Some estate agents are breaking the law and using misleading contracts when they sell houses, according to the consumer magazine Which?
Which? says one estate agent lied about a higher offer
It carried out an investigation into estate agents which it said uncovered serious breaches of the law.
The consumer guide also found widespread use of complicated and misleading contracts as well as contracts with clauses that could be legally unfair.
The investigation involved 10 people putting their properties on the market in England.
Our undercover investigation cast light on parts of the house-buying process the public doesn't usually see, with worrying results
Helen Parker, Which? editor
Each one asked three estate agents to give valuations and asked for copies of their contracts. Researchers then posed as potential buyers for the properties.
Which? said that even in this snapshot test it found one agent that seriously violated the law.
The company lied to one of the Which? buyers by saying that a higher offer had already been rejected, and encouraged them to come back with another offer. The higher offer was a complete fabrication, according to Which?
"This goes to the heart of the Estate Agents Act 1979," the consumer guide said.
"Although the act sets out the way estate agents are meant to behave, there is no systematic way to prevent these types of breaches of the law, because no-one sees it being broken."
Enforcing the law
The investigation also found other breaches.
Homeowners of the UK deserve to at least expect an agent to follow best practice, codes of conduct and minimum standards of competence
Melfyn Williams, President of the NAEA
Estate agents are meant to pass on all offers promptly in writing but Which? said only two of the six that received offers put them in writing, the others gave the information only by phone.
It said the most common problem found by the undercover researchers was the use of unfair or misleading contracts.
"In the worst cases, unfair or misleading contracts leave people paying thousands of pounds even if an agent has done nothing to help the sale," Which? said.
The consumer guide is calling on the Office of Fair Trading - which is responsible for enforcing the laws for estate agents - to take measures to address the problem.
The trading watchdog is currently undertaking a review of estate agents' practices.
"Our undercover investigation cast light on parts of the house-buying process the public doesn't usually see, with worrying results," said Which? editor Helen Parker.
"Without anybody checking to ensure they are behaving competently and honestly, some estate agents are routinely getting away with using dodgy contracts and even breaking the law."
The National Association of Estate Agents (NAEA) said it was concerned about breaches of conduct.
Melfyn Williams, President of the NAEA, said: "The public should look for the NAEA logo as a seal of approval, similar to ABTA in the travel industry, when choosing an agent to handle their property matters.
"To the majority, their property is their biggest and most important asset; the homeowners of the UK deserve to at least expect an agent to follow best practice, codes of conduct and minimum standards of competence".
Tell us your experiences of dealing with estate agents. Are they good or bad? Do estate agents deserve such infamy?
This is going on all over the place. We were told our offer had been rejected and we should put in a higher offer when in fact it was not even put to the owner.
The estate agent I used to sell my property agreed a completion date with the purchaser without my knowledge. The whole deal would have fallen through had I not been able to go into temporary accomodation for the best part of a month
Peter Gee, England
Whilst there are some very good, thorough and professional estate agents, there are still too many 'wide boy' types who are only interested in making their commission. At the end of the day agents earn a heck of a lot of dosh for just putting a picture in their window and a bit of advertising on the net or on the local rag. What a shame they cannot be eliminated from the house purchasing process, thereby saving all of us a small fortune.
Christina Georgiou, England
Your country always interests me, and this seems so untypical. Not to intimate that it works any better here, however: The U. S. does have a "chain of command" which probably equates as follows: (1) agent monitored by in-house broker who is legally responsible for the agent's acts, (2)lender application with trust establishment (downpayment, i. e. money) (3)title search by title company which usually has an attorney who reviews all of the docs, (4)private attorney review (5) close with "Truth in Lending," i. e. all of the docs must be clarified to the parties at the point they are proffered for signature. Contracts are what we call ISO, or standard, form so that the only deviation is readily obvious because it is usually hand-written in and initialled by both buyer and seller. (There are refinements, but this is the basic concept.)
