Estate agents are bumping up profits by telling prospective homeowners that their offers won't be accepted unless they use the agents' in-house mortgage brokers, which is an illegal practice.
This happens because estate agents get a referral fee from their in-house broker if a buyer goes to them, or they may receive a fee from the lender the client goes with if the estate agents directly employ the broker.
This is known as conditional selling, and it is prohibited by law under the Estate Agents Act 1979. It stipulates that buyers cannot be discriminated against or misrepresented, and that agents are obligated to put all offers to the vendor in writing within 24 hours, unless the seller has told them otherwise.
The practice only continues to grow as agents struggle to make the same money from fewer sales in a slowing property market. And even though conditional selling can have agents prosecuted by Trading Standards, however this is not always an effective deterrent.
This can lead to buyers ending up paying higher mortgage rates than expected because they did not receive the best advice.
Conditional selling is also a real problem for sellers of houses, because if the sellers don’t get all the offers, it can result in them accepting less money for their homes unknowingly.
The bottom line is that an agent should not prejudice any offers or viewings even if a buyer refuses to use any additional services.
