Reply to: How do they get away with it?! (Estate Agents)

[TheCyclingProgrammer]

The solicitors will refuse to deal with it if it looks dodgy.

Most value their livelihoods over one dodgy property deal. However if they are dodgy from the beginning - which they may be if introduced to by the EA - then they won't care.

Aren't solicitors obliged to inform the authorities if they suspect or are asked to do anything less than above aboard when dealing with this kind of thing?

I still think OP's client should inform the vendor and go from there. If the vendor is able to use this as a reason to drop the agent and deal with the buyer directly, thus saving themselves estate agent fees, then the buyer is in a stronger position to negotiate a better offer.

[SueEllen]

In terms of the vendor being aware my thought was that it seems so clumsy that it is bound to come to the attention of your clients solicitors in pre contract, thus it will come to the attention of the vendors solicitors and consequently the vendor.

Thus I though t maybe in the negotiations with the vendor he had said something like "well ok, but at that price I will only pay 500 commission".

The solicitors will refuse to deal with it if it looks dodgy.

Most value their livelihoods over one dodgy property deal. However if they are dodgy from the beginning - which they may be if introduced to by the EA - then they won't care.

[ASB]

In terms of the vendor being aware my thought was that it seems so clumsy that it is bound to come to the attention of your clients solicitors in pre contract, thus it will come to the attention of the vendors solicitors and consequently the vendor.

Thus I though t maybe in the negotiations with the vendor he had said something like "well ok, but at that price I will only pay 500 commission".

[ASB]

Sorry, I meant potential sticky wicket.

If you know that your client is acting in a dubious manner then by acting for them you are assisting. If that action is criminal then you are at risk. There are a lot of ifs in there.

However you are in a difficult position. You do not know exactly what is happening and you have advised your client accordingly.

[Wanderer]

I would also disagree that the vendor is aware of it. Why would they allow the Agent to take £4k which is rightfully (if the client is willing to pay it) theirs considering the offer inclusive of the £4k is actually less than the current offer on the table?

It is technically feasible that a vendor's contract with an estate agent could allow the agent to charge a "finders fee" to the buyer as well as charging a fee to the vendor, though I don't think most vendors would engage an estate agent on that basis for fear of it giving rise to a conflict of interest...

You should encourage your clients to report their concerns directly to the vendors. If the estate agents are all above board and legal then there is no problem. I don't think it's any problem for your business though...

[Power Mortgages Ltd]

It seems as though the vendor may be aware. After all how does the agent expect these unusual arrangements to get through the mortgage broker, lender, both solicitors etc without the vendor becoming aware.

I would have expected one of them to be at least a little cautious rather than engaging in a conspiracy to defraud. Or assisting in a fraud.

Some of these will also have reporting obligations.

So, if it is dodgy then the agent would be incredibly stupid to expect to get away with it. Unless of course a brown envolope has been mentioned in which case it is without fail entering into a conspiracy. And possibly other offences as pointed out by wanderer.

the op, by continuing to act, with this knowledge is on a sticky wicket. The choices, to me, are decline to act. Or establish a paper trail with the agent confirming exactly what the arrangements are.

How am I on a sticky wicket exactly?

The 'deal' is between the client and the Agent, I have expressed my concerns and told the client the risks of doing this and pointed out that the Agent is probably breaking some form of rules doing what he has suggested. As Estate Agencies are an unregulated industry, I am unsure of who the client can actually complain to and what it will get him by doing so and not being a Solicitor and well versed in contract law, specifically property contract law I don't know if this is in breach of any contract or not and how it could actually be proven if it is?

I am not aware of who the Agent is, the name of the firm or even the property in question at this stage so quite how I can complain is beyond me?!

As mentioned, the Agent will probably end up falling on his own sword if he does persist as he will no doubt insist on some form of written agreement that my client pays the £4k upon completion for fear of the client just not paying it. If this happens then there will be a paper trail which we can forward to the vendor to use against the Agent.

I would also disagree that the vendor is aware of it. Why would they allow the Agent to take £4k which is rightfully (if the client is willing to pay it) theirs considering the offer inclusive of the £4k is actually less than the current offer on the table?

[ASB]

It seems as though the vendor may be aware. After all how does the agent expect these unusual arrangements to get through the mortgage broker, lender, both solicitors etc without the vendor becoming aware.

I would have expected one of them to be at least a little cautious rather than engaging in a conspiracy to defraud. Or assisting in a fraud.

Some of these will also have reporting obligations.