I have been astounded by the arrogance and rudeness of some agents when trying to purchase a property - I now boycott some agents in preference to those who are friendly and professional to talk to.
I have dealt with bad agents and not-so-bad agents, but none ever seem to get it right in every area. Some are good sellers but bad closers/administrators, and vice-versa. I had no complaints about the last agent I used to sell my house - they did everything by the book, and were great at seeing the deal through as smoothly as possible to completion - they earned their fee from every angle EXCEPT one small point....they never actually showed my buyer around (I did, 3 times, complete with my own sales patter, as the agent was always booked up), and therefore I think they should have paid me some of the commission - I sold the house, not them !
Estate Agent contracts longer than four weeks should be outlawed as should any Sole Selling Rights clauses. Estate Agents should also have an obligation to make consumers aware that it is not legally necessary to use an agent when selling a home.
The Internet has made selling a home privately so much easier, agents should have to compete to survive.
K Davis, UK
My sister recently had an offer accepted by phone on a Saturday, only to be told on the Monday that a 'substantially' higher offer had been submitted by another party and the vendor had accepted the new offer. To cut a long story short, the other party was an one of the estate agents at the branch who had bid a fraction over my sister's bid. My sister eventually got the house for an extra 5K on her originally 'accepted' offer. To cap it all the vendor confirmed the original offer had been agreed by them.
rhys jones, Wales
I was buying a house on a 'buy to let' and made an offer which I was told had been accepted.
When I said that I was not going to obtain a mortgage through the Estate Agent but through another source, I was told that in fact the offer had not been accepted.
Anthony Allen, UK
When selling my house in Reading, I tried two agents in the area, both overvalued the property, gave no reasons why it was not selling and left me to show people round in 95% of the cases! One other agent embarked on a slur campaign against another agent to try to get my business. They charge far more than a solicitor (who has legal obligations) and do very little for it, they have no real controls over what they do and ought to be licenced and have a relevent qualification!
We found a house we wanted to buy in Hyde. We put an offer in and was told by the estate agent that it had been accepted. The agent then tried to get us to arrange a mortgage through themselves. We told them we would arrange the mortgage elsewhere. A couple of days later they called to tell us the vendor had accepted a higher offer. We bumped into the vendor a few weeks later and they informed us that they had never recieved any offer from ourselves. We of course lost the house, but bought a different one through a much more professional and courteous agent.
It was strongly suggested to me by the estate agent that before I could view a property, I should arrange a mortgage through their adviser. I agreed to this initially and made an appointment both with the adviser and to view the property. The next day, I changed my mind and told them I wanted to arrange a mortgage with another lender, and that I was still interested in the property. An hour later, they called me back and told me the property was already under offer and that my viewing had been cancelled.
Jack Parkinson, UK
Approximately five years ago I put my house on the market through a local agent. After three months I had received no offers and so no evidence of any active marketing so I withdrew from the contract expressing my dissatisfaction and marketed the house privately. I sold it within a fortnight after which news got back to the estate agent and I received a solicitor's letter demanding that I pay them 'their' commission. A classic!
In my recent experience of moving, most estate agents are professionals trying to do an honest job and making the odd mistake, just like the rest of us.The real problem is the buyers & sellers. I lost a sale & purchase when the seller's partner refused to sign the papers at the last moment then I had a buyer who convinced my agent & their solicitor that they had the funds right up to the day before exchange of contracts, forcing me to take out bridging finance to save the rest of my chain. Honest straight forward dealing from householders would save a lot of grief
It is unbelievable that their work is not regulated and does not require any professional qualifications.
Richard Brown, England
I've taken a similar decision to Richard and now boycott some estate agents in our town. We were first time buyers 2 years ago and at best were treated as if we were stupid, and at worst, blatantly lied to; we were told that receipts were available for work that we later found out had not been done at all. But I am not alone. Of the 3 people I know who've bought a house in the last 2 years, one found that their offer was rejected because the estate agent wanted to buy the property themselves (thankfully, they were in contact with the vendor and have now successfully bought their house); and another friend was mislead to believe that the property was freehold when it was in fact leasehold, and this fact only came to light when the solicitor drew up the contracts.
