The question of estate agency ethics rose its head this week in our office, following two comments from a couple of clients. The issues related to the cross-selling of services and conflict of interest.
Each matter centred around estate agents arranging viewings for prospective buyers – or rather not doing so, in these instances! Clients’ have attempted to book viewings through estate agents only to be told the property they wanted to view was either sold (or about to be), or they couldn’t find a space in the diary that suited the viewer. In fairness, much as though I sympathise with the potential viewer I appreciate a genuine diary issue – we sometimes struggle to accommodate a buyer who rings our office late on a Friday afternoon asking to view an empty house the following morning when our diary is already full. Equally, requests for viewings at 6pm on a Sunday, or 8pm during the week poses a problem for an agent responsible for undertaking viewings. With the best will in the world, I can’t expect my team to be available 24/7. I don’t know any agent offering escorted viewings at such times. We do offer viewings 7 days a week, and appointments until 7pm during the week, which accommodates serious buyers.
The issue of telling a prospective buyer a property is sold or a sale is about to be agreed, when it actually isn’t sold and the interested party then sees the property advertised the following week, and learns that there are other people viewing it without the agent having contacted the said client, carries questionable undertones. In the cases I have been involved in, I asked our clients whether the selling agent had insisted they speak to the agent’s mortgage broker. In both cases the answer was affirmative, and in both cases they had declined. In the first instance my client works for a bank, and in the second my client would have been buying for cash, following her sale. It would appear the selling agents were ‘cherry picking’ buyers from whom they were likely to generate additional fee income by way of arranging the buyer’s mortgage (financial services) or referring them to ‘tame’ lawyers to generate a referral fee. Don’t misunderstand me, there is nothing wrong with an agent referring buyers in this way – in many instances it helps facilitate a sale to an early exchange of contracts, which is in everyone’s interest. But it should not preclude a buyer from viewing a property.
By limiting the number of potential buyers who view a property the selling agent is artificially restricting the market, and consequently undermining the seller’s opportunity to achieve the best price or deal. I accept, a buyer dependent upon selling a property to purchase the next one may not be in the best position to proceed, but what if that person could have re-mortgaged an existing property to temporarily raise funds to buy the next one? What if they could have borrowed money from family? This is something a colleague of mine helped his son with when selling a flat and buying a family semi. We come across such arrangements all the time, and with the appropriate negotiations very attractive, mutually beneficial deals can be done.
Many agents do not make detailed enquiries about a buyers position so they have a full understanding. In some instances I accept the buyer doesn’t want to give this information to the agent when booking a viewing. But this is where a good agent will spend time explaining their need for the information and establishing a person’s ability to buy. This takes time, and therefore costs the selling agents money – which in some instances the agents are not prepared to do.
In these instances the selling agents were discriminating against our client, and as a consequence were not acting in the best interest of the seller. In both cases the selling agents were on-line agents with no local office, charging an up-front, flat rate fee. They had no incentive to try and get the best deal for the seller. They were only interested in generating additional revenue for themselves. I personally find this practice abhorrent. It is commercially understandable, but contrary to the Consumer Protection Regulations which all agents have to abide by. If you have been subject to this treatment I would be interested to hear from you.