BrokerJan 18 2018

Estate agent with broker arm denies conflict of interest

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Estate agent with broker arm denies conflict of interest

Buying agent Henry Pryor has criticised the estate agent Spicerhaart and broker partner Just Mortgages, suggesting his client's bid to buy a property might have been successful if his client had chosen to use the in-house brokerage of the selling agent rather than an independent adviser.

Spicerhaart has rebutted his concerns and defended its processes with Just Mortgages as entirely proper.

Mr Pryor said his client had an agreement in principle for a mortgage to buy a property being marketed by Spicerhaart, which he forwarded to the estate agent along with the client's name, address, solicitor, mortgage broker and confirmation of his status as a chain-free buyer.

The client had been offered a mortgage by Halifax through another broker which Mr Pryor had no commercial relationship with but at this point he was informed by the negotiator handling the sale that as buyers they would need to be "qualified" by Just Mortgages.

When Mr Pryor challenged this, he was told Just Mortgages was independent of Spicerhaart and that it checked all potential buyers on behalf of the estate agency to ensure their financial position.

He was also told that the broker firm might offer alternative funding which the buyer was not obliged to take up.

Mr Pryor said: "I am deeply suspicious and suspect what they wanted to do is to […] sell us a mortgage."

He said he was told by Just Mortgages that in the course of checking the buyers position it might offer a "competitive quote" but in this instance it didn’t get the chance as Mr Pryor refused to provide the buyer's details.

Mr Pryor also said that if Spicerhaart were to share his client's details with Just Mortgages that could breach data protection legislation. 

He said: "At no point was my permission sought for my client's details to be passed to a third party.

"As a buyer, I am providing the person I am negotiating against at Spicerhaart with the full details of what I can afford and compromising my negotiating stance.

"Are these people selling homes or loans? My trusting nature in estate agency profession is sorely tested in these circumstances. 

"The principle is wrong – you should not be selling people mortgages and conveyancing if your job is to sell as an estate agent rather than a broker. The buying public should be aware they are not obliged to take the offer."

Mr Pryor said the buyer did not recall giving consent for his details to be passed on and said the buyer would have refused had he been asked.

But Spicerhaart defended its practices, saying all procedures were followed correctly and in accordance with official guidelines.

“Buyers are in no way obligated to use our financial services but can choose to do so. Under no circumstances would we say that an offer can only be accepted if the buyer has to arrange their mortgage with us,” Paul Smith, chief executive of Spicerhaart, said. 

Mr Smith said: "We recognise it is disappointing for any buyer's agent when a purchase fails to go through, especially if it means they will receive little or no commission as a result. 

"While we cannot comment on the specific details of this case due to client confidentiality, we can confirm that all procedures were followed correctly.

"We comply with anti-money laundering regulations and our processes are tried and tested with thousands of transactions every year. This includes running an identity check on a purchaser, for which we require their date of birth. 

"In order to progress any house sale, it is vital that we check that all prospective purchasers have the means, whether cash or a mortgage, to buy the property in question so that we can advise our sellers as to whether the potential purchasers can afford to proceed with the purchase.

"This is in accordance with the code of conduct operated by The Property Ombudsman Scheme.

"Many transactions fail at the last hurdle because other agents do not go through this process. Even when an agreement in principle is provided from the buyer's mortgage broker, buying agent or lawyer, in some instances we also double check that the buyer has the means to progress because we have found that they often don't, which leads to disappointment all round."

Matthew Fleming-Duffy, director at Bournemouth-based Cherry Finance, said concerns such as Mr Pryor's about large estate agents with broker arms were "really common".

He said: "If you start from an estate agent's perspective, if they put an offer forward, they have to make sure it is a valid offer. There are lots of very good estate agents who do a decent job.

"Unfortunately, this does translate sometimes into aggressive sales tactics."

He added that the issue fed into a wider debate about whether estate agents should be regulated.

"They are the only part of the process that is unregulated," he said, adding that having professional standards would mean "the good guys are being protected by the fact that they are adhering to the rules."

simon.allin@ft.com