Sellers face losing thousands as estate agents ‘manipulate’ contracts

a woman looking at houses for sale at an estate agents

Estate agents are “manipulating property sales” with clauses that block bids from being passed on to sellers, Trading Standards has warned.

The consumer body said buyers could end up hundreds out of pocket while sellers could lose thousands of pounds due to offers not being passed on because of the small print in a contract they have signed.

Many estate agents earn a commission – sometimes as much as 60pc – by referring buyers to partner firms which provide mortgage brokering, conveyancing and surveying services. They may even earn extra revenue by providing these services themselves through separate business arms.

Conditional selling – where an estate agent does not pass on an offer to a seller unless the buyer opts for their in-house services – is an ‘undesirable practice’ according to the law.

While not technically an ‘offence’, agents found to have done this could be lumbered with a ban on business by the regulator.

But there are exceptions to the rules. One way agents can get around this is if they have it in writing that the seller only wants offers of a particular type.

James Munro, of National Trading Standards, said: “Anecdotally, we’ve found agents can manipulate the offer process. One exception [to conditional selling] is if the seller says in writing that they don’t want certain offers.

“Agents get creative, shall we say, with the contracts they ask sellers to sign [before they list their properties]. We’ve seen them include lines such as ‘refuse buyers which have not been financially qualified by us’.

“If you went to a tribunal, it is likely the judge would decide that explicit consent was needed – and that an implied term of consent in a contract doesn’t count.”

Agents will often insist that buyers are financially qualified by an agent – even if they have already paid an independent broker and have a mortgage decision in principle, Mr Munro said.

If a buyer refuses, their offer might not be passed on. But if the seller has signed a contract only agreeing to offers which have been ‘financially qualified’, then the agent is technically not breaking the law.

Mr Munro said trying to catch agents in the act and evidence the practice can feel like “whacking moles” or “nailing jelly to a wall”.

Trading Standards, Mr Munro said, relies on buyers providing them with evidence of conditional selling. But in many cases, buyers who opt for agents’ in-house services do not know the difference – and those that do just move on, because a rejected offer does not translate into a material loss.

For the seller, however, thousands of pounds could be at stake if some of the highest offers are not being put forward due to an uninterest in in-house services – but they would never know.

Mr Munro said: “Big corporate factories referring out like this often employ agents earning more through commission than selling houses.

“We do receive data from Citizens Advice and the redress schemes, but we ultimately rely on people feeding us information which can trigger an investigation. We only have finite resources.”

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