The Property Ombudsman has said that in her view, there is no difference between ‘Sale Agreed’, ‘Under Offer’, and ‘Sold Subject to Contract’.
We asked Katrine Sporle for definitive advice after our story about Purplebricks on Friday.
Purplebricks’ Google adverts claim that the agent sells a home every 30 minutes, and puts one under offer every 30 minutes.
This provoked debate among our readers as to the difference. Purplebricks itself suggested there was no difference, as both claims refer to properties Sold Subject to Contract.
We asked Sporle to give definitions of:
Sale
Sale Agreed
Under Offer
Sold Subject to Contract
Sold
She told us: “All estate agents use different terminology to define the status of a property and The Property Ombudsman’s Code of Practice for Residential Estate Agents does not define which term agents should use.
“However, paragraph 7d says ‘any board you do erect must be appropriate for the occasion’, meaning agents have an obligation to ensure it is correct.
“In my view, ‘Sale Agreed’, ‘Under Offer’ and ‘Sold Subject to Contract’ all propose the same, that the seller has accepted an offer on the property, that is, a sale has been agreed, but contracts are not yet exchanged.
“‘Sold’ should only be used once contracts have been exchanged.”
We also asked Sporle to clarify whether a consumer who accepts a refund from an agent, for example one charging an upfront fee, loses their right to redress.
We pointed out that any customer who accepts a refund from, for example, John Lewis, is specifically advised that this does not change their consumer rights.
So, for example, can a vendor dissatisfied with an online agent be advised that if they accept a refund, they waive their right to redress?
The issue appears to be particularly complex in the world of estate agency, according to TPO.
Sporle told us: “If a complainant is properly due a refund of a fee or any other monies, then that should be honoured.
“An agent cannot say to a consumer that by accepting money that is rightfully owed to them, then they accept in full and final settlement of a complaint and waive the right to take their complaint to TPO.
“For example, we might receive a lettings case where an agent has attempted to say to a landlord that if they accept the money offered (often deposit monies agreed with the tenant) then they do so in full and final settlement of the dispute the landlord has with the agent.
“This is wrong if the monies are owed to that party.
“In this case, we will accept the complaint.
“However, if in response to a consumer asking for a fee refund, the agent is saying “We are due our fee in full, but as a goodwill gesture, to resolve the dispute, we will make an offer of £X”, then, if the complainant accepts this, TPO will not take on the dispute and would consider it resolved.
“While the consumer may see this as a partial fee refund, it is not.
“The fee is due in full and there is a separate goodwill offer for perceived service failings.
“By accepting the dispute has been resolved, there is no right to pursue through TPO.”
We have asked TPO whether she will be issuing advice to consumers and agents about the acceptance, or otherwise, of refunds – an issue for letting agents, but also for online sales agents charging money upfront.
An excellent point of clarification from The Property Ombudsman – confirming the generally accepted definitions of those terms by nearly all estate agents.
It really does matter that we ( estate agents, consumers and regulators) all operate with a common agreed set of definitions for important matters such as defining a “sale”.
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I wonder what Katrine therefore makes of the claim “we sell a house every 30 minutes”. We sell (or exchange / complete) or we sale agree (it goes stc)?
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HI Andrew,
It’s got to be “Sale Agreed” hasn’t it?
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Simon, I agree.
If the context of the PB advert is that they agree a sale (STC) every 30 minutes, then it should read “we agree a sale every 30 minutes”, whereas if it refers to a completion / exchange of contracts then it would be appropriate to say “we sell a home every 30 minutes”.
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So where does the advertisements stating … “we sell” fit into the definition, which is the claim often seen? The public perception is what matters (the intended target), not what is correct definition.
How about these types of claims in adverts should show (as comon with ratings) ratio of “sold” completed contracts, which is what matters at the end of the day, to those listed?
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While the majority of estate agents know or should know the difference between sold and STC ( or any of the other ”STC” combinations used) not all do. I took this up with an agent in Newton Abbot, Devon when he put a sold slip up very quickly and when questioned he said he always did that as the sale would eventually go through and I did not know what I was talking about. As expected with that attitude the sale fell through , his firm was replaced by another and eventually it sold
The main problem is the lack of understanding by the public of the word sold. How often have we heard a friend or neighboiur say ‘….sold very quickly’. When asked have contracts been exchanged then the answer is no. We as a profession need to constantly keep educating the public. When buying properties for clients I always explain in considerable detail the different stages and the most important one for them is that it is not theirs until contracts are exchanged. One even said to me he had signed his contract so that was it he had bought it! Not so until exchanged.
Perhaps we need an aide memoire approved by for example the TPO, RICS, NAEA etc that is simple terms on one sheet of paper explains what the various stages mean? It may help some agents as well!
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Quite right Nick; there should be standardisation and clarification from NTSEAT and any relevant case law.
The Town and Country Planning Act adds light on the matter too. As all agents should know, if you want to put a sold or sale agreed slip up, it must have sstc to indicate it has not yet exchanged contracts (otherwise it becomes an advertising hoarding and requires planning permission).
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Who hasn’t heard the phrase … “Sold” board gets instructions and really is the reason they are used by agents. This same principle is why agents on TV use it in marketing, often to mislead the intended audience, that they are better than they really are?