I mean, I know that the vendor is the 'customer' of the estate agent, but surely they have some responsibility towards the buyer as well!
I think the goverment should pass a law where all estate agents get a flat 1% or 1.5% of any property they sell. The estate agent should just be a co-ordinator for the sale, they put buyers in touch with sellers the 2 parties then agree a fee and tell the estate agent to take the property off the market, the estate agent then gets his percentage of the fee agreed.
What you need more than anything else is a CLS - central listing service where everyone can see everything up for sale. Makes making comparisons easier, as well as reduces time wasting! Otherwise, Estate Agents need to be regulated, so that they are accountable to someone in the end!
G Edwards, Canada
We were tricked into signing an exclusive agency agreement by an estate agent who hid the terms and conditions of the contract that was signed by folding the paper over so details could not be seen.
Tim Haines, England
I work in the financial field.
Brokers are universally trusted depite minor mistakes.
Seems to me that an estate agent is a house broker, usually handling the life savings of people. If financial brokers are regulated - and very strictly they are, why aren't estate agents subject to the same controls?
Mark - Expat Scot, Japan
I'm English but have been stateside for 10 years and I quite forgot the scamming that goes on in the English market. Over here, once an offer is accepted, the seller CANNOT back out of the deal, to accept a higher offer or any other reason. Realtors here also have to get a license. The seller pays 6% of purchase price (taken out of proceeds at closing)which is divvied up between the two realtors. I have friends who have worked with realtors for 12 months or so, looking at over 100 properties during that time and the realtor still only got paid when they bought! Makes the business v. competitive and if you're no good, you get no work. No exclusive contracts for buyers, either.
As an "estate agent " in Canada I'm appalled at the system in the UK. I grew up there and my parents had horrendous experiences. Over here, the estate agent is governed by very strict rules, regulations. The agent can lose their licence at the drop of a hat for anything that smells unethical or unprofessional.To be licenced you have to take a 8 courses, including mortgage financing, real estate law, real estate appraisal aprt from all the contractual business. We also have a system called MLS which allows agents to place the property they're representing on the web which then makes it easier to attract the buyers.All the appts. for the property have to go through the agent, they have to show it, market it, obtain engineers reports etc. etc. Unlike the UK where it seems the agent just gets the seller to sign something and then disappears. Here Agency Relationship is spelled out and scared.
It seems to me that too many people forget that the agent is employed by the vendor to get the best deal for them, and short of lying has no obligation to the purchaser at all. agents are by and large not worth what they cost, there seem to be enough signals and channels around for buyers and sellers to be able to set values and communicate with each other. Perhaps we have reached the point where we are able to dispense with agents in the vast majority of cases.
James Walton, uk
What do you expect?
The commision paid in the UK is under 2%.
In Canada/U.S. the commision is between 5% and 7%.
I recently sold my flat in London using a local Agent and consider the 1.25% commision paid a bargain.
Estate Agents have been making a fortune in the current price boom. They still charge about 1.5% fee. I bought my house in 1995 for £45.000.
Their fee would have been £670.
Today it will sell for £ 180.000
Fee for the estate agent at same rate,
How can they justify that kind of increase?
We are embarking on the house buying/selling process. There are some 'good news' stories but on the whole, this process is as palatable as a game of Russian Roulette...it certainly seems that as buyers, we pay for the privilege of being treated unethically! Can we not name and shame individual agents (based on concrete evidence, of course!) who indulge in malpractice?
Nora , England
The idea of a central listing system is not new. This is the system in Scotland. For example in Edinburgh all properties for sale are listed at the Edinburgh Solicitors Property Centre - there is a showroom, a weekly paper listing all properties and a webpage. The effect is that any potential buyer is aware of all available properties, which works for both buyers and sellers. Finally, the sealed bid process which is common avoids an agent playing one potential buyer against another (possibly fabricated) buyer.
