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Estate agents are charging buyers thousands of pounds in ‘reservation fees’ to take properties off the market.
Analysts say booking fees are rising as real estate agents increasingly adopt “modern auction methods”.
The “modern way” allows buyers to bid on properties online and finance their bids with a mortgage.
But the Property Relief Scheme (PRS) says it has also noticed an increase in ‘reservation agreements’, where agents charge buyers a commission to secure an offer.
These fees are lower than those charged in the auction world, ranging from £500 to £2,000 on average.
Sean Hooker, head of relief at PRS, warned that these types of fees “could be exploited” if the government did not step in and regulate the agencies. This is a bill that the government was told by Lord Best to introduce five years ago.
Mr Hooker told the Telegraph: “My concern is whether these fees are transparent enough and what are the ‘legitimate’ reasons for a buyer to walk out and get this fee back.
“If anyone should keep the commission, it’s the seller. But I suspect some agents are taking this fee instead. That’s why there’s clear guidance and rules around it. is necessary.
“These types of commissions are technically ‘discretionary’ and therefore not legally recognized, so agents can charge as much as they want.”
Hooker said there are fewer complaints about reservation contracts because buyers either go ahead with the sale or accept that refunds are non-refundable. Last year, the TPO consulted him on 36 cases and he made 9 decisions regarding disputes.
The sales process is even more opaque for those bidding on properties put up for auction. Paula Higgins, from property adviser Homeowners Alliance, said she was “very concerned” that the fees charged on these types of transactions were “too high” compared to the property value.
She told reporters: “I’m hearing more and more stories of people who don’t get this fee back. The seller doesn’t pocket it either. The real estate agent takes it and it’s very expensive.
“The more non-refundable commissions an agent receives, the more profit they make over sales commissions.
“Five years ago, this was particularly prevalent in the Midlands. But now it’s a national problem.”
Booking fees of between £500 and £1,000 are common in the new build sector, but these are often deducted from the entire purchase price and refunded if the sale falls through.
Yesterday, the Level Up, Housing and Communities Committee questioned industry commissioners about the home buying process and the issue of booking fees was raised. Watch here.
Kate Faulkner, one of those who spoke at yesterday’s committee, has been calling for regulation of estate agents for many years.
She said: “A lot of these problems exist because agents don’t have to be qualified and aren’t regulated. It’s just ridiculous.
“Everyone else is regulated, like brokers and lawyers. But agents are not.”
Trading Standards last week revealed that some estate agents are “manipulating” property sales by insisting on sellers’ contracts (often without their knowledge), and that buyers have already paid independent agents and secured mortgages. The company announced that even if it is a partnership, it is still necessary to obtain financial qualifications from a real estate agent. Decided in principle.
A spokesperson for the Department of Equalization, Housing and Communities said: “It is completely unacceptable for real estate agents to defraud consumers.” Real estate agents, including real estate agents, should already be part of a redress scheme so that buyers and sellers can complain when they receive poor service.
“We continue to work with the industry to improve best practice across the estate agency industry, and the measures in the Leasehold and Freehold Reform Bill and the Tenancies (Reform) Bill will help improve standards across the board. I guess.”
Real estate agents are “manipulating real estate sales” by not communicating offers to sellers