HOA – Estate agents pressuring buyers to use in-house brokers and charging 8% commission on auction sales
The Home Owners Alliance (HOA) has revealed it is examining cases where consumers have been charged massive rates of commission by estate agents when conducting auctions on individual property sales.
The consumer representation group also highlighted the continuing pressurising of buyers to use in-house services such as tied mortgage brokers, and their failure to share basic property information.
HOA founder and chief executive Paula Higgins slammed many practices and asked estate agents whether they were fairly representing their client or just “working for themselves?”
It highlighted that consumers were left with nowhere to turn if they wanted the property because the agent was working for the seller.
Under extreme pressure
Speaking at the Westminster Legal Policy Forum seminar, The future for the home buying process, Higgins said: “We hear day-in day-out, and from our research, that buyers when they go to an estate agent they are under extreme pressure to use those in-house services.
“We know it’s not supposed to happen, but it happens, and buyers have nowhere to turn to because the contract with the estate agent is with the seller – there’s nowhere for them to go.
“They want that property, they don’t really want to get into an argument.
“So that is a real gap that is under-reported that I’m not sure the ombudsman will be able to take account of, which is why it’s really important estate agents get this basic information to buyers,” she added.
8% auction commission
Higgins continued by emphasising how important it was that the incoming regulation would have teeth and force estate agents to improve.
“It’s great we’ve got this estate agent regulation coming through – let’s hope it’s not just something on paper that they go and do a little online test, but that it is about enforcement,” she said.
“Where is this enforcement? Where are the third of buyers being pressurised into using [tied] mortgage brokers and not being allowed to look at properties – how are we going to support them?
“We have a situation we’re looking into where some of these auctions, and these are becoming more prevalent, where people are paying 8% commission.
“Let’s not have a system that the trade associations are very happy with, that protects them. Let’s have a continuous improvement,” she added.
Overall Higgins welcomed the incoming regulations and concluded that more transparency for estate agents was one of the biggest solutions, but questioned their potential conflict of interests.
“Estate agents, can you really make money off the buyer and seller in the transaction, or are you just working for yourself? I think that really makes things confusing for people,” she said.
Source: Mortgage Solutions