Beware; mortgages and dubious estate agents
Posted on 6 June 2013 by
As the housing market continues its phoenix like rise from the ashes, there’s an old practice that seems to be rearing its very ugly head; that of some (and we stress some) estate agents desperately trying coerce buyers into using their in-house mortgage adviser, rather allowing them the opportunity of taking independent advice. Firstly it’s important to remember that the estate agent is paid by the vendor to act on their behalf in the sale of their property, and that many estate agent based advisers work off of a limited panel, rather than the whole of the mortgage market.
The most common tactic seems to be that when making an offer, buyers are told they must see the in-house mortgage adviser to make sure they can afford the mortgage, or else the agent can’t recommend acceptance of their offer, even if the finance has already been arranged in principle. In the event that the buyer refuses and decides to use an alternative source, they are invariably informed that the property will therefore remain on the market until (at the very least) the mortgage valuation has been carried out, causing stress to the buyer that they may lose the property, and suffer abortive costs.
However we’ve also had clients asking us whether it’s the norm for an estate agent to insist they see their mortgage adviser or they won’t allow them to view any of the properties they have on the market, and agents even going as far as inserting a clause into the vendors selling contract, to stipulate that they agree that all potential purchasers of their property must be vetted by the agents in-house mortgage adviser.
Despite all of the reforms and progress made in every other sector of the housing market, it remains a perpetual mystery as to why the most pivotal part of the whole housing transaction remains free of formal regulation. From solicitors, to surveyors, to mortgage brokers and lenders, we all have to abide by legislation and have an industry standard qualification, without which you cannot practice. However any Tom, Dick, or Harry can wake up one morning, thinking “I know what I’ll do today, I’ll become an estate agent “, and off they go.
There are a couple of voluntary bodies that they can join, including the National Association of Estate Agents, and the Property Ombudsman, whose members agree to follow their ‘code of practice’, however unlike the rest of the professionals associated to the mortgage and housing industry, they are not mandatory, nor are there formal qualifications to be attained prior to commencing trading.
Other interesting ploys have included us being told by an agent who was trying to find out which lender we were using on a case because it was a lower rate than their adviser had quoted, that we had to tell them the lender’s identity as it was requirement of the estate agency ombudsman.
Meanwhile another of our clients buying at 90% was told that the only mortgage the agents in-house broker could source was a 2 year fixed rate with a condition that they agreed to pay the mortgage down to 75% by the end of the fixed rate period. After we’d sorted the mortgage out with a different lender at the same rate, we confirmed to the borrower that the rate and condition they were quoted never existed. It was (we think) a ploy to see if the borrowers had any more funds and could therefore get the mortgage down to 75%, thereby making it far easier to place.
The right to choose who you want to arrange your mortgage for you is vitally important and at no point should any buyer feel pressurised into dealing with an adviser that they aren’t happy with. If you feel like you’re being railroaded then complain.
For almost every one of us our mortgage is the largest financial transaction we’ll be involved in, and yet in the whole of the buying process there’s no one acting on our behalf to make sure we’re getting the best deal for our circumstances. The Estate Agent is being paid to act for the vendor, which in most people’s eyes makes it questionable whether they can also act for the buyer in arranging the mortgage. The solicitors are paid by the respective sides to act in the best legal interests of their client(s), and the surveyor (particularly for mortgage valuations) acts for the lender. So who looks after your financial wellbeing and makes sure that your interests are being looked after?
Many buyers initially don’t want to, or can’t see why they need to, pay a fee to arrange their mortgage, particularly if that adviser is employed in the estate agency they are buying through. There are a variety of different options on offer too, but after seeing the differences between us and some of our competitors, the knowledge that at John Charcol someone is actively looking after only your best interests when advising on and arranging your mortgage adds to the value for money.
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