Fed-up brokers are calling on regulators to toughen up and take action against those who continue to use the unethical practice of conditional selling.
Advisers have warned that some estate agents are increasingly forcing buyers to pay for in-house services — such as a broker or solicitor — before putting forward their offer.
And, while it isn’t a new problem, it’s one that simply refuses to go away.
If not many people are buying, moving and selling, estate agents are going to look at other ways they can bring in revenue
Mortgage Strategy has spoken to three brokers who have experienced it recently.
Meanwhile, alleged conditional selling by estate agents was among the subjects most talked about by advisers on the cherry industry forum in August.
Your Mortgage Room director and adviser Charlotte Oakley says: “One of my clients is presently experiencing the challenges of conditional selling. Hence it is evident the issue persists and it is a matter of significant concern for me.”
The Mortgage Providers mortgage and protection adviser Jahidu Jaman says: “Every single adviser has experienced it in one way or another.
“I have been an adviser only since 2018 and it’s happened to me, but when you chat to other brokers who have been around 25, 30 years they have many experiences of it.”
Yes, something needs to be done, but what can be done?
Meanwhile, John Charcol mortgage technical manager Nick Mendes says earlier this year there was “undoubtedly” an increase in clients saying they felt pressure from estate agents to see an in-house mortgage adviser.
All three brokers Mortgage Strategy spoke to agree that estate agents turn to conditional selling as an additional revenue stream out of “desperation” when times get difficult.
Oakley says: “In hot property markets, where demand far exceeds supply, some estate agents and sellers may be tempted to use conditional selling to maximise their returns.”
Mendes observes: “We haven’t seen the same number of instances recently because activity levels have picked up compared to when purchase levels were down early this year. Estate agents certainly seemed pressured to sell other products, whether this was to remain profitable or desperation to show sellers they were doing more.”
Without consequences, these rogue estate agents can continue to do whatever they want and get away with it
Jaman adds: “There does seem to be a trend [for conditional selling] when estate agents are struggling.
“If not many people are buying, moving and selling, they are going to look at other ways they can bring in revenue.
“Maybe out of desperation they feel they need to try harder and go back to old-school tactics like conditional selling to make money.
“But the estate agents that do this simply aren’t putting their customers’ needs first.”
The question is, what can be done to deter them from this practice?
It is evident the issue persists and it is a matter of significant concern for me
“First, implementing tougher government rules, including stricter regulations regarding the acceptance and withdrawal of offers, could be an effective step,” says Oakley.
“Additionally, introducing penalties for those engaging in conditional selling may serve as a deterrent.”
She adds that promoting transparency and timeliness in the buying-and-selling process and creating a more stable property market could be two other ways to solve the problem.
“There need to be consequences,” adds Jaman.
“There needs to be punishment, perhaps fines. There certainly needs to be some sort of accountability where they are monitored.
“Without consequences, these rogue estate agents can continue to do whatever they want and get away with it.”
Mendes agrees, saying: “The short answer is, yes, something needs to be done, but what can be done?”
The estate agents that do this simply aren’t putting their customers’ needs first
“Pressure and systemic culture will be impossible to eradicate overnight, and it will take consequences to evoke any real changes.”
Mendes says it is “very difficult” to obtain figures on how widespread the issue is, while Oakley says the question of whether conditional selling is getting worse is a “matter of debate”.
James Munro, head of the National Trading Standards Estate and Letting Agency Team, recently admitted there was a current lack of resources to police the practice effectively.
But the message from brokers is clear: borrowers should know it’s their choice which adviser they use, and they shouldn’t feel under pressure to use an estate agent’s in-house team.
Jaman says: “We honest, ethical brokers find it hard to take when certain estate agents try to mug our clients off.”
Implementing tougher government rules, including stricter regulations regarding the acceptance and withdrawal of offers, could be an effective step
In August, Jaman revealed that a client had received an email from estate agents Connells saying he must resubmit his offer, which had previously been accepted. Jaman claims this was because, while his client had previously spoken to in-house mortgage advisers, he later sought advice from an external broker. Jaman accused Connells of “blatant conditional selling” on X (formerly Twitter).
In response, Connells said it had subsequently launched an internal investigation.
Advisers have spoken out. Now, will the government and regulators finally take the necessary steps to tighten the rules and end conditional selling for good?
This article featured in the October 2023 edition of MS.
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