Mortgage brokers are once again up in arms regarding conditional selling, which they say has ramped up in recent months.
The practice sees estate agents denying potential housebuyers the opportunity to view or bid on a property until they have spoken with the agency’s in-house adviser or solicitor, in some cases even when the purchaser already has a mortgage approval secured.
Much has been written about the issue over the years but brokers say, despite this and legislation, nothing has changed and, if anything, the practice has become more prevalent recently.
It’s generally very amateurish behaviour but it goes on every day
And now, it has also been claimed that certain agency advisers are, at times, misadvising borrowers on their mortgages.
Mortgage Advice Bureau network partner Clare Jarvis says she comes across conditional selling regularly, coupled with borrowers being offered products by unnamed agents that are not the best deals for them.
“I’ve had many clients who wanted to view properties at estate agents but were told they would have to make an appointment with the in-house adviser,” says Jarvis. “It draws out what can already be a long and stressful process for the buyer and seller.
“I’m sure the vendor wouldn’t be happy to know that interested parties were being turned away because they hadn’t used the agent’s advisers.”
Jarvis says she tells buyers who want to see a property to go along with an initial appointment and later switch to their preferred adviser after the viewing. She adds that she has won business from borrowers who have come to her for a second opinion when unhappy with advice from an agent’s adviser.
People lose sight of who they have responsibility to
“I have come across (and won) a handful of clients where they have previously been advised that their only option would be a specialist ‘adverse’ lender,” says Jarvis.
“It is so very important to keep up knowledge on the lenders/regional building societies that will look favourably on individual circumstances and potentially manually underwrite cases when the high street says ‘No.’”
According to a survey by Access Financial Services, 63% of mortgage advisers who were asked said their clients had experienced conditional selling in the six months from November 2023 to May 2024. Of that group, all of them said it had caused their clients harm, such as stress, hassle or confusion. A third (33%) of advisers believed that conditional selling had got worse in the six months to May.
Lift Mortgages managing director David Baker also comes across conditional selling frequently. He recounts a recent incident.
“One young client of mine was told they had to use the estate agent’s broker quickly,” says Baker. “The broker they used didn’t even quote the right rate [for the mortgage] — it was more expensive than it needed to be.
I’m sure the vendor wouldn’t be happy to know that interested parties were being turned away because they hadn’t used the agent’s advisers
“The client had been quoted for the 95% LTV range when, in fact, they could get to the 90% range by putting down just £500 more.
“It’s generally very amateurish behaviour but it goes on every single day.”
Baker recently posted advice to borrowers on his LinkedIn page in a bid to help them understand the issue of conditional selling and what he calls a “sales pitch”. He highlighted the fact that sellers do not prefer buyers to use estate agent brokers, and that the broker being referred to by the agent “probably does not have access to better rates than your current broker”.
Vizion Mortgages director Craig Woulds shared a message on LinkedIn that he had received from a client. They had outlined their concern over an agent’s insistence that the buyer see their in-house broker before making an offer on a property, despite already having a mortgage approval in principle.
In an email to the agent, the client writes that they are happy with their existing broker (Woulds), but this is not accepted by the agent, they claim.
Ami continues to have discussions with the major agency groups, which all have policies that are designed to avoid this
The post was supported by numerous mortgage brokers who had had similar experiences, and Woulds claims the practice is particularly prevalent at one large agency.
“I come across [conditional selling] every time I have a client viewing a property with Connells,” says Woulds.
“I myself have had to lie about what I do for a living when viewing a property on the market with them as I know they won’t sell [to me] if they know I own a mortgage company.”
Woulds says he doesn’t address the matter directly with the agency when a client reports it as it could affect them securing the property.
“I usually tell my clients to go along with their adviser’s mortgage appointment, and, ‘Don’t tell them you already have an adviser. Then, when your offer is accepted, come back to me if you’d prefer to use me.’”
Connells did not respond to requests for comment.
Any breaches of the estate agency code can be raised with local Trading Standards
Association of Mortgage Intermediaries (Ami) chief executive Robert Sinclair says the trade body continues to have discussions on these issues “with the major agency groups, which all have policies that are designed to avoid this”.
He adds: “Local practices sometimes evidence poor behaviour where people lose sight of who they have responsibility to and in whose interests they must be acting.”
However, with regard to misadvising clients on mortgage products, Sinclair says, although Ami has seen no evidence of commission causing provider bias, if advisers are “not delivering the most suitable recommendation, they are putting their future in the industry at risk, as many discovered in 2010”.
It draws out an already long and stressful process
He adds that, if Consumer Duty assessments were carried out correctly by lenders, they should be aware when applicants might not be in their target audience.
He advises that everyone involved should exercise caution and that any breaches of the estate agency code can be raised with local Trading Standards.
Conditional selling is banned under Section 3 of the Estate Agents Act 1979, which states that every offer must be passed to the seller within two working days of receipt.
This article featured in the December 2024/January 2025 edition of Mortgage Strategy.
If you would like to subscribe to the monthly print or digital magazine, please click here.
Publisher: Source link
