If you contact an agent and make an offer for a property, you want to know that your bid has been passed on to the vendor.
So, what if you found out that the agent hadn’t shared your offer because you hadn’t been “approved” by their in-house mortgage broker?
This is Money recently revealed that some agents are reportedly engaging in this practice, known as “conditional selling”, even though it is against the law.
Often, agents engaging in this activity do so because of the lucrative commissions they can earn from mortgage advisers – even though it might not be in your or the vendor’s best interests.
Read on to find out more about “conditional selling” and why you don’t have to use an in-house mortgage broker when buying your next property.
Although an illegal practice, “enforcement is non-existent”
In 2023, Property Industry Eye reported that the National Trading Standards Estate and Letting Agency Team had investigated cases of agents allegedly failing to pass on best offers because of commission fees earned. However, they warned that this type of illegal behaviour is likely to go undetected.
Many estate agents receive referral fees by recommending mortgage brokers, solicitors, surveyors, and other third-party services. It’s these fees that Trading Standards claim is causing this type of illegal behaviour.
Essentially, estate agents are failing to pass forward an offer for a property in cases where the buyer has not been “pre-approved” by their in-house mortgage broker. They are all but forcing buyers to use their broker, often because it will generate a commission or kickback.
If you refuse to be qualified by an estate agent’s mortgage adviser, you could be unfairly losing out on homes you offer on.
Paula Higgins, chief executive of HomeOwners Alliance said: “We have always believed that estate agents should not be able to make money from both the buyer and the seller in the same transaction. There is a real conflict of interest.
“Although an illegal practice, enforcement is non-existent so estate agents get away with this”.
Conditional selling is illegal
It’s important to remember that “conditional selling” – or being forced to meet with an in-house mortgage professional – is against the law.
Estate agents who don’t pass offers to vendors for these reasons are in breach of their professional duties and can face sanctions, according to James Munro, senior manager of the National Trading Standards Estate and Letting Agency Team.
He said: “We view this practice as unacceptable and are aware that it is a significant problem that can cause considerable financial loss and emotional turmoil to buyers.
“The practice often goes unnoticed and unreported, as offers on homes may be turned down for lots of reasons and most prospective buyers quite rightly assume that, if an agent tells them their offer has been rejected, the process has been honest.”
You can use any mortgage broker you wish
The key takeaway here is that you are well within your rights to say “no” if an estate agent asks if you want to speak to their in-house mortgage adviser.
You can use a broker of your choice. So, if you have spoken to an Altura broker and your mortgage has been approved in principle, share that information with the agent. They should then put that forward to the seller along with your offer.
An estate agent is acting illegally if they do not put forward your offer to their client, so don’t feel pressured to use any services they recommend – this might also be a solicitor or conveyancer, or an insurance broker.
Report the estate agent if you believe you have been affected by conditional selling
If you believe that an estate agent has not put forward your offer because you chose not to use the services they recommended, or a seller has accepted a lower offer because a buyer is “pre-approved”, there are steps you can take:
- Report it to the Citizens Advice Consumer Service (England and Wales), advice.scot (Scotland), or Consumerline (Northern Ireland). These organisations can refer the complaint to the local authority Trading Standards team.
- If the estate agent is registered with either The Property Ombudsman or the Property Redress Scheme you can also report the agent to them. These bodies can investigate the complaint and award compensation.
Get in touch
If you are looking to buy a property and you want to put yourself in a great position, speak to one of our mortgage professionals.
We can help you to get your borrowing approved in principle, meaning you can demonstrate you’re ready to move quickly if your offer is accepted.
To find out more, email [email protected] or call us on +44 (0) 20 3411 0079.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
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