Earlier this year the Telegraph ran a piece entitled ‘the dodgy estate agent tactics that leave buyers and sellers out of pocket’ – referring to a new upselling strategy being implemented by estate agents across the country.
At House Buyer Bureau, we understand how important it is to feel in control of the buying and selling process. That’s why we’re 100% transparent with our customers throughout the sale process and we’ve drafted this blog post so that you can find out exactly what ‘agent upselling’ is and how to avoid its potential costs.
What is Agent Upselling?
Rather than making income only from selling fees, estate agents increasingly profit from mortgage broking and conveyancing services, causing buyers and sellers to lose out.
It’s understandable to think that upselling mortgage and conveyancing services may simply mean that the buyer is left out of pocket, but the seller may lose out too.
The reason for this is that there has been an increasing amount of pressure put on estate agents to upsell these products to the buyer, but if they are successful in doing so, it is also arguably in their interest for that buyer to be successful when they make their offer.
Because most people only sell homes two or three times in their lifetime, the stress of the process means that the seller puts their complete faith in their estate agent to work on behalf of them to find the right buyer at the right price for their home.
However, with the agent’s interest also pulled to a buyer that will take a mortgage and conveyancing through their agency, they may be inclined to sway the seller to accept an offer from that particular buyer. This may mean they miss out on a higher offer from a buyer that has sourced their mortgage and conveyancing independently.
In the Telegraph article, Jenny (name changed), an estate agent from London with 10 years’ experience, explains:
“It’s all about selling mortgages these days, [sellers] put this blind faith into their estate agent and that is being abused, pure and simple,”
“Most people only go through this process two or three times in their life. They don’t know enough to understand what is being done to them. Most people for the sake of a couple of thousand pounds will go with the [offer] they’ve been told has more certainty.
“So you just put both offers to the homeowner and say: ‘This one offered £2,000 less but they are doing everything in-house and it is far more likely [the sale] will go through. If you go with the person who’s offered £2,000 more, they are using their own solicitors and their own mortgage services so we can’t make any guarantees.’”
How to Avoid Agent Upselling – The Signs
Sellers – although it can be tempting to ask your agent to only pass on ‘financially verified’ offers, this gives the agent the right to dismiss offers from buyers not using their mortgage services automatically.
Buyers - buyers can be told they will become a ‘hot buyer’ if they use the estate agent’s mortgage broker, giving them special access to an exclusive list of houses only available to them. In reality, this just limits the market to the seller, and having a conversation with a mortgage advisor within earshot of an estate agent is a no-no, as there is a risk the agent could learn enough about your financial situation to encourage the seller to wait for a higher offer.
At House Buyer Bureau, we understand how important it is to feel in control of the buying and selling process and we’re 100% transparent with our customers throughout the sale process.