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Conditional selling? Brokers share their views

ended 08. December 2023

Following a post on LinkedIn by Malcolm Davidson of Hull-based broker, UK Moneyman, on Thursday, in relation to an incidence of possible conditional selling (see screengrab), Newspage asked brokers for their thoughts, below.

 

31 responses from the Newspage community

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Malcolm Davidson
Director at UK Moneyman
It's quite incredible that this is still going on after all these years and I'm growing weary of calling it out. The FCA have been advised (again) and if they want to talk they know where to find not just me, but the dozens of broker peers who raise this issue on a regular basis.
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Elliott Culley
Director at Switch Mortgage Finance
A common occurrence unfortunately which needs to be taken more seriously. The buying process is already stressful without added pressures from some estate agents tactics. Will anything change? It seems unlikely, all to the detriment of the buyer.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
It is pressurised selling and certainly not Consumer Duty. They haven't outright said you have to use their broker to buy the property, but it is heavily implied. You can be certain that the vendor has never asked for the buyer to use the in-house broker, just wants it verified to ensure the potential buyer can get a mortgage or has an agreement in principle. This is an awful sales technique just to force people into using their in-house brokers to maximise their profits. This should not be allowed and technically is not allowed, but the same agents get away with it all the time.
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Mike Staton
Director at Staton Mortgages
Wow, this is conditional selling at its finest. Let's face it, this is more than likely a message from a young and inexperienced negotiator of an established corporate estate agent, who is being pressured by their highly strung area manager, who didn't have the balls or the skill set to set up their own business, so they can get a pat on the back at their over-hyped monthly corporate meeting. If we want to stamp out conditional selling in this industry then you need to stamp out the crooks who have climbed up the corporate ladder by any means necessary. Why not bring licensing into estate agency and qualifications, too? And if you are a broker reading this that knows they get their diary filled this way, go back to whatever dead-end job you did before, the industry doesn't need you.
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Rohit Kohli
Director at The Mortgage Stop
We're seeing more and more examples of this where estate agents, particularly the larger chains, are trying to use conditional selling. The whole estate agency and letting sector needs better regulation. In fact any regulation. It needs to be brought in line with the consumer duty obligations placed on other parts of the home-buying process.
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Jack Tutton
Director at SJ Mortgages
This continues to be a common theme, unfortunately, hiding behind the fact that the vendor wants everything in-house isn't an excuse but is something that we often hear. I do not know how this is continually allowed to happen given the recent regulatory changes, treating customers fairly and the introduction of consumer duty. There doesn't seem to be any consequences for their actions even though the client could get the wrong outcome, particularly if the in-house broker worked from a restricted panel compared to a broker that had access to the whole of the mortgage market.
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Craig Fish
Director at Lodestone Mortgages & Protection
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Riz Malik
Independent Financial Adviser at R3 Wealth
In 2023, the ability to freely choose who you do business with is a fundamental expectation. Engaging in practices that lack voluntary choice reflects a state of desperation, employs coercive methods, and is deeply reprehensible.
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Simon Bridgland
Director at Release Freedom
This isn’t a surprise, it’s been happening since estate agency existed with in-house advisers. It's the worst kept secret going. It’s quite surprising how stupid the agent has been to actually put it in writing. Shame on you Spicerhaart. Letting these practices go on is a reflection of the management within a firm. The tactic has been used at scale by so many agents over the years, some subtly, some like this brazen attempt to “help the buyer”. Makes my stomach churn. The same tactic is also used to sell conveyancing services. Spicerhaart should get a thick pad of P45s ready.
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Michelle Lawson
Director at Lawson Financial
This type of practice is just why agents get such a bad name. There is no evidence at all that any transaction is 'smoother' using an in-house broker. In most cases it can be a distinct disadvantage due to conflicts of interest if the agent is selling the property and the broker is arranging the mortgage. It would be interesting to know if the vendor is fully aware of this practice (most aren't) or whether this is an example of typical corporate target desperation. It is illegal to condition the sale of a property on using in-house services and downright foolish to put this in writing. We all know it goes on as it has been going on for years and it needs to be stopped once and for all as this is not customer service. The only winner here is the agent's pocket. The sooner agents have to have qualifications/licenses and some sort of regulation, the better, as they are the only ones in the property chain that aren't.
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Katy Eatenton
Mortgage & Protection Specialist at Lifetime Wealth Management
Unfortunately when estate agents are seeing their commissions drop, they are going to push harder on the add-ons. I educate my clients how to deal with this very early on in the process so don’t get affected by it. It’s bad practice and not worth the aggro as they only get about £75 per lead they pass to the in-house adviser anyway. Why risk a sale or losing a vendor?
