Estate agent tricks - How to spot and beat them!
There are various tricks an estate agent can use during the conveyancing process. Some support the seller and some the buyer; all estate agents' tricks support the estate agent. There are some tricks of the trade that an experienced estate agent can use to help get your transaction to exchange, and others are used to get their commission by the end of the month.
Most home buyers and sellers aren't experienced enough to know which tricks are in their favour and which are in the estate agent's. The article below covers how to spot a trick, assess if it is useful to the buyer or seller, and what to do.
Why do estate agents use tricks?
To understand why an estate agent uses tricks, you must understand their goals:
For the seller | For the buyer |
The estate agent wants the seller to:
| The estate agent wants the buyer to:
|
How can estate agents get away with using tricks?
Residential estate agents aren't regulated, although all must be registered with a government-approved Redress Scheme (independent complaint handler). There are only two schemes, and these are:
- The Property Ombudsman's (TPO). Read their - Code of Practice for Residential Estate Agents. Some estate agents are voluntary members of Propertymark, the leading membership body for property agents with 17,000 members. Estate agents who are members must declare if they hold Professional Indemnity Insurance (PI) and which of the two Redress Schemes they are registered with for complaint handling.
- Property Redress Scheme (PRS). Read their - Consumer Guides.
Where the Ombudsman considers there has been any single flagrant breach and/or any persistent breaches of the Code by any Member estate agent, then they can be excluded from being registered under the Consumers, Estate Agents and Redress Act 2007. This means an estate agent could be stopped from trading if they use tricks that breach the code.
5 Estate agent tricks for sellers
1. Overestimate the asking price
When you meet an estate agent, they'll provide you with a list of comparable properties recently sold or on the market in your local area. Using this information, the estate agent uses their first trick, putting forward a "higher estimated sale price" than they think they will sell the property for.
The code states:"4b Any figure you advise, either as a recommended asking price or as a possible selling price, must be given in good faith and must reflect available information about the property and current market conditions and must be supported by comparable evidence. You must never deliberately misrepresent the market value of a property."
A high sale price sounds very attractive, but it means nothing if the property won't sell.
How to beat the estate agent trick:
- Research the market before the estate agent arrives. Only look at properties on your road or within 1/4 mile. The comparable properties need to be similar to your property in size, beds, bathrooms and condition. Ask to see copies of the estate agent's comparable properties. Our House offer calculator will work out an average price per square metre.
- Research property price growth in your area, using Land Registry data. If the price the estate agent says is 20% more, but the market has only gone up by 10%, then question the agent why.
- Ask the estate agent: how long they leave a property on the market before reducing the asking price, and, on what percentage of properties do they have to reduce the original asking price, in order for it to sell? Propertymark, with over 17,000 estate agents, reports on the number of property sales which complete over or under the asking price within their membership. If your estate agent is part of Propertymark, they will have this information.
2. Long-term agency contracts
An estate agent wants as many properties on their books as possible because it drives a higher volume of buyers and, in return, more sales. To achieve this goal, they prefer you sign up with them as a sole agent (no fee sharing with another agent or lost income if someone else sells your property) for as long as possible. If you have signed a 3 to 6-month contract and are unhappy with your estate agent's advertising style, conduct, or number of viewings, you may want to move to a new estate agent.
How to beat the trick:
Agree to a shorter-term contract of one to two months (even for good agents, it can take time to find a buyer, especially at slow times of the year). You may even work with several estate agents, known as multi-agents. The commission may be more expensive if you work with more than one agent.
Review the terms and conditions if the estate agent doesn't budge on reducing the sole agency contract to less than 3 months. What are the termination rules/costs/notice period, and do you still have to pay a reduced commission to the agent if you sell through another estate agent after this period ends?
3. The estate agent is conflicted
A well-used trick is for an estate agent to be connected to your buyer through business relationships, family/friends or through a finders fee. In such cases, the Code of Practice states:
The connection may be harmless and work in your favour if you sell the property for current market value. The conflict arises when the property is sold under the market value.
The code states:"2c. You must avoid any conflict of interest. You must disclose at the earliest opportunity in writing (*) to consumers or any relevant third party any existing conflict of interest or any circumstances which might give rise to a conflict of interest."
"2g If your firm is instructed to sell a property and you, an employee or an associate (or an associate of the employee of your firm) intend to buy it, you must by law, before negotiations begin, give all the relevant facts, in writing, to the seller; and as soon as possible to the seller’s representative."
How to beat the trick:
Ask the estate agent where your buyer came from and if they are connected to them. If the estate agent is conflicted, ask to use one of their colleagues in the office who isn't conflicted and check the current market value using the above research techniques.
4. Add additional fees
Some estate agents offer additional services and include these costs within their terms and conditions. This could take a very reasonable fixed cost or percentage, into a much more expensive actual fee.
