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It is alleged that conditional sales practices remain a nationwide problem among real estate agents.
A report in the Financial Times has revealed that conditional sales by UK estate agents are actually on the rise, with estate agents warning that this is not an “isolated incident”, as individual branches have claimed when they challenged it.
Mortgage advisers and brokers have once again highlighted the issue of conditional sales at some of the major estate agency chains, particularly around agreements in principle and the promotion of the use of in-house brokers.
Brokers such as Lewis Shaw of Mansfield-based Shaw Financial Services and Jamie Lennox, director of Norfolk-based Dimora Mortgages, say their clients are receiving threats from a range of high-profile estate agents.
The threat is that unless the customer uses an in-house mortgage adviser and obtains an AIP, the seller will not go ahead with the sale.
Mr Shaw said: “I don’t know if it’s because estate agents are making less money each month and are relentlessly pursuing additional income streams, but I’ve seen clients come back to me saying they’ve been told to negotiate with their estate agent to get an AIP.
“This is happening despite myself and my fellow brokers being fully qualified and regulated mortgage brokers who already have fully valid AIPs in place.”
He said when he raised this as a complaint he was told this conditional sales practice was an “isolated incident.”
“But that’s not the case,” he added. “If you look at any forum or join any mortgage broker group on Facebook or LinkedIn, you’ll see the names of the same real estate agents pop up over and over again all across the country, and Spicer Hart is one of them.”
“Brokers say they have received calls from clients who have been told by real estate agents that the seller will not proceed unless the AIP is completed with the agent’s in-house broker, even though they have already given their client a valid AIP.
“Sometimes we’re told it will take twice as long to sell, or that vendors are pulling out, but the result is the same – it just puts more pressure on the client.”
He added: “I’ve spoken to brokers in Wales and East Anglia and they’ve all had the same experiences with the same companies, so how can this be an isolated incident?”
One such agent is Norfolk-based Lennox, who told FT Adviser he was helping a client secure a property near Dereham, Norfolk, but that the agent used the local branch of national estate agency Spicer Hart to facilitate the sale.
“The agent said that the seller had asked my client to get an AIP again from their in-house broker, and the broker told my client that they could not view the property without an AIP,” Lennox said.
“According to my client, the AIP they did in Dimora was ‘ready to go’ but the agency was delayed, so I emailed my client to send it to them and we went to Spicer Hart ourselves.
“They ended up viewing the property without an AIP from an in-house provider and their offer was accepted by the seller.
“It really felt like the agents were just dragging their feet.”
Asked what advice Spicer Hart was giving to agents across the UK regarding conditional sales, a spokesman said: “Conditional sales are not acceptable to us and we take allegations of this nature extremely seriously.”
“We have strict procedures in place to prevent this from happening, including mandatory training for all real estate agents and mortgage brokers on the rules around conditional sales.”
“If issues are found, we will conduct a thorough investigation, provide retraining and take disciplinary action against those who flout the rules.”
The spokesman was also asked whether there were incentives for branches to upsell or enhance packages.
They added: “Real estate agency managers have absolutely no incentive to recommend mortgages at the point of sale and are actively discouraged from doing so.”
“Our internal data has found no evidence to suggest that a disproportionate number of buyers are receiving mortgages through us – in fact quite the opposite.
“We expect our sales representatives to conduct themselves in an appropriate and professional manner at all times.”
There have been some campaigns designed to give agents control over contingent sales made by real estate agents, but so far they have had limited success.