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
The FCA needs to just stop property sales having a conflict of interest as obvious as this is. The agents work for the seller but they work with an adviser that’s supposed to be looking after the buyer. But they both normally work in the same office and don’t speak to each other? I doubt it, don’t you? Why not have a rule of having three preferred partners to work with that the client decides on? Be transparent!
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Ken James
Director at Contractor Mortgage Services
As a broker, it’s damn frustrating to have an unscrupulous estate agent. You know how it goes: you have a decision approved for your client, the estate agent then wants them to speak to their own in-house broker to validate them, alarm bells start ringing. Some agents are brilliant and then there are those who will lie, deceive and even sell their own mothers to ensure that they get the sale. You must use our mortgage broker if you want to put an offer in, the sellers won’t accept an offer if you don’t, your offer is too low we can’t put in offers if they are not asking price, oh and don’t forget to use our solicitors as we can ensure it’s all in house and the seller wants this. Lies told time and time again but seemingly they appear untouchable. We look to educate our clients that they have a choice and not to feel pressured but invariably when they fall in love with a property they can be pressured to use all the services agents offer.
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Justin Moy
Managing Director at EHF Mortgages
What is disturbing about this is the estate agent has knowingly prayed on the vulnerable buyer, giving them no other option but to play along or lose their dream home. Whether this comes from company or individual level, I have never heard any vendors specifically request the use of the in-house adviser, so to see this used as justification every time suggests it’s pushed from a higher echelon.
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Imran Hussain
Director at Harmony Financial Services
This another example of those involved in property transactions applying undue pressure on ordinary people who are simply looking to purchase a home. No vendor in their right mind will stipulate that you use an agent's in-house broker; they just want their house sold for the best price and most people don't wish to use a person who knows how much they can borrow in the same room as the person who is trying to get the most amount of money out of them for a house they are selling. How many times have we heard that it's a one-off and branch-specific? The culture of trying to get every last penny out of a transaction in this manner needs to be called out.
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Kylie-Ann Gatecliffe
Director at KAG Financial
This is without a doubt another episode of conditional selling. Will anything be done about it? Probably not. We have seen this for years, and unfortunately as estate agents have been quiet, their aggressiveness has ramped up. We have challenged many agents this year on their communications with our clients and how they have tried to force them into using a broker they didn't want to. In no other industry would this be allowed to happen. More than ever Consumer Duty needs to be taken seriously and estate agents should be regulated much more tightly than they are. Consumers find buying and selling a home one of the top ten most stressful life events, so why are certain firms allowed to make this even worse for clients by putting them under even more pressure? Clients build relationships with their broker, and trust them with their finances, so expecting them to drop this and go with a complete stranger just to boost the estate agent's commission is bang out of order and needs to change.
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Darryl Dhoffer
Founder at The Mortgage Geezer
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Rowan Frayling
Managing Director at J Finance
I see agents have gotten wise to the issue of them insisting on in-house services and pivoted to now saying it's the seller's request. I can almost guarantee no seller has ever requested this, nor would they welcome selling to someone with a lower offer just because they're using XYZ Mortgages not ABC Mortgages. This absolutely has to stop, and buyers be allowed to exercise freedom of choice.
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James Bull
Mortgage Broker at JB Mortgages
This is an unfortunate reality of the world we live in. It is dog eat dog and you win some you lose some. Tactics like this have been used by estate agents since the year dot, there isn't a lot you can do about this as a broker, frustrating as it is.
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Gary Bush
Financial Adviser at MortgageShop.com
Estate Agent firms, large and small, have been carrying out these tactics, in our knowledge, since the early 90s. Action against firms for implementing these conditional sales scams is long overdue. Pressganging property hunters into using estate agent-related mortgage broking and legal firms demonstrates a general lack of care to customers. Everyone, after all, has the right to search and select their own advice arrangements. To hear that an estate agent negotiator has confirmed that a buyer's offer on a property won't be put forward to sellers as they aren't using the firm's additional services is getting more and more common. Something needs to be done to stop this rough practice.
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Steven Hargreaves
Mortgage and Protection Adviser at The Mortgage Co
This is just one of the reasons estate agencies give themselves a bad name. After nearly 30 years in the industry, agents have consistently tried to use these tactics, with their in-house brokers who are oftewn not whole of market advisers, have a restricted panel of lenders, restricted protection panels, and little experience. There is one large estate agent that uses these tactics on a regular basis, which is frustrating when the advice and products in many cases are inferior to a whole of market mortgage and protection adviser. You would think The Property Ombudsman would be taking a keener look at these estate agents.
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Charles Breen