The code states:"5n. Where your Terms of Business include options for sellers to use associated and/or recommended services (such as conveyancing), sellers should be presented with the opportunity to actively opt-in to use the service. Requiring sellers to actively opt out of any additional or recommended service should be avoided. Charges made for not using a service must be disclosed by the National Trading Standards Estate Agency Team’s ‘Guidance On Transparency of Fees Involving Property Sales’."
How to beat the trick:
Agree on a fixed percentage or all-in cost for the sale of the property. Ask for any potential additional fees and find out the chance of these being applied. If there is any chance, ask for these fees to be waived and excluded from your terms/contract.
5. Accepting lower offers
"That's the best offer you're going to get" may be true sometimes, but is it playing tricks for an estate agent to say it on an offer that is undervalue?
The code states:"18a. Aggressive Behaviour. In order to make commission quickly, pressure a seller client to accept an offer at a lower price than is reasonable for their property, for example by telling them that they cannot get a better offer."
How to beat the trick:
Ask the estate agent how they know this is the best offer. Compare this offer to the original comparables they provided when you contracted with them and ask why these have changed. Research again, like in point 1, and check the current housing market position in your area.
How do I report Estate Agent Tricks?
If you feel your estate agent has breached the Code of Practice set out by the Property Ombudsman, you must follow the following process:
1. Report to Estate Agent
You must first write your formal complaint to the estate agent and give them a reasonable time to respond. A reasonable time is normally 15 working days, and you need to keep copies of all correspondence in case you need to escalate your complaint further.
You may find that your complaint can be adequately handled without further escalation. For example, if the estate agent refuses to put your offer forward to the seller in breach of the code of practice, and after your complaint, the offer is subsequently put forward to the seller.
2. Report to the independent body
It is a legal requirement that residential estate agents be registered with a Government-approved independent complaint scheme. The two schemes are:
- The Property Ombudsman (TPO)
- Property Redress Scheme (PRS)
Your estate agent should state on their website (often the logo) or original documents (such as their terms/contract) which one of the above they are registered with.
6 Estate agent tricks for buyers
1. You have to use our surveyor, solicitor or mortgage broker
The selling estate agent's most common objection is when a buyer chooses their solicitor. The selling agent might state "they aren't very good; look at their reviews", or "They don't understand the London property market", and even, "The seller won't agree to sell unless you use our solicitor - we use them all the time". The trick here is to force you to use the estate agents solicitor.
The code states:"9d. By law you cannot make it a condition of passing on offers to the seller that the buyer must use services offered by you or another party. You must not discriminate or threaten to discriminate against a buyer because that person declines to accept that you will (directly or indirectly) provide related services to them."
"15a. You must co-operate with any investigations by the Ombudsman being conducted in accordance with the Ombudsman’s Terms of Reference. Pressuring a potential buyer to use associated services, for example to take out a mortgage through the in-house mortgage advisor or to use a particular firm of solicitors or licensed conveyancers."
"18w. Transactional Decision. Informed decisions made by consumers include, but are not limited to: A buyer’s decision whether to view an advertised property, or whether and on what terms to make an offer on a property, instruct a solicitor or licensed conveyancer, commission a survey, apply for a mortgage, or exchange on the purchase."
How to beat the trick:
You should choose a surveyor, solicitor or mortgage broker based on your own careful assessment. An estate agent's preferred solicitor often pays a referral fee to them in exchange for paying clients, so cannot be 100% impartial. You will benefit from having your own independent solicitor to handle your conveyancing to ensure they are acting in your sole interest, independent from the agent.
2. Lie to buyers about competing offers
Buyers often ask us, can estate agents lie about offers to buyers? They are not allowed to; however, it is difficult to know whether the estate agent is in fact lying or not, because they don't have to disclose offers they receive to the buyer.
The code states:"9c You must keep a written or electronic contemporaneous record of all offers you receive, including the date and time of such offers and the seller’s response."
How to beat the trick:
As the estate agent won't provide evidence of the offers to you, the only option is to raise a formal complaint with the estate agent stating you feel they didn't have another offer for the price they stated. The agent must confirm the date, time and amount of the offer to you in writing, not including the name of the party (GDPR laws won't allow that).
If the estate agent doesn't confirm in writing, or you don't believe the agent's response, you can report your claim to the ombudsman. The ombudsman will investigate and want to see the "written or electronic contemporaneous record of all offers".
This is a serious breach if the estate agent doesn't have another offer because it places you at a financial loss if you have already exchanged. After all, you could have offered lower.
3. Won't put forward your offer
"The seller won't accept offers under £250,000" or "If you offer £275,000, I'm sure the seller will agree". Is this good advice or just an estate agent trick? These scenarios are both fine if the seller has stated in writing they won't accept any offers under £250,000 or that they'll agree to a sale at £275,000.
The code states:"9a. By law, you must tell sellers as soon as is reasonably possible about all offers that you receive at any time until contracts have been exchanged unless the offer is an amount or type which the seller has specifically instructed you, in writing, not to pass on. You must confirm each offer in writing to the seller, and to the buyer who made it, within 2 working days."