As an Insurance Broker I can see many similarities between the processes involved n arranging the sale of a property and arranging insurance products. However there is just one disparity between the two professions, some of us are not only regulated by the FSA but are able to take professional exams bestowing the confidence and trust that our clients deserve before they make any finical commitment. I just wish that you the public takes heed of the inevitable result of the Which report, and simply boycott Estate agents when selling your property, as I choose to do.
A Kaye, UK
As some of the commentators point out the biggest problem is that both vendors and purchasors can change their mind for any reason. Make offer and acceptance binding on both parties except for faults in title and you will be a good way to sorting out the problems. There would be no opportunity for rouge agents/applicants/ vendors to take advantage of a faulty system. The sellers pack will change nothing as it does nothing to change the process. You will still wait while your lendor carries out due dillagence before parting with your mortgage money.
I find it amazing that the industry is not regulated in anyway at all & the results of the Which? survey were of no suprise.
Carolyn, London, England
I sold a property in Surrey some years ago and as I was working away from home my wife had to deal with the estate agents. Coming back one weekend, my wife told me that "our" estate agent had given her a list of items that needed to be done to the house before a prospective buyer they had would make an offer. I went straight round to the estate agent and made it clear that "he worked for us" and "not for the buyer", only to be told by the agent that if we wanted to sell the house we had to do what he said. Needless to say I told him to consider who was paying his fees at the end of the transaction, but this didn't seem to worry him. I think the whole estate agent business is akin to second hand car dealers, "they will do anything to get a sale".
Sometimes estate agents' dodgyness can actually work in your favour. We had the misfortune to engage what must be the slowest solicitors in England for our recent purchase, and as things dragged on with no sign of a completion date, the agent informed us the vendor was considering another, higher offer. We don't believe this was anything but a ploy to make us get a move on, but we were able to use the threat to force our solicitors to get their fingers out and our purchase finally went through.
On the second house which, unfortunately was with the same estate agent, we were in the process of trying to re-work the price of the house based on work which needed to be done. We were doing all negotiating through the EA... in the understanding they were Legally bound to put forward any offers we made. (we were only looking for a reduction of about £500 -1000). The EA told us they had put this to the vendor, but they had refused to budge!!
Since that time we have spoken with the vendors themselves -they had never been told about our offers!!!
Luckily we managed to talk direct with them and come to an arrangement.
Andy Allen, UK
This report really does not come as a surprise. Having worked in the Uk for a number of years as an agent, I have seen these tatics many times. The problem with UK (not all) agents is that, they are only intested in the sale which means money. The bad ones don't care about customer service, because a lot are only in it to make a quick buck. Training can be poor, laws don't really stand and as a hole the system is dated. I've been working in Cayman for a few years now, and I deal with a lot of English buyers. And I have noticed they all have one thing in common. They don't trust real estate agents. A lot of my American colleagues always ask: Why is it so hard to build a good trusting relationship with English buyers, and I have to explain the way things work back in old blighty. I think the whole system needs updating and better rules need to brought into place, and kept under strict guidelines. If this happened's it would make the business a much more enjoyable place, not only for the agents, but also for the buyers and sellers.
Sam Hunt, Cayman Islands
Whilst looking for a house to buy I had a variety of experiences with various estate agents including one agent which I boycotted as they refused to submitt my offer to the vendor unless I sought finacial advice for my mortage through there own Finacial broker. Even though I already had this arrranged and in place. I'm glad to say that another agent in the same street has been very helpful and has been a completely different expirience and my purchase is proceeding well.
Don't tell me about agents! I only found out my ultimate buyer had made an offer when they copied me in direct on their letter to my (?) agent with the offer. My so called agent apparently thought it wasn't high enough and told them it had been rejected - shame he didn't see the "cc" at the bottom of the letter eh? Suffice to say I had an interesting chat with them when it came to dealing with their invoice - can someone please tell me what they actually do for their money?