Connells has come under fire for allegedly trying to pressurise a buyer at a Barnard Marcus branch into using its legal and financial services.
The purchaser already had a mortgage offer and wanted to use his own solicitor, but said that Barnard Marcus tried to ‘strong-arm’ him into using its own services.
After he had made the offer, he says he was offered a £5,000 discount if he used the in-house services.
The accompanying email said: “The seller requires a secure buyer with as many positive securities as possible, for example using our legals and financial services… Basically you are required to speak to my financial adviser.”
The Sunday Times ran the allegations under the headline “Beware estate agents’ hard sell tactics”.
The story also claimed that Barnard Marcus operates a list of ‘head start’ buyers – people who sign up for financial services and have a mortgage agreed in principle through the firm. The Sunday Times says it was told by one Barnard Marcus branch: “When we take on a new property for sale, people on the list get to see it first.”
The OFT said: “The Estate Agents Act clearly states that agents must not discriminate against potential buyers because they don’t want, or might refuse, to take services.
“For example, they must not refuse to give information about a property to these buyers or take longer to send property information to them.”
Connells is owned by Skipton Building Society. The Sunday Times claims that it has a panel of only 15 lenders, and that it would be possible to get a cheaper mortgage elsewhere by using an independent broker.
Barnard Marcus told the paper that it apologised if any buyer felt any undue pressure to use its mortgage and conveyancing services, and stressed these were entirely optional.
It added: “It is common practice for our branches to have lists of buyers in a position to proceed, some of whom are cash buyers, some of whom are head start card holders and some of whom have mortgages in place with other lenders and mortgage providers.
“This is common practice across the industry.
“This does not mean that other buyers do not get to view the properties, and it is against company policy to give priority to those who have a head start card.”
Ombudsman Christopher Hamer said Barnard Marcus is not the only agency running a 'head start' scheme.
He said: "Such arrangements have come to the notice of The Property Ombudsman in the past. The agent is both legally required and contracted to give the best service and get the best deal for the seller. There is no contractual commitment to the buyer, although the agent has to act in a fair and honest manner.
"The stated merits of such schemes are that they allow the agent to meet his legal requirement to do his best for the seller by ensuring the smoothest possible transaction for the seller through closer control of the transaction. However, he still has to pass on all offers, whether or not the buyer takes advantage of the preferential buyer package. The agent does not have to disclose earnings he makes from introducing the mortgage, insurance, or conveyancing service but he does have to disclose to the seller what the package is going to cost the seller at completion through funding the cashback or price reduction. Any buyer is free to negotiate a similar discount directly with the seller if they so wish because they are not using the preferential package.
"I have received complaints, but only from vendors. Provided the agent has clearly disclosed costs in advance of the sale process starting and they have been agreed in writing with the vendor then there is no problem with it. The contract is transparent and upfront, as required in my Sales Code of Practice. I did find in favour of the complainant on one occasion because the agent did not disclose the cost of the scheme until the day of completion, when it was too late for the seller to pull out. In that case, the agent was instructed to reduce his commission fee by 50%."
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Comments
Thanks Jonnie, put far better than I!
@Puzzled Of Tunbridge Wells,
First off, providing your place is worth no more than about £330,000 then id be very pleased to act for you for £5,000 trouble is assuming you are in Tunbridge Wells you are miles away from me so I couldn’t be much use to you but if you weren’t, I would and could.
Anyway lets assume I did act for you then id make sure anyone that makes and offer on your house has been ‘financially qualified’, its part of the responsibility id have to you and it ensures that we (being me and you) don’t enter into negotiations with a buyer who is un likely to be able to actually pay the money, (you will be suprised how many people dont get this bottomed out) happily for me some of these buyers actually like our chap here and without any strong arm tactics decide to get him to set it all up and we earn fees from the lender and relevant insurance companies etc, on average this is about £1900
However, like the vast majority of EA’s we do not disadvantage buyers that don’t want to use us for the mortgage / use someone else, but we offer the service.
I hope that gives you an insight into what really goes on, I feel this ‘Snotty’ chap and you aren’t getting on so well and he’s not done the best job of explaining it, in fact between me and you I think he’s just enjoying a scrap.
Jonnie
Its just that sort of attitude that give the public such a bad name, grow up Snotty.
5K fee only so perhaps not such a good house then, very low value for the area, is that why you are so offensive, feel inferior??
Smiling now about all the extras your agent will have made that you know nowt about, brilliant!! 5K a good one will have made double that from you!!! Hah hah!! Loving it now!!
Puzz of Snotty Town(?) wrote: 'Oh sorry Puzzled I forgot we are a charity not a business, will revrt to doing everything for you lot for nothing from tomorrow.'
Are you nuts or daft? You are a business that charges me £5k for selling my house. I don't expect you to be indulging in shenanigans in the background - filtering possibly good buyers so you can make a commission out of selling them a mortgage! Who said anything about a charity.
People like you are the reason your industry has such a poor reputation.
Oh sorry Puzzled I forgot we are a charity not a business, will revrt to doing everything for you lot for nothing from tomorrow.
Puzzled, nothing mockm outrage from me, they just got caught!
And yet some of you come up with mock outrage when your industry is criticised.
The industry reputation as a nest of vipers seems well merited.
Our local Sequence branches are not showing EPCs on their websites or Sales particulars! Tut Tut
Good plan, just didn't sell it well enough, the second mistake then, getting caught!
You've only got to let the property owner know of such underhand tactics and they might just dis-instruct any agent who let's face it is operating like most cowboy outfits.
They always of course deny any wrong doing but they would, wouldn't they?
It goes on all the time - as the previous comment - the AM gives you all real hard time and the purchasers are pressured all the time
Nothing new here then used to happen all the time when i was with Sequence...all part of the same company! they call it the complete sale and we used to get battered by the area director for not doing it