Can estate agents lie about offers?

Most agents will be a part of the Property Ombudsman and must adhere to their code of conduct, this is the Estate Agency regulatory body and agents would need to follow the rules and guidelines that the Ombudsman set out. Not following the rules could mean that the agency is expelled from the Ombudsman.

The rule is that estate agents should not be inventing anything or lying about anything and that offers should be acknowledged and submitted in writing within 24 hours of receipt.

Estate agents should also follow the Undesirable Practices Order 1991 and the Estate Agents Act of 1979 too.

The regulations include:

• Having a conflict of interest
• Engaging in coercive or collusive practices.
• It is an offence to withhold an offer from a seller.
• Offer Misrepresentation

What happens when someone offers on a property?

As mentioned above, legally an offer should be reported within 24 hours of receiving the offer, however, this doesn’t always happen and sometimes for ‘good reason’ I might add.

Any good estate agency will want to verify the offer is a legitimate offer and refrain from getting the sellers hopes up with an offer that is going nowhere.

Usually what an agent will do is request paperwork from the potential buyer when they submit an offer to the owner. They will request the offer in writing, proof of funds, mortgage decision in principle, IDs for all purchasers of the property and also their mortgage broker or bank advisor’s details. If a potential buyer fails to submit any paperwork, then it is highly likely that some offers may not be getting reported within the 24-hour window.

Why would an agent report an asking price offer to a seller with a buyer submitting no paperwork?

What if the owner told the agency upfront that he didn’t want his/her time wasted and any offers under a certain value should not be reported as they don’t want to know about it?

These situations happen all the time.

What the agent should be doing is to stay on the right side of the law and appease the seller. This happens with an upfront conversation to state that it is his legal requirement to make you aware of any offers within 24 hours even if the agent thinks it is not legitimate or a waste of time. If the seller doesn’t want a call, then the agent can just send an email of each offer so that they are fulfilling their responsibilities to the letter of the law.

However, stating the above, what can also happen is that no paperwork is received from a potential buyer and no offer is submitted to the seller because it is not going anywhere in the first place, this happens quite regularly in estate agencies. Frankly, the potential buyer is viewed as a waste of time.

Low Offers

This is another thing that quite regularly happens. An agent is fully aware that the seller is not going to accept under a certain amount, for explanations sake, let’s say £300,000.

The agent receives an offer of £250,000, tells the potential buyer that the owner is not accepting anything without a ‘3’ in front of the number and asks the potential buyer if he can increase his offer, the potential buyer says ‘no’ or they can only stretch to £270,000 as a maximum offer and the agency doesn’t even put the offer to the owner because they think it is a waste of time.

This happens frequently, again this is wrong for two different reasons.

Reason one is that it is against the law as mentioned above, but secondly, an offer gives the owner great feedback on the property and where the general public financially rates it within the marketplace, it is the owner’s decision whether to reject or accept the given offer and it could be that the owner may consider an offer of £280,000. If this is the case, then it does change the goalposts on the renewed offer of £270,000.

This also goes against the agency in terms of selling houses and in my opinion is the difference between a good and a bad estate agent.

Multiple Offers

Sometimes the marketplace is extremely buoyant, and it does become a sellers’ market instead of a buyers’ market. I have heard of cases where there have been as many as 50 offers on a property. The amount of paperwork involved in conducting 50 offers legally is absurd.

As a good agent, you would need to go through every single offer which does take a lot of time, plus there is a lot of pressure on the agency to choose the right offer or advise the owner to accept the right offer. Imagine it falls through and money is wasted on both sides.

You need to receive the mortgage in principle, proof of deposit, IDs, and mortgage information too. Some buyers delay their paperwork, and others simply do not have it to hand.

It’s tedious sifting through 5 different offers, let alone 50 offers for an agent.

I am sure out of the 50 offers, quite a few are below the mark and wouldn’t get reported, therefore, breaking the terms of the legalities on this matter.

But does it matter here? The seller is receiving the right service, the serious offers will come to fruition and marketplace nature will take its course, therefore, does the reporting of every single offer to buyer and seller actually matter in this scenario? I will let the reader decide.

Again, no harm in reporting every single offer over the phone and in writing to the seller as part of the legally compliant service.

Do you trust your estate agent?

Now getting into some uncomfortable territory that does happen and could happen to any seller or buyer. This needs to be written about because it is the elephant in the room and is the reason why people do not trust estate agents.

If you are selling your property, make sure you trust your estate agent!

• Do all offers get reported?
• How easy is it for an offer NOT to get reported?
• Is it easy for bribes to take place?

Take this scenario:

There is a derelict property with quite a bit of land around it, the property is on the market at £400,000 and is a probate property, it is empty and the inherited seller (son or daughter of the deceased) is selling the property and gives a key to the agency.

The property is in demand by the local developers of the area as there could easily be planning obtained to build three separate houses with driveways turning the investment into a very attractive proposition for a developer to make money.

The property is entrusted to the manager or the owner of the estate agency’s hands to pick the correct buyer. They are the seller’s preferred estate agent.

There are 5 interested buyers but one of the buyers is a developer who asks the agent to get the property agreed upon for £30,000 less than the other offers on the table but will give the appointed estate agent £10,000 as a bribe to get the property for him! Just don’t tell the owner about it, keep the £10,000 for yourself and allow the seller to lose £30,000.

Let me tell you that this definitely happens, there have been far too many rumours in the industry with other estate agents admitting to knowing that this goes on and it is morally wrong.

However, this is where I tell you to trust your estate agent and do your homework.

If there is a vacant property being left in the entrusted hands of a dodgy estate agent, then disgusting and evil practices can easily happen when trust is put in the wrong hands.

Therefore, it is very easy for an offer not to get reported to the seller and unfortunately, many sellers and buyers have fallen victim to this situation.

As mentioned above, I have just skirted around the surface of all the situations and potential scenarios of taking an offer down on a property and what goes into it, I would love to do a video interview and really get into the meat of this and unpack it properly.

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