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%."