Q&A: Dealing with estate agents

Published 04th Apr 2007

Dealing with estate agents can be an intimidating experience for the first-time buyer. BBC News offers a brief guide to what rights homebuyers have in England, Wales and Northern Ireland...

What is gazumping?
If you put in an offer to buy a house which is accepted by the seller, but then the seller decides to go back on the agreement and accept a higher offer from a different bidder, then you have been gazumped.

Despite being a frustrating, and potentially expensive, experience the practice is perfectly legal in England, Wales and Northern Ireland.

Even when your offer has been accepted, the estate agent has a legal duty to pass on any other offers received unless specifically told not to by the seller. In Scotland a sale is considered legally binding from the moment an offer is accepted.

I've been told the seller has received a higher offer. Should I believe that?
Badly handled offers are one of the top complaints at the estate agents' ombudsman.
People who try to increase the price of a property after accepting an offer can cause heartbreak for a buyer. But even if it is questionable ethically, if you are the vendor and are offered an extra £20,000, then you are likely to accept.

But could a higher offer simply be a ruse to get you to part with more money? It can be difficult for the buyer to know.

According to the Office of Fair Trading (OFT), an agent must not invent a bid or claim to have a cash or first-time buyer unless this is true. Nor can they state that they have a potential buyer unless this is true.

The OFT suggests people should demand to see evidence if they have suspicions. This can be difficult in practice, though, particularly if you want to keep on good terms with the agent.

Is the Estate Agent obliged to pass on my offer?
When an offer is made for a property, the estate agent must pass it to the seller promptly and in writing, except those which the seller has told the estate agent not to be passed on, for example, all those below a certain price.

The estate agent does not have to give you details of other offers they have received.

Can I force the agent or seller to take the house off the market when my offer is accepted?
You can not force an estate agent or seller to take the property off the market, or stop advertising - just because you don't want to lose your "dream home".

The agent is working to get the best price for the seller, and is employed by him - not you.

However, some will offer to do so out of goodwill, or if you are seen as a good buyer, for example, because you are not in a chain.

Can an estate agent demand a deposit?
Yes, in England, Wales and Northern Ireland, but the estate agent should not hold a deposit or any other money unless they are covered by adequate insurance.

And all money must be held in a separate client bank or building society account or accounts, as set out in the Estate Agents (Accounts) Regulations.
Receipts for deposits must be provided.

Can estate agents use "creative" language to describe properties?
One of the most common gripes handled by the Ombudsman for Estate Agents is "inaccurate sales particulars".

While some artistic licence may be acceptable, it is an offence for an estate agent to make certain statements about a property which are false or misleading.

Can estate agents put for sale or sold signs outside empty homes?
This is generally seen as an "undesirable practice" by the authorities, and estate agents can be prosecuted.
Can the agent hit me with extra charges - and misleading contracts?
Estate agents must state either the exact amount you will be charged, or when this is not possible, provide details about how the costs will be worked out or give an estimate.
According to research by consumer website Which.co.uk, contracts can be badly worded and misleading.

It warns people to watch out for terms, which could catch them out. For example, if you opt for sole selling rights, and then find a buyer yourself, you will still have to pay the estate agent.

Another one to watch out for, if you are a seller, is a "ready, willing and able purchaser contract". You will have to pay once a buyer, who is able to exchange unconditional contracts, is found.

This still applies if you withdraw your property before the sale is completed. In this scenario, you may also be charged for the cost of 'For Sale' boards and advertising.

Can my estate agent discriminate against me if I don't want its financial advice services?
No. Estate agents must treat all buyers "fairly", under the terms of the Estate Agents Act 1979.

So-called "preferential listing" is also not permitted.
This is when buyers are told they will be put on an open and fast-track priority or preferential service list if they take financial services, such as insurance or a mortgage, offered by the estate agent.

However, with limited sanctions in place, Which? believes it can be very difficult for consumers to challenge these sorts of practices when they occur.

What about conflicts of interests an agent may have?
If you are selling or buying a property that your estate agent or his/her close associates wants to buy, you must be told promptly and in writing.

How to protect yourself - and complain if it all goes wrong?
The main problem for consumers is that estate agents are not required to sign up to a membership body - and the area is barely regulated.

An individual's right to reproach about their individual treatment depends on whether an estate agent is a member of a scheme.

The Royal Institution of Chartered Surveyors and the National Association of Estate Agents operate internal complaints procedures.

The Ombudsman for Estate Agents offers a complaints service for its member agencies, but the current voluntary scheme covers only one third of agents.

The ombudsman can award compensation of up to £25,000 for breaches of its codes, although many awards are for much less. The ombudsman publishes a list of members on its website.

Who else can I complain to?
If a buyer or seller believes that an agency has failed to meet its obligations they could complain to their local trading standards department.

The OFT can also issue warnings and banning orders if it has sufficient evidence of a breach of law.

Top Tips
• Find an agent which belongs to an Ombudsman's scheme;
• Be aware of the agents' legal obligations;
• Remember the agent is working for the seller not the buyer;
• Complaints about agents should be made to your local trading standards office;
• If the agent cannot sort out a problem and he is signed up to the OEA code of practice, you can take your complaint to the Ombudsman;
• Do not use the same legal adviser as the seller.
Source: Office of Fair Trading
Where do I go to for further information?
The OFT has a free booklet, called "Using an estate agent", which is available from its website or by calling 0800 3893158. The guidance covers England, Wales and Northern Ireland
Useful contact numbers

The Ombudsman for Estate Agents Scheme: 01722 333306
The National Association of Estate Agents (NAEA): 01926 496800

Source: ' Move Channel Ltd '

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