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:
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 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.
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.
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…
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.