The code states:"9d. Failing to tell the seller of an offer to buy the property. Telling the seller of an offer less quickly than other offers you have received. Misrepresenting the nature of the offer or that of rival offers."
How to beat the trick:
Ask the estate agent if the seller has put in writing that they won't accept an offer under £250,000 or that they will accept an offer at £275,000. If they don't have this in writing, ask for your offer to be provided to the seller.
Where an estate agent is being obstructive, it isn't uncommon for a buyer to write to the seller and put their offer directly to them or make an offer to the seller at the viewing. It upsets the estate agent but opens a clean dialogue between the seller and the buyer. If you do this, read our article on making a winning offer.
4. The agent is on my side
The selling agent can often make you feel like they're on your side, so what they tell you is in your best interest. They are your friend...right? Wrong. The selling estate agent can only act in the seller's best interests. Whilst they must treat you fairly, they act for the seller.
The code states:"2a. You must treat all those involved in the proposed sale or purchase, including sellers and buyers, fairly and with courtesy."
"2b. When instructed, your duty of care is to the client (the Seller). You must offer suitable advice to meet the client’s aims and needs. Where the law and the interests of the client conflict, adherence to the law must prevail."
How to beat the trick:
Take advice on price drops, updates or legal enquiries directly from your solicitor. Your solicitor has a duty of care solely for you, so they cannot act in anyone else's best interest. This is why we don't advise using the estate agent's recommended solicitor.
5. Misrepresentations about the property
The seller provides protocol forms to their solicitor; known as the property information or fittings and contentsfittings and contents forms. It should be everything they know about their property and what they are leaving to you as part of the purchase. It needs to be accurately filled out, and neither the seller or the estate agent are allowed to withhold information about the property.
During the process the estate agent may state "the wardrobes are included" or "the extension didn't need registering at building control". What if this is incorrect and you move in and the wardrobes aren't included or did you need the extension registered?
The protocol forms state:"It is very important that your answers are accurate. If you (the seller) give incorrect or incomplete information to the buyer (on this form or otherwise in writing or in conversation, whether through your estate agent or solicitor or directly to the buyer), the buyer may make a claim for compensation from you or refuse to complete the purchase."
How to beat the estate agent tricks:
Make sure anything said to you by the seller or estate agent is put in writing via email to your solicitor. Your solicitor will confirm this with the seller and bind their comments to the contract. You can claim compensation for financial losses if this information is incorrect. Read more - Can I sue the previous owner or estate agent?
6. Pressure
The most commonly used phrase of an estate agent applying pressure is "The seller will pull out if you don't exchange this week". For the buyer, this causes a huge amount of pressure as they are often unable to control the reason that exchange of contracts hasn't yet happened. For example, it could be:
- enquiries aren't satisfied
- waiting for mortgage offer
- survey flagged a defect requiring investigation
Whilst it is good to work to a timeframe, it doesn't help applying an unachievable deadline.
The code states:"1e. You should provide a service to both buyers and sellers consistent with fairness, integrity and best practice, and you should not seek business by methods that are dishonest, deceitful, manipulative or involve misrepresentation. You must avoid any course of action that can be construed as aggressive behaviour (*) or harassment (*)."
"18a. Aggressive Behaviour. Pressuring (for example by persistent and/or aggressive telephone calls) the buyer to act quickly to put in an offer, raise their price, skip the survey, finalise the sale and/or exchange contracts."
"18o. Harass/Harassment. Unwanted conduct which has the purpose or effect of: violating a person’s dignity; creating an intimidating, hostile, degrading, humiliating or offensive environment for a person."
How to beat the estate agent tricks:
Stay calm and understand the implications of the statement. If the seller does pull out, they'll search for a new buyer, which can take weeks. They'll then have to start the conveyancing process again and potentially get to the same issue you are encountering. The seller will exchange faster with their existing buyer versus a new buyer.
The best way to handle the estate agent is to return the issue to them. Explain that you want to achieve the deadline they are imposing but need their help. Get the estate agent working on getting the replies to enquiries, or helping to resolve the survey issue. Once they see the issue won't go away for future buyers, they are more likely to support you and remove the pressure.
Regulation of Property Agents Working Group (RoPA)
Propertymark are spearheading the ROPA working group advising the Government on a new regulatory framework to help raise professional standards in the estate agent industry.
The ROPA Report recommends:
- All residential property estate agents should be licensed (meaning the directors pass a "fit and proper test") with directors having a Level 4 or above qualification.
- All employed staff delivering ‘reserved activities’ should be licensed, Level 3 or above qualified, and adhere to a Code of Practice.
- A new regulator to be appointed to oversee compliance to the above with an overarching Code of Practice.
Regulation of estate agents won't stop underhand estate agent tricks but will make the estate agent (company or employee) accountable via their regulator. We could, however, see a decline in the percentage growth of house prices reported in our Housing Market Reports as the estate agent's practices around offers will be scrutinised; no more "they won't accept that offer, but they will accept this one".
Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.
