TV presenter and money saving specialist Martin Lewis has issued a warning to anybody who has appointed an estate agent.
He warns that the unlawful practice of conditional selling by estate agents is getting worse and harming customers.
Conditional selling, as most of you will know, is when an estate agent tells a prospective buyer that they must use the agent’s in-house broker in order for their offer to be put forward on a property, and Lewis says there is growing evidence to suggest that more agents are “hard selling” mortgage brokers to renters and mortgage customers.
“New. Is your estate agent hard selling its mortgage broker or solicitor? Too many do, skirting the edge of the law, it’s known as ‘conditional selling’. Your rights and what you need to know,” Lewis said on a fresh post on X, formerly Twitter.
The Money Saving Expert continued: “Buying a property can be stressful, and isn’t made easier by an estate agent saying you MUST use its recommended solicitor or mortgage broker. This dodgy practice is known as ‘conditional selling’ – it’s against the law, can cost you more and even risk sales falling through, yet it’s widespread.”
One such type of pressure could be estate agents saying: “We need to make sure you’re financially qualified so we can put your offer to the seller – speak to our mortgage broker so they can carry out financial qualification.” Or they could say: “The only way I am able to show you properties before they come on to the market is if you come in for a chat with our mortgage broker.”
“For example, if there ends up being two offers on a property both at £190,000, but one buyer has their own broker and the other buyer is using out broker, the vendor will go with the £190,000 offer that is using our broker because they are keeping it on-house so we are able to get the sale through more quickly.”
Another example could be: “We’ve got exclusive mortgage rates for you from these banks and building societies”
A recent survey found that conditional selling is becoming a growing problem.
Almost two-thirds (63%) of Access Financial Services mortgage advisers surveyed said that their clients have experienced conditional selling in the six months from November 2023 to May 2024. Of that group, 100% of advisers said it caused their client harm such as stress, hassle or confusion.
A third (33%) of advisers surveyed believe that conditional selling has got worse in the past six months until May. The same proportion (33%) think the problem is about the same. 30% don’t know, and 4% think it’s getting better.
Perhaps most concerning for the property industry, is that more than four out of five (83%) of mortgage advisers feel like there are some estate agencies where conditional selling is almost standard practice.
Karl Wilkinson, CEO of Access Financial Services, said: “Something is broken in the property industry when this practice continues after 20 months of our campaigning against conditional selling, and developing tools and processes to protect advisers and their clients.
“A significant minority of estate agents are being allowed to continue to negatively impact our industry. This has to stop.”
Wilkinson continued: “Conditional selling is morally wrong and a clear breach of Consumer Duty as well as The Property Ombudsman’s Code of Practice and the Estate Agents Act 1979. What other industry puts up with this kind of harmful behaviour? We can do better.”
