The Property Ombudsman has defended her advice that a viewing essentially constitutes an introduction to a sale – and not just an introduction to a property.
EYE asked Katrine Sporle for comment after a column by our compliance expert David Beaumont appeared yesterday.
Beaumont interpreted TPO’s advice and what it means for agents.
But comments on Beaumont’s article, plus correspondence to EYE, criticised TPO’s advice and said it is wrong, and flies in the face of case law.
The issue centres around a case where the judge said that to claim a commission, the agent must show they have not just introduced someone to the property, but to the transaction.
Edward Hartshorne, managing director of Blenkin & Co, said: “Surely case law is the backbone of our justice system – any solicitor will tell you that.
“My worry is that if agents are taken to court by their vendors, the TPO guidelines are nowhere near robust enough.
“Foxtons v Bicknell and many others show that judges disagree completely with what TPO is saying.”
He said that in his view, an agent wanting to prove it had introduced a purchaser to the transaction would have had to have gone significantly further down the route than a viewing – for example, sending out a sales memo.
Yesterday evening, Sporle told us: “As TPO has stated before, our stance is that no consumer should unknowingly be placed in a position of paying more than one commission fee.
“The Foxtons v Bicknell case, which was more than ten years ago, dealt with a single, specific set of circumstances.
“Since then, disputes over dual fees have become an increasing cause for concern.
“At our recent conference, 80% of agents in our sales workshop said they had been involved in a dual fee dispute.
“That is why we raised the issue at our industry and consumer forums, with input from NTSEAT, provided guidance released on EYE earlier in the year and consulted MHCLG, the industry and NTSEAT on the new Codes of Practice.
“The Codes and the guidance clearly set out how both agents should behave to avoid consumer detriment and how agents will be held to account in the event that a consumer complaint is received.
“I believe we have done all we can to draw attention to the need for agents to behave responsibly and to not put consumers at risk of unknowingly facing the prospect of paying two fees.
“In respect of the possibility of whether a court would reach a different view, this is always a possibility, as the result of what is considered to be best practice and fair and reasonable in the circumstances can differ to a decision made purely on a point of contractual law.”
I appreciate the Foxton’s case was 10 years ago but the fact remains that a woman did a brief viewing (didn’t go upstairs) and counted the property out. Foxton’s were disinstructed and Hamptons instructed. Some time later, presumably when the lady realised there was nothing better, she re-viewed all of the property and proceeded to buy and it was ruled in Appeal that the second agent was the effective cause of sale. At the time TPOS issued guidance which stated an agent will have to demonstrate that it introduced the buyer to the purchase of the property not just introduced them to the property.
I appreciate that TPOS don’t want fighting agents and that when they do this damages the reputation of all agents. I agree that a better approach is needed. However if TPOS code and case law are at odds with each other this will do little to resolve the issue.
For example, what if Agent A does a sloppy viewing or open house and doesn’t follow up the applicants or negotiate properly on price? Or gets viewings but not offers and fails to advise a price reduction is needed to achieve a sale? Agent B comes along and drops the price and achieves a sale to a buyer who A introduced? Is it fair that sloppy Agent A gets the prize? Is this encouraging poor rather than best practice under the new Code?
Would it be better to say the first agent to get an offer is the winner? This would encourage customer contact and relationships I would say.
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TPO just don’t get it.
The point is; they should be advising member agents that they can’t claim a fee by simply conducting a viewing – this whole nonsense of agents sending each other lists of people whom they have sent brochures to is a farce….
If you introduce somebody to a purchase – i.e. instructed solicitors, then you are due a fee if that person comes back and buys it.
If you happen to show somebody round the house and then they buy it with another agent you are not due a fee.
Simples
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Exactly my view.
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What happens if agent A shows a number of properties to an applicant and they say “I will have a think as I have several other houses to see and will come back to you.”
They then go to another agent who offers them a list of houses. They go to see two of them but of no interest. Then they tell the second agent who also has the house shown by agent A on their books that really that they have decided it is suitable for them. He takes them for a second viewing of the house which is vacant and ties up the sale.
Agent A finds out about this a week later from the owner. Is he supposed to feel the deviousness of the applicant and the second agent’s dishonesty is all acceptable and he should not be paid his commission because the other agent instructed solicitors?
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You’ve answered your own question – agent B tied up the sale – it’s a mindset thing with most agents
Agent A did not introduce the prospective purchaser to the purchase, he just showed them round. For whatever ever reason the purchaser perhaps did not like agent A, maybe his car was to flash, or his suit too shiny… We will never know, but the idea of “his commission” need to be dispelled. Agent A did not sell the house, they merely showed them round.
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