Estate agents are the bad guys again

Home buying: Unethical behaviour is back, says Nic Cicutti
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The Independent Online
It had to happen. Amid the euphoria surrounding the latest wave of house-price increases, "knock the estate agent" stories are beginning to surface. Estate agents, who suffered through the lean years of the early to mid-1990s, now have the whip hand again. As on the last occasion, they are earning themselves the emnity of many home buyers and sellers.

The very scale of complaints from both sides led the Office of Fair Trading, which has regulatory powers over estate agents, to issue a warning this week that unless they remember their "obligations to consumers" they may be shut down.

John Bridgeman, director-general at the OFT, explains: "There have been reports some estate agents have been failing in their duties. I would remind them that I have powers to ban them from practicing as an agent if they breach the Estate Agents Act, or to remove their consumer credit licence if they engage in improper, deceitful or oppressive practices."

Mr Bridgeman's comments follow cases where estate agents are said to have accepted a bribe from buyers to "ring-fence" a property and not accept further bids. This can be attractive to an estate agent because the extra commission from a higher-priced sale is less than the potential bribe to be earned by a buyer.

Other practices worrying the OFT include:

rfailing to declare a personal interest to a seller, such as when an estate agent does not tell the vendor that he wants to buy the property, or that an associate who is a property developer is interested in buying it;

rfailing to tell the seller that the agent has an interest in supplying services to the buyer for which he will receive payment, such as a finder's fee or commission paid on a mortgage or insurance the agent is arranging;

rinflating the price of properties by claiming to buyers that fictitiously high prices have been bid.

This last concern reflects claims by many potential purchasers, including one who contacted The Independent .

The buyer, who declines to be named, says: "I was told the house, a three- bedroomed semi, had come on to the market that morning. My girlfriend and I went to see it that evening. We got the very definite impression from the vendor that we were the only people who had viewed it so far. I called the estate agent the next morning and offered the asking price, subject to a surveyor's report.

"He told me there were others already prepared to pay more and that we should consider raising our offer by at least pounds 5,000. I told him to get stuffed. He rang me back two hours later saying we could have it at the original price. We have since exchanged contracts."

Hugh Dunsmore-Hardy, of the National Association of Estate Agents (NAEA), accepts that in the current overheated market, there may be some unethical behaviour: "We welcome the decision of the OFT to clarify the legal obligations of estate agents towards their clients. It reflects our members' commitment to provide high levels of service and to act properly at all times.

"What makes me angry is that a tiny minority of people in this industry are ruining the reputation of the vast majority who do a good job for vendors, on whose behalf they act."

Mr Dunsmore-Hardy adds that the NAEA, together with the Royal Institution of Chartered Surveyors (RICS) and the Incorporated Society of Valuers and Auctioneers (ISVA), have long argued for estate agents to become professionally qualified in all the legal aspects of agency, together with the skills needed to assess a property and sell it. "It seems inconceivable but it is possible for someone to set himself up as an estate agent without any qualifications at all," he adds.

The OFT publishes a free guide for buyers and sellers, which explains in detail the law regarding estate agents and the steps to take when deciding with whom you want to sell or buy a property.

If you are unhappy about the activities of an estate agent, it is possible to complain to their professional body or the Ombudsman Scheme for Corporate Estate Agents, although not all agents are members. The OFT will also investigate where it appears an estate agent has broken the law.

NAEA: 01926 4968000; ISVA: 0171-235 2282; RICS: 0171-222 7000); Ombudsman Scheme: 01722 333306. For copies of the OFT's free guide `Using an Estate Agent' write to PO Box 172, East Moseley, KT8 0XW, or call 0181-957 5058.

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