So, if it is dodgy then the agent would be incredibly stupid to expect to get away with it. Unless of course a brown envolope has been mentioned in which case it is without fail entering into a conspiracy. And possibly other offences as pointed out by wanderer.

the op, by continuing to act, with this knowledge is on a sticky wicket. The choices, to me, are decline to act. Or establish a paper trail with the agent confirming exactly what the arrangements are.

[kingcook]

All agents, whatever they're selling/buying, are scumbags.

[Wanderer]

The Agent has asked what the highest amount my client would be prepared to buy the property for to which my client gave his figure. The Agent came back with a counter proposal that he would persuade the vendor to take my clients offer but for £4k less than my client is prepared to spend on the agreement that my client pays him (the Agent) the £4k personally!

Surely that is a massive conflict of interests?!

Estate Agents are required to pass all offers on to the vendor, promptly and in writing.

It sounds like your client made an offer which was met with a counter proposal, this is very very dodgy ground. If I were you then I would also feel duty bound to tell your client that entering into a deal like this with the estate agent could mean that both parties are committing a criminal offence under the Bribery Act 2010. As a buyer, I would just tell the estate agent what the offer is and insist that they pass it on to the vendors.

I'd also report the estate agent for trying it on.

[TheCyclingProgrammer]

I have no idea on the legalities of this either; I have seen some estate agents in London do "sale by tender" and charge the buyer a "finders fee" instead of the seller paying commission.

I've been doing research on this myself as I'm planning to buy later this year, but isn't there a risk that the £4k "inducement" paid to the estate agent could be treated as part of the overall consideration for the property for the purposes of stamp duty?

I believe any offer to settle a seller's debts by the buyer (e.g. paying the seller's estate agent fees or anything else) in order to get a lower sale price doesn't work to avoid extra stamp duty as it's treated as part of the consideration (although I bet lots of estate agents try and convince buyers to do this on properties near stamp duty thresholds). I wonder if this could be too (I also wonder how HMRC look at buyer "finder fees" too - probably depends heavily on the wording of the contract).

I wonder what would happen if your client was to approach the vendor, let them know what the sneaky estate agent has been up to, offer to meet them in the middle (so their offer + half of what the estate agent wanted from them) and use a different agent!

[Power Mortgages Ltd]

This sounds like a material breach of the Agency Agreement to me and would probably allow the vendor to cancel the agreement.

This might work in favour of your client, since if this double-agent is confronted by both parties, and agrees to cancel, based on his actions, then the vendor would be able to deal direct with your client?

IANAL

My thoughts entirely but I guess it just comes down to proof. I'd assume in order to enforce the £4k he would ask my client to sign something to ensure my client doesn't just walk away without paying him the £4k once completed and by doing so, he would then be providing all the evidence he needs for my client to take the document to the vendor to prove there has been a breach.

Worrying thing is, this is the second time I have heard this in a week from two different clients so I'd imagine it is becoming a practice more and more Agents are trying to get away with!

[Power Mortgages Ltd]

If I was your client, I would contact the vendor and tell him/her what's happened.

Completely agree. The difficulty is I cannot advise on any matter non-mortgage related like whether to buy the property or to take the risk in proceeding with this Estate Agent's offer because that doesn't fall under the remit of mortgage advice. I have pointed out the pitfalls from my professional opinion though to enable him to make his own mind up.

Personally like you, I'd knock on the vendor's door, explain what has happened, advise them to review the contract they have signed with the Agent and possibly seek legal advice with the view to tearing the contract up and selling the property privately anyway. Thing is, if that did happen I guess the onus would be on the vendor proving that this happened so unless my client recorded the Estate Agent doing it, it would be very difficult to prove and therefore the vendor would likely fail in any bid to oust the Agent from the process and would still have to pay them.

It really is unbelievable they are not regulated though!

[Scruff]

This sounds like a material breach of the Agency Agreement to me and would probably allow the vendor to cancel the agreement.

This might work in favour of your client, since if this double-agent is confronted by both parties, and agrees to cancel, based on his actions, then the vendor would be able to deal direct with your client?

IANAL

[Bronco Billy]

If I was your client, I would contact the vendor and tell him/her what's happened.

The pimp will just deny it. Get your client to purchase one of those mini voice recorders, and try and record the conversation..... And then play it for anyone who's interested (press / vendor / estate agency directors)....

[barrydidit]

If I was your client, I would contact the vendor and tell him/her what's happened.

^^this