A study of 2,000 home owners shows that over a third have felt pressured by an agent into use its in-house mortgage lender.
The survey, for Boon Brokers mortgage advisers, involved what it calls a nationally representative sample of almost 2,000 UK mortgage holders.
Almost half used a mortgage broker recommended by their estate agent and 37 per cent of them said they felt "pressured" by the estate agent to do so.
There was also a false belief amongst many that using a broker recommended by the agent would secure them preferential treatment, to help ensure they get the property they wanted.
Those most likely to use their agent’s recommended in-house mortgage firm were predominantly young.
Some 74 per cent of buyers aged 18 to 24 did so, compared to the age groups 25 to 34 (52 per cent), 35 to 44 (46 were cent), 55 to 64 (48 per cent) and 65 or over (30 per cent).
“So, it looks like younger buyers with potentially less experience and knowledge about the mortgage process were more likely to be pressured into using the agent’s affiliated broker or were unaware they had alternative options” concludes the mortgage broker.
The survey plays into the current debate within the industry about referral fees.
A recent report to government by the National Trading Standards Estate and Letting Agent Team recommends mandatory disclosure of fees to ensure consumers feel confident in the services they receive.
The proposal in turn follows a review into referral fees and their impact on buyers and sellers carried out by Trading Standards at the request of the Ministry for Housing, Communities and Local Government.
Boon Brokers, in a blog revealing the survey results, says: “[Referral fees] can lead to estate agents seeming pushy about using their in-house broker but although there are lots of benefits for them to do this, the buyer will not get preferential treatment for using the agent’s mortgage broker. Before agreeing to use any mortgage broker, you should compare the service with at least one other broker, to work out which broker offers the best service for your requirements.”
It goes on to say: “Another factor to consider when you are deciding whether to use an agent’s broker, is that if you get a mortgage agreement in principle, the agent will be aware of what asking price you can go up to, which could mean that they use that information to their advantage.
“The more money you pay for a property, usually the higher amount of commission they will earn, so they could try to give you the impression that the property is likely to receive the asking price, to encourage you to place a higher offer, for example.”
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In my time working for one of the "cheaper" brand corporates, we were regularly encouraged to tell the buyers that we would not be able to forward their offer to the vendor until they had spoken to our "financial advisor" so he/she could verify their ability to purchase. In the event we had multiple offers on one property, we were told to recommend to the vendor the buyer doing their mortgage through us over a cash buyer on the basis that as the mortgage buyer would be paying for a valuation, they would be more comitted to the purchase. Negotiators who were so aggressive as to get complaints to the MD were held up to us as beacons of success who were doing their job properly. As usual, the atrocious practices of these idiot companies will reflect on the rest of us.
Estate agency is not a moral business. Estate agency that thinks about it’s clients best need first, is. This is why the corporate machine has about 5 years left before complete collapse (unless they accept the needs of the clients and customer first). My advice for 18 - 21 year old in this business is too become surveyors. Quality estate agency will not occur unless the agent is a master or their own destiny. Working badly for the “powers that be” is not acceptable anymore.
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