Why You Shouldn’t Always Trust Your Estate Agent

Updated Article: 04 -03 – 2010

I was engrossed by an article I was reading on the BBC website the other day, The Secret Agent, which surfaced a few of the ill practices estate agents embraced in their day-to-day profession. The worrying part was that not all these tactics were deployed by the odd rotten apple, some were actually tactics passed down and encouraged by management.

The article was about two undercover reporters working at various estate agents, investigating what really happens behind the scenes of some estate agents. Some of the tactics are pretty hardcore and heart-stoppingly ruthless; I’m not saying ALL agents harness these tactics, but I am saying these are reported issues and DO happen, and they’re issues we, as homebuyers and vendors, should be aware of.

Here are a few of the danger areas summarized:

Overvaluing properties

Properties are often overvalued by agents so their commission is boasted and overall profits are maximized. It’s also common practice for agents to convince surveyors that properties are worth more than they actually are.

Under-performing agents are heckled

Under-performing estate agents are heckled and those who have done the most deals are applauded and given champagne and cash rewards.

With rewardment schemes like that, no wonder psychological cords are pulled, forcing the underachievers to perhaps deploy dirty tactics to escape from the bottom of the barrel.

Going to war mentality

The article mentions that Jon Hunt, the owner of Foxtons, encourages his agents to adopt the mantra: “Our clients expect us to go to war for them!” – so it’s hardly surprising the lengths his staff will go to keep the deals coming in.

Inside financial knowledge

A lot of estate agents have in-house mortgage brokers, or brokers that work closely with agents. If that’s the case, it’s not unheard of for both parties to openly discuss potential buyers’ budgets so they can squeeze as much money out of them as possible.

Some buyers have no idea that the agents showing them around properties already know exactly what they can afford.

Faking documents

Faking documents has been one of the more extreme cases reported. Agents fake a signature on an absent landlord’s paperwork. Secret footage has been recorded of staff cutting, pasting and gluing signatures onto contracts. It was referred to as “chop chop”.

The invention of fake offers

This is where an agent will hide offers, so vendors are led to believe their properties were overpriced. Then after a while, when the owner is utterly desperate to sell, the agents make up false offers well below the original valuation so the owner reduces the price.

This is usually done when agents are trying to get bargains for their friends and families.

Backhanders

A case was reported where agents were asking for cash backhanders from property developers in return for cheating owners out of tens of thousands of pounds. So basically, an agent would convince vendors to sell their properties for a well undervalued price, so the developers could snap up a bargain. In some cases, properties were undervalued by as much as £40,000.

Even after the £backhander, the developer is still £30,000 in positive equity.

Fake Documentation

By far the most extremist practice- agents have openly offered homebuyers a fake British passport, P60 forms and forged utility bills. These documents help homebuyers get mortgages that they’re not illegible for ordinarily obtaining.

What’s your experience?

Have you ever dealt with estate agents that lied, or crossed a certain line to push through a deal or maximize profit? Hit me with your story…

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Talk / 5 Comments left so far

Matt Sherlock wrote this on 2010-03-13 16:58:29 Dear Blogger,

As a former estate agent, i can testify that all of the above practices you have mentioned above DO take place, and yes, these do happen in an more than just the odd one or two small independents, but in the large chains too!

But, regardless of the skullduggery, i think there will always be a place for the lesser spotted 'estate agent' in our property crazy country, they call Britain.

Some people have talked of the demise of uk estate agent with the advent of the internet and growth in 'private sale sites', however, i cannot see this taking place anytime in the next fifty years, at least!

In reality, the UK estate agent needs to be regulated in the same way surveyors, architects and accountants are regulated. Only then will we see this type of malpractice dissapear from the industry.

The other issue is that the industry has no type of formal training, and this is reflected when you go on a viewing. Recently being shown round an apartment in London with a rather inexperienced agent, i asked if if the property was leasehold or share of freehold - to which i was met with a totally dumbfounded expression!?

There's no wonder that these dodgy practices happen when trainee agents have no structured guidance, and think that overvaluing and faked signatures are the norm!

Trevor Kent - a former president of the National Association of Estate Agents (NAEA) - said the OFT should have introduced minimum standards of competence for those running an estate agency business. Famously quoting "A poodle clipper today can be an estate agent tomorrow".

Much love

Matt Sherlock
www.sherlockpropertyfinders.co.uk 1

Sam wrote this on 2010-03-19 12:24:05 The issue is business is tough. We always harp on about how bad estate agents are - but when did BA and Virgin ever get so much bad press for fixing their fuel prices and ripping consumers off for years on end. The fact of the matter is: business is not all sweetness and light, not in any sector. Even charities employ underhand tactics - think how the word "Chuggers" came into being! 2

Flats To Let Glasgow wrote this on 2010-03-25 13:19:47 Well I agree both of you guys though Agent Broker plays a vital role in looking for a better property that will suits according to your requirement but indeed set a limitations to give everything.

My one cents. 3

Rachel wrote this on 2010-04-29 19:33:11 We have been trying to buy a property 'in need of modernisation' and despite these coming up every few weeks, we have failed on 3 now. We are in a proceedable position, having sold our own house and our offers are the highest The reason for us being unsuccessful on more than one ocassion is due to a mystery cash buyer.. they pop up all over the place. During the bidding process however the agents are desperately trying to find out our mortgage and solicitor information. I think we haven't had enough 'extras' for them to make money out of so these houses are probably selling to people who haven't put their houses on the market yet and are showing interest in their 'extras'. I've heard they tell the seller who might be tempted to go for the higher offer that in their opinion the purchaser is unreliable.
Any suggestions on how we can ever secure a property, bearing in mind most of the ones we see are vacant possession? 4

Mandy wrote this on 2010-07-08 16:17:05 Im having problems with my Landlady/letting agent, she has been overcharging me for 3 years and when I found out about it she made a fake tenancy agreement ( which was for far more that she was charging and had charged me, which she told me to keep my mouth shut about because I should actually pay more to her ) up to cover her tracks, I had never seen this agreement before and it had no witness on it, the landlady laughed it off and told me it did not matter.
I have proof of how much she overchaged me but she refuses to discuss the matter so I have withheld my rent, I have since asked for my housing benefit paid to me and have with held the rent from this landlady until the overcharged rent has paid for the rent due to her, I informed her and she told me she would contact me soon after looking into the matter, she has not contacted me since (even though I have rang the office) and went behind my back to the council to tell them I am in arrears, I found this out by letter from the council, she overchaged me by £27 every four weeks and it amounted to nearly £1000 so I showed the council my proof ( I got a photocopy of my rent card from the landlady before she knew she was found out ) that I was in fact in front with my rent, Im not sure how to deal with my landlady she is the director of the business and the accountant all the other people in the office refuse to comment on the matter as they put it and I dont know where I stand, this woman is very sly and underhanded and I think shes going to try and pull another fast one. 5

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