View more on these topics

Investigation: Estate agent hard sales tactics harm consumers 

Real-Estate-Agent-House-For-Sale-London-700.jpg

Estate agents’ pressured sales tactics are harming consumers, stopping them from getting the best deals and even causing house sales to collapse, Mortgage Strategy has found. 

This publication has found dozens of cases of customers across the UK being pressured or ordered to use estate agents’ in-house mortgage and conveyancing staff, sometimes before being allowed to view or put offers in on houses.

Many buyers fear that if they use rival services they could lose the house.

Mortgage brokers mainly link the practice to branches of large estate agents such as Countrywide, its brands Entwistle Green, Palmer Snell and Bairstow Eves, as well as Connells, its subsidiary Sequence and trading names Fox & Sons and William H. Brown. 

However, some smaller estate agents also put pressure on customers in the same way, according to those interviewed by Mortgage Strategy. 

In-house pressure

Earlier this month we reported that Palmer Snell’s Taunton branch pressured two customers of mortgage broker White Financial Services to use in-house mortgage staff before viewing houses. 

Following the story, nearly twenty people have now come forward to report similar accounts of pressurised selling – too many to list here. 

The Clayton Hulme Partnership director Chris Hulme says: “It is going on left, right and centre. 

These accounts reveal how sales tactics can have profound effects on both housebuyers and sellers.

Buyers

Hard sales tactics affect housebuyers as it can lock them into using advisers with restricted lender panels, meaning they might not access the best mortgage deals.

For example, Connells and Countrywide both operate restricted panels, and would not reveal their lenders when asked.

London Money director Martin Stewart says: “You are potentially stopping a consumer talking to a whole-of-market broker and you end up speaking to someone with four lenders on the panel.”  

If consumers feel locked in to using estate agents’ financial services this can also mean they pay more than they would by using rival services.

Some brokers say the total fee cost for consumers can be hundreds of pounds more expensive than market norms.

William H. Brown was brought up several times over an incentive where homebuyers get a £1,000 discount on the property price if they use the firm’s preferred mortgage broker and conveyancer. 

Warwick Home Finance mortgage broker Richard Scott says: “The last client I had that was offered this by a local WHB office was actually out of pocket because the adviser charged a £500 fee and the solicitors fees were over £500 more expensive than I could get them.” 

However, Mortgage Strategy understand that Countrywide estate agent mortgage fees can work out cheaper than using independent brokers.

Vendors

These sales tactics also affects vendors. Mortgage brokers report cases where interested buyers have been stopped from viewing or bidding on homes, potentially driving prices down for the seller and leading to agreed deals falling over.

One broker says: “It is so frustrating. You get a first-time buyer who falls in love with the house, they are bullied incessantly and walk away disillusioned.” 

When customers walk away from deals it can cause house sales to fall through, potentially breaking down a chain of deals and hitting both vendors and buyers, brokers say.  

Policy

There is evidence this pressure on customers is official policy in some estate agent branches. 

Mortgage Strategy has been contacted by four former Countrywide advisers who said this was policy at their branches during their employment.  

All said buyers were told to talk to the in-house mortgage adviser about finance or their offer would not be put forward. 

One former adviser says: “I can confirm it is the company’s policy to make all applicants see their in-house adviser. We were actively encouraged to collect ‘original’ payslips etc when ‘financially qualifying’ applicants.” 

This publication has also seen emails from estate agents stating clearly that using in-house mortgage services is a condition of buying a home. 

Mortgage Strategy has also carried out mystery shopping on Countrywide and Connells. In all cases we were strongly encouraged to see the in-house mortgage adviser within the first few minutes of showing interest in a property, often with the financial paperwork needed to sort out a mortgage.

No pressure

Countrywide and Connells both deny pressurised selling.

A Countrywide spokeswoman says: “Our company policy is committed to putting our customers at the forefront of the services we offer and we pride ourselves in our ability to support buyers and vendors through the complexities of the property purchase process.”

