Mortgage brokers are once again on alert after seeing a surge in conditional sales in recent months.
Under this practice, a real estate agent denies potential homebuyers the opportunity to view or bid on a property until they have consulted with the real estate agent's in-house advisors and attorneys, and in some cases, the buyer already has a mortgage. The same applies even if approval has been obtained.
Much has been written about this issue over the years, but brokers say that despite the laws and bills, nothing has changed and, if anything, the practice has become even more prevalent in recent years. states. 
It's generally a very amateurish act, but it goes on every day
And it is now being claimed that advisors at certain financial institutions sometimes give borrowers incorrect advice about mortgages.
Claire Jarvis, network partner at Mortgage Advice Bureau, says she regularly encounters conditional sales, where borrowers are offered products by unknown agents that aren't the best deal for them.
“We had a lot of clients who wanted to see a property with a real estate agent but were told they needed to make an appointment with an in-house advisor,” says Jarvis. “It brings out what can already be a long and stressful process for buyers and sellers.
“Vendors won't be happy to know that interested parties are being turned away because they didn't use the agency's advisors.”
Jarvis says he tells buyers who want to view a property to make an initial appointment and then switch to their preferred advisor after the viewing. She added that she has also won deals from borrowers who came to her for a second opinion when they were dissatisfied with the advice from their agent's advisors.
people lose sight of who they are responsible to
“I have met (and won) several clients who had previously been advised that their only option was a specialist 'backwards' lender,” Mr Jarvis says.
“It’s really important to look at individual circumstances favorably and stay knowledgeable about lenders and local building associations who might be able to take you on manually if the big guys say ‘no’. ”
According to research from Access Financial Services, 63% of mortgage advisers questioned said their clients had experienced a conditional sale in the six-month period from November 2023 to May 2024. Everyone in this group said that conditional sales harmed their customers. Stress, hassle, confusion, etc. A third (33%) of advisers thought conditional selling had worsened in the six months to May.
David Baker, managing director at Lift Mortgages, also encounters conditional sales frequently. He talks about recent events.
“One of my young clients was told he had to use a real estate agent broker right away,” Baker says. “The broker they used didn't even give them a good interest rate (for the mortgage); it was way higher than they needed to be.
Vendors probably won't be happy to learn that an interested party is being turned away because they didn't use the agent's advisors.
“The client was quoted in the 95% LTV range, but could actually reach the 90% range by just adding an extra £500.
“It's generally a very amateurish practice, but it goes on every day.”
Baker recently posted advice for borrowers on his LinkedIn page to help them understand the issue of conditional sales and what he calls the “sales pitch.” He emphasized the fact that sellers don't like buyers using real estate agents, and that the agents they introduce “maybe not able to get better rates than their current agent.”
Vizion Mortgages Director Craig Coulds shared a message he received from a customer on LinkedIn. They outlined concerns over agents insisting that buyers meet with an in-house broker before making an offer on a property, even though they already have mortgage approval in principle.
The client wrote in an email to the agent that they were happy with their existing broker (Woulds), but they claim the agent did not accept this.
Ami is in discussions with major agency groups, all of which have policies to avoid this.
The post is backed by a number of mortgage brokers who have had similar experiences, and Woz claims the practice is especially prevalent at one large agency.
“Every time I have a client look at a Connells property, I encounter (a conditional sale),” Woz said.
“I personally had to lie about what I was doing when touring properties on the market with them, because they told me I owned a mortgage company. If they knew, they wouldn't sell it to me.”
Woz said the agency would not address the issue directly if a client reported it because it could affect securing a property.
“I usually tell my clients to follow their advisor's mortgage booking, and then say, 'Don't say you already have an advisor.' So, if your offer is accepted, you want to use me.” If so, please come see me again.”
Connells did not respond to requests for comment.
If you breach your estate agent's terms and conditions, you may be prosecuted under local trading standards
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries (Ami), said the trade body was continuing to discuss these issues “with major agency groups” and that no group would avoid doing so. He said he has a policy.
He added: “Local customs are indicative of inappropriate behavior where people lose sight of who they are responsible to and whose interests they must act in. There are things,” he added.
However, when it comes to misadvising customers about mortgage products, Mr Sinclair said that although Mr Ami had seen no evidence that fees were causing provider bias, he believed that advisers “provide the best recommendations”. If you don't, like many advisors, you're putting your future in the industry at risk.” Discovered in 2010. ”
Extends an already long and stressful process
He added that if consumer duty assessments are being carried out correctly by lenders, they should be aware of when an applicant is not in the mix.
He advises that all parties involved should take care and that any breach of the estate agent's terms and conditions could be brought against them under local trading standards.
Conditional sales are prohibited by section 3 of the Estate Agents Act 1979, which states that all offers must be passed to the seller within two business days of receipt.
This article was published in the December 2024/January 2025 edition of Mortgage Strategy.
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