Founder at Montgomery Financial
This is blatant conditional selling. It is an attempt by them to steal the freedom of choice that any consumer has and is a blatant play on the emotions of buyers, and all of this for maybe £50 commission at most. It's absolutely disgusting. The more that this is called out, the better. But the real issue is, when these blatant acts are caught and called out, what action does the FCA and Trading Standards take? We never hear of any punitive action being taken against these maligned actors in the industry. You can have as many rules as you like but without enforcement and punishment they are as useless as a chocolate tea cup.
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Gareth Davies
Director at South Coast Mortgage Services
This is the oldest trick in the book and somehow it’s still peddled out. Pretty much everyone within the industry knows this is nonsense, yet still it continues. I guarantee the vendor isn’t even aware. At a time when every other trade involved in house sales is regulated, how can agents not be? Utter madness.
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Luke Thompson
Director at PAB Wealth Management
Effectively telling a customer that the only way to get the house is to use the estate agent's services is conditional selling in my eyes. I would also be very surprised if the vendor has confirmed to the agents they will only deal with someone who is using in-house services. On the other side of this though, it does show the issue with the English and Welsh housing market as a whole. There are far too many timewasters when it comes to buying and selling houses and until such a time as we deal with that by making sure people are fully proceedable before making an offer on a property, estate agents are going to continue to conditional sell. In my eyes it should be a legal requirement that to make an offer on a property you should have a mortgage underwritten up to the point of valuation. This would cut a whole lot of these kind of situations out.
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Steven Morris
Advising Director at Advantage Financial Solutions
What Mike Staton said. We all know how these absolute slugs operate. These companies' mortgage services are low quality and have about 12 lenders on panel between the lot of them. They have nothing positive they can actually offer clients, so they just force clients into using them. They belong in the bin of financial services history along with endowments and PPI (mis)sales.
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Austyn Johnson
Founder at Mortgages For Actors
We know it happens, we also know that the 'star' advisers do it, too. Personally I think there should be a blacklist for this, but it won't happen. There should be a printed FCA-regulated document that is given out by the estate agents as part of their IDD, and the Estate Agents Act should be clearly printed at the top. All I would say is, if you have to push this hard to get leads, you are doing something wrong.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Section 9c of the Code of Practice for Residential Estate Agents states: 'By law you cannot make it a condition of passing on offers to the seller that the person wanting to buy the property must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide related services to them.' This message from the estate agent would be a breach of that in my mind, there is obvious discrimination taking place. If the agent's customer has made some form of request that they only want to deal with buyers using the agent's in-house adviser, then this would need to be in the form of a stand-alone letter or email from the client specifically giving that instruction, something tucked away in the agents T&C's won't cut it, according to Trading Standards.
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Elliott Benson
Owner at Sett Mortgages
Oh dear! And I thought the email we saw earlier this year stating an offer had to be re-submitted to a vendor as the buyer was no longer using the in-house broker would be the most cringe-inducing piece of correspondence of 2023 but this person has gone the extra mile and more than likely will now be the winner. No vendor in the history of the world has ever been bothered or even asked who their buyer is using. This text reads like the sender is trying to describe how conditional selling works and becomes more embarrassing the further you get through it. Luckily most brokers will be able to advise their client that this is illegal and that they can use whoever they like. It's just a shame some clients will be forced into using an adviser they don't want to because they will take this as gospel.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
I recommend that Malcolm turns up to the meeting with his client and see how red the face turns of the in house broker.
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Matthew Jackson
Director at Mint FS
The fact that a member of staff at this large corporate estate agency has the confidence, or arrogance, to put in writing to an applicant that they intend to conditionally sell this property tells you how rife this practice is. If this is the approach of a negotiator, it is clearly the modus operandi of the firm, trained to their staff and runs through every level of management. More worryingly, they are not at all frightened of the consequences of breaching The Estate Agency Act and see the regulator as toothless. Until one of these firms is made an example of with a fine of significant proportions they will continue to stick two fingers up to the law.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It is about time the Property Ombudsman and FCA adopted a firm stance on this matter; otherwise, the firm in question will issue a standard response, and the issue will be swept under the carpet. The FCA must assert itself more strongly, particularly in light of the introduction of the FCA's consumer duty. It raises questions about where this duty applies when clients are compelled to use a specific broker. There is a pressing need for improved public awareness, and it should be mandatory for Estate Agents to include a warning in their marketing or literature stating something along the lines of "You are not obligated to use our mortgage/financial services." Without such measures, this practice is likely to persist.