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““In my view, ‘Sale Agreed’, ‘Under Offer’ and ‘Sold Subject to Contract’ all propose the same”
Is it just me here – or does The Property Ombubsman’s personal view mean Jack?
In all aspects of our business – previously under the rules set out in PMA1991, more recently under the terms of CPRs2008 – we are required to provide information that is neither false nor misleading; and that in all cases the benchmark for “misleading statement” is “…one from which a reasonable person would be likely to make a false inference…”
Yet Agencies are getting away with murder day in; day out – as this article clearly demonstrates.
From what I can see, Estate Agents claims such as “We ‘sell’ a house every (insert number here)…” doesn’t appear to be within the scope of TPOMb to act upon.
Of course, that’s just “in my view…”.
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She told us: “All estate agents use different terminology to define the status of a property and The Property Ombudsman’s Code of Practice for Residential Estate Agents does not define which term agents should use.
“However, paragraph 7d says ‘any board you do erect must be appropriate for the occasion’, meaning agents have an obligation to ensure it is correct.”
This is at odds with previous guidance and actually a catch all if TPO wants to use it. There is no doubting that agents do now commonly use SSTC as a “catch all” for convenience but they do not mean the same? They were supposed to be used at each following stage of a potential sale.
Under offer: Offer submitted but not agreed (various reasons). Can fall through.
Sale agreed: Offer accepted but contracts not issued (varied reasons but primarily vendor dosen’t want sold and put another buyer off, there is a risk it may still not proceed). Can fall through.
SSTC: Contracts now issued. This was originaly intended to be once confirmation had been confirmed that the buyer was in a position to proceed and conveyancer had now been instructed. Many a conveyacer will not agree to contracts until funding (mortgage) is in place. Should be unlikely to fall through!!!!
Exchanged: As it says, but it could still fall through!
SOLD: No, not when contracts had exchanged but sale had completed.
While this may seem obvious to agents, those read here that are not agents may see the difference and raises the point of TPO ‘any board you do erect must be appropriate for the occasion’ (gottcha as and when it pleases!). Agents used to and some still do today, the majority don’t! I doubt in court anyone would disagree with what was old practice, is correct. Interestingly some web sites offer all these options.
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>Is it just me here – or does The Property Ombubsman’s personal view mean Jack?
Well I’m sure The Property Ombudsman’s opinion is important in the jurisdiction they have been provided with but it could only be classed as persuasive to a Judge in one of the Higher Courts in anything outside their jurisdiction.
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If you are a little quackers and don’t understand the whole property law process, here it is. (ducks)
Person ‘a’ views a property, likes it and makes a conditional offer (subject to contract, finance, survey etc.)
Agent submits offer to seller (‘b’) having asked for details of/ or actually checked ability to proceed (TPO requirement)
Negotiations may or may not take place dependent on the status and level of the offer and the buyers position/ timescales etc.
The seller ‘b’ accepts the conditional offer (subject to contract, finance, survey etc.)
The agent (if they have not already secured them) requests solicitors details and asks ‘a’ if they wish to continue marketing. The agent must also inform them that they will have to mark the property as sstc in any case to comply with CPR regulations and NTSEAT guidance.
The property, at this point, must be marked as either under offer stc, Sold stc or sale agreed stc dependent on local practice (practice and usage varies around the UK) as an offer stc has been made and accepted (stc is often dropped and is a widely accepted norm in the advertising of property*).
Marketing may continue (at the sellers request) but, if it does the prospective buyer ‘a’ must be informed of this under TPO guidelines or, active marketing will cease.
A memorandum of sale is issued now or, as is common practice with some agents, after the survey has been completed and any financial offer issued.
All and any offers (no matter how wild or silly) must still be submitted (and be able to be submitted) unless the seller instructs the agent in writing that no further offers are to be considered or submitted (1979 Estate Agents Act – as amended)
*There is a subtle but important difference between referring to a property as being ‘sale agreed’ and the advertising of the fact that an agent “agrees a sale” or ‘sell a property’ every ‘x’ minutes. One is generally taken as having a sale agreed on in subject to contract but which has not yet exchanged and, the latter two clearly imply (or are used to imply) that a property completes in that timeframe.
Edited.
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Chris,
Doesn’t look much like law to me, looks like your opinion of it.
Of course you are entitled to your opinion.
Personally I think if I had to choose I’d put money on the Property Ombudsman’s opinion being the one that a Judge would back.
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A property is sold (legally binding) on exchange of contracts (not completing is the start of a whole different scenario), so most of the other interpretations relate to compliance and best practice for Estate Agents. I think a Judge would apply contract law in the first instance.
So to avoid any pre-sold anxiety doubts/syndrome I would suggest the adoption of the term “NEARLY SOLD” to add some clarity to boards, websites and Supreme Court cases.
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Amazing how many estate agents on here and we have to debate such simple terms.
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It’s also amazing how many agents don’t know the law.
I agree, much of the debate above is semantics however, when terms are being banded about which may well be used to deliberately mislead consumers or investors or, disadvantage competitors, it is at that point when lawyers become involved and subtle word differences can have profound and costly effects.
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