitted in writing in a timely fashion because if I was the enforcing body for this and I was reading this thread I know where I would start.

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  5. EAMD172

    Unfortunately our business is only policed by complaints, which tend to go to the TPO and take a very long time to get anywhere as they are so understaffed. What this industry needs is an organisation that spot checks branches across the country on a regular and frequent basis and has real power to suspend a branch from trading on the spot for certain or repeated offences. Too many Estate Agents do not understand the laws which they are governed by and translate them incorrectly. I understand where RealAgent is coming from, but he/she is misguided by their translation of the law and consumer protection. The Estate Agent Act seems to be overlooked as everyone now just looks at the most recent legislation not realising that we are covered by a great deal of legislation.

    This is what the OFT Estate Agency Guide says:

    Keeping clients informed about offers. You must give your client written details of all offers received from potential buyers – except those which the client has told you in writing need not be passed on (for example, those below a certain price). You may find it helpful to keep a written record of all offers received.

    You also MUST disclose to your vendor that you will be earning commission from your buyer if they are using your broker (or if they are selling through you or you are earning any commission from them in any other way) as there is a conflict of interest. So in fact your client (vendor) is better protected if they are using an independent broker as is your buyer.

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    1. Retiredandrelaxed

      “This is what the OFT Estate Agency Guide says:”

       

      I am a tad concerned that you seem to be operating on the basis of guidance from a government body that was dissolved in 2014

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  6. Matthew Gardiner Legge

    Nothing changes. Ten years ago I was working under the Sequence/Connells/Skipton brand and this was normal practice. As negotiators and managers we were instructed that offers were not to be put forward unless applicants had been referred to our FA. There was no ambiguity as to why we had to do this as it was openly admitted that it was about getting the mortgage business.  In the case of two offers  – one cash, one mortgage (with us) – we were instructed to persuade the vendor to go with the mortgage buyer on the basis that they would be paying fees and therefore would be more committed. Happily, I never won any awards for referral figures and I left as soon as I could.

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    1. Retiredandrelaxed

      “Happily, I never won any awards for referral figures….”   🙂 🙂 🙂

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  7. BMB

    I was in agency for many years with a number of agents and i can categorically say Connells are not the only agent that do this.

    there are great examples of agents in house referring partnerships such as FS and solicitors doing great jobs for buyers and vendors., speeding up transactions and finding better deals as well as great customer service.

    However more times than not a buyer in the exact same position who could have even offered less would be put across in  a better light to their vendors because they are using the agents in house services, iv seen this so so so many times and it wont ever change due to the amount of money agents earn from mortgages and solicitor referrals.

    Agents sales staff are targeted so heavily on mortgage referrals and solicitor referrals its no wonder they put pressure on buyers and vendors. Its one of the reasons i got out of agency, we were becoming more focused on the additional revenue streams and what we should have been focusing on, no matter how the agency would try sway it.

    Not all agencies practice this but its more common in larger agencies for sure.

     

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    1. EAMD172

      We don’t have in house brokers or earn commission from recommending conveyancers so I don’t have an axe to grind here. However, if one buyer was using a local solicitor that we had recommended and using a local mortgage broker that we knew or had recommended, and another buyer was using a conveyancing sausage factory in Cardiff or Stockport or anywhere really, and getting their mortgage through one of the corporate agent’s broking arms, I would certainly be recommending buyer 1. These are the polar opposites but along the scale as agents we use our experience and knowledge to advise our clients which we think is the better buyer and often it’s because we have recommended professionals that we know communicate well and do their job efficiently. If there is a broker or solicitor (could be you) that is awkward and doesn’t ring with updates or return our calls we are likely to recommend the other buyer. Simple stuff really. Think about every client as if they are your mother or your best friend and what advice you would give them and you won’t go too far wrong.

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  8. conoco9

    This is not surprising at all. The pressure put on sales negotiators by under par regional managers in this group is nothing short of shameful. The problem lies with middle managers who are not up to the job. Get them out Connells and replace with real talent.

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  9. Bosky

    Sensible Money has already covered what is required to legitimately require qualification of a buyer prior to submitting an offer.

    “TPO – 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 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.”

    I am sure it is not too difficult to sell the idea to your clients to write such a letter, better still, have a template for them to sign or maybe including it in your T&C’s might suffice.

    Personally, I would want my buyer to be qualified, and I would have more confidence if undertaken by the agents broker or a broker that the agent has confidence with. Let’s not forget the agent has a duty of care to their client, but let’s not also forget they have a fiduciary duty, and should act accordingly.

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  10. Richard Moseley

    I believe Real Agent’s lack of understanding of the required Trading Standards for Estate Agents is just another example of the desperate need for increased regulation of our the property sector. Preferably independent, but that is probably wishful thinking on my part.

    This latest saga, which in my experience, both private and professional, is common practice with several corporate agents in the Essex property market. It is  just further evidence confirming that our sector can’t be trusted to act correctly under the existing regulatory. structure.

    I hope and believe tighter regulation is coming and frankly, it can’t come soon enough!

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  11. NHGURU

    I’d love to hear the internal panic in the board room at LBuzzard- as we know Connells and now CWD are owned by the Skipton Building Society and if they get wind of this heads will roll -or should anyway -problem is it won’t be the poor sod who is just doing what he is being told to do in a branch or the area director who is being beaten up for a lower than x% hit rate -a fish  rots from the head down

    The agents forum above should take their findings directly to the Skipton if they want to see speedy change in a rotten culture.

     

    A huge estate agent fuelled  by greed owned by a highly compliant respected mutual building society ……..what could go wrong

     

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