The spokeswoman explains that the firm vets buyers to make sure they are able to buy the houses they show interest in.

She adds that more than 92 per cent of Countrywide customers would refer the firm to a friend if asked.

A Connells spokeswoman says: “Connells Group offers customers a class-leading range of products and services which are entirely optional. There is no pressure to use them and we treat all customers equally regardless of whether they opt to use additional services or not.”

For more, read the April print edition of Mortgage Strategy.

Recommended

Telephone-Phone-Business-Finance-General-700.jpg
10

Countrywide probes branch pressure to use own advisers

Countrywide is investigating reports that one of its estate agent branches is pressuring customers to use in-house mortgage advisers. Mortgage broker White Financial Services reports two of its clients in the last fortnight were unduly encouraged by Countrywide subsidiary Palmer Snell to use their own mortgage adviser. The Taunton branch of Palmer Snell told the […]

Bridging and buy-to-let combination deal launched

UX Mortgages and bridging loan provider Tiuta has launched a combined bridge and buy-to-let mortgage with a joint application and underwriting process.The providers say the product – Dual – is the first to combine the two elements and to guarantee that the bridging loan will be transferred into a remortgage as a longer term option.It […]

To-Let-Signs-London-480
1

Councils given new powers to tackle rogue landlords

Local authorities will be given new powers to tackle rogue landlords who rent overcrowded properties. Councils will now be able to impose fines of up to £30,000 on those who do not comply with new standards, under measures outlined by housing minister Heather Wheeler in parliament today. From October, councils will be able to set […]

barclays-building-2012-700x450.jpg

Barclays stiffens criteria for 5x income mortgages

Barclays has increased the income residential mortgage applicants need to get a 5x income multiple from £45,000 to £55,000. Applicants with incomes of less than £55,000 will get income multiples of up to 4.49 x income. The 4.49x figure also applies to those with incomes of more than £50,000 and LTVs of more than 85 […]

Parental leave and pensions

Fiona Hanrahan  – Senior Product Insight and Technical Support Analyst We are often asked how parental leave impacts workplace pension schemes in terms of funding in general, auto enrolment and salary exchange. This article will explain each of these. How does parental leave impact the funding of workplace pension schemes? A member of a defined […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Charlie Baker 20th March 2018 at 3:11 pm

    Having been aware of these practices for some time now in “chain estate agencies” I’ve now committed my self to forwarding every customer email stating that they have been harassed, disallowed to put in offers, or told (in writing) that they have to use the estate agent broker, or that the agent wont put forward the offer until their own broker has seen a copy of the DIP application summary, to the whistle blowing email address for the FCA – They have received 4 emails from me so far… They wont act immediately but if the emails build up eventually they will have to look into it

  • Nick Jones 20th March 2018 at 2:35 pm

    I have been in the industry for 26 years and have witnessed these practises by mainly corporate estate agents time and time again. I can’t believe that nothing has been done to prevent this disgusting practice that more often than not harm the clients….

  • Ross Robinson 20th March 2018 at 2:31 pm

    The WH Brown £1,000 incentive is paid for by the vendor. Tell your clients to find their own solicitor and ask for an extra £1,000 off the asking price if you’re not using the scheme. So, in the given example that’s a £500 broker fee saving, £500 solicitor saving, and the interest saving on borrowing £1,000 less. That’s £1,500 or so!

  • John Townsend 20th March 2018 at 1:58 pm

    I’ve been independent broker 30 plus yrs and its been going on all this time. Fear of losing house will prevent most people insisting on true independent advise especially first time buyer new to this market. Regulation wont stop it

  • Martin Fairchild 20th March 2018 at 1:41 pm

    Estate Agents financial advisers are trained in the dark art of commission and bonus earning, just like their Estate Agency homies are. They should be hauled over the coals, fined very heavily and be unauthorised from the industry in my mind. Estate agents are the least qualified in the whole process and yet earn more than brokers and solicitors. You can be an estate agent the day after you leave school and buy your first shiny suit and have a spiky haircut!