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They say that honesty is the best policy. But can estate agents lie about offers? What about other aspects of the house sale? How much do they HAVE to tell you? How much do they keep to themselves? If you’ve ever wondered about these questions, you’re in the right place. In this article, we’re going to tell you the truth about lying.
After undertaking some research, you’ll discover that the more responsible and reliable agents are members of The Property Ombudsman. There are other industry bodies, but this one is the most well-known. Membership of The Property Ombudsman means that estate agents must agree to a Code of Practice. If they break these rules, the agent will be penalised and removed from the scheme.
One of the rules laid out in the Code of Practice is that estate agents are not allowed to make up or invent details about an offer that either does or does not exist. The exact clause is: ‘By law you must not misrepresent or invent the existence, or any details, of any other offer made or the status of any other person who has made an offer.’
The rules of The Property Ombudsman should make it unlikely that an estate agent will make up an offer because it carries a lot of risk. However, in reality, an estate agent could invent a phantom offer and, providing they’re not caught out, no one would know about it.
An estate agent lying to a buyer about an offer usually carries a relatively small risk, as the likely outcome will be that the buyer increases their offer to match or exceed the new offer that the estate agent claims to have been submitted. However, an estate agent lying to you as a seller about offers carries a lot more risk, because you could challenge them.
Yes, an estate agent is legally obliged to tell you in writing about every offer that is made. They have to tell you even if the agent knows that the offer is lower than the price you’re willing to accept. This is because you need to have the opportunity to turn down offers that don’t meet your expectations.
In fact, an agent must present all offers to the seller up to the point that the contracts are signed. If you’re a buyer, there are a couple of ways you can protect yourself from being gazumped by another buyer that makes a more attractive offer. These are:
A lockout agreement involves a buyer paying a holding deposit to the seller’s solicitor on the condition that the seller takes their property off the market for a period of time. This removes some of the risk of a competitor putting in a bid at the last minute. It also shows the seller that you are serious about the purchase and are keen to proceed quickly.
A good will agreement is slightly different from a lockout agreement because both the buyer and the seller pay a deposit when the offer is agreed so that if either party pulls out, the other side keeps the deposit money.
Unless the vendor has instructed otherwise, estate agents are legally obligated to pass on written offers within 24 hours of receiving them. If you suspect that your estate agent has not passed on an offer, your first point of contact should be the agent’s head office. If you feel that the head office has not dealt with the complaint in a satisfactory manner, you can approach an ombudsman so as to take the issue further.
In a word, ‘no’. When they relay to you the offers that have been received for your property, estate agents cannot attempt to sway you towards one particular offer over another. For example, a buyer may have committed to using an estate agent’s in house services (such as conveyancing), and this could lead to your estate agent wanting to sway you towards choosing this buyer.
Also, estate agents can’t try to persuade you to accept a certain offer because they believe the sale will move faster, (such as a buyer with no chain). The decision has to be entirely made by the seller.
An estate agent is unlikely to go to prison if they make up offers on a house, but it does go against the codes of conduct that most legitimate agents choose to follow. If they are found to be in breach of the Code of Practice, they will have their membership revoked and this will have a detrimental effect on their business.
The best way to find out whether or not a third-party offer is real is to ask for written proof. This is a fairly standard request, and the seller’s estate agent should be comfortable with providing the evidence that you have requested. Usually, they will share a signed letter from the seller’s solicitor, acknowledging receipt of a legitimate offer. If an estate agent is unwilling to provide this written proof, it can be a warning sign that the other offer is fake.
There’s no law, and for that matter, neither is there a Code of Practice clause that prevents an estate agent from disclosing just how much someone else has offered on a property. However, this isn’t really a standard practice in the UK.
Giving you a guide figure rather than an exact figure for other offers is one of an estate agent’s many tools of negotiation. Estate agents are always working for the seller, not the buyer.
If you think your estate agent is lying about offers, you should contact their head office as soon as possible and explain the reasons behind your complaint. If it is not solved to your satisfaction, you can contact the Property Ombudsman.
Here are three lies of which you should be aware when you’re dealing with an agent.
One lie you may hear from an estate agent is that your property is really popular, resulting in you getting a lot of viewings. The reality is the agent may just be booking all the viewings back-to-back to make it appear as though it’s in high demand. They might also be asking their friends and relatives to come and view your property and pretend they’re interested so as to make the agent appear as though they have done their job in creating lots of interest in your property.
This is a common one. You’ll be told that your property is valued at more than it is actually worth. The reason for this is simply to get you to sign up and be their client. If an estate agent knows they’re competing against other agents for your property, they will likely overvalue your property to encourage you to sell with them. You should remember that their valuation is not a promise of the amount that you’ll receive. As such, it will likely lead to pain down the line because your property could well be on the market with little to no interest, which is only going to lead to the agent trying to convince you to reduce the price. Setting a realistic price in the first place would avoid this heartache.
Thankfully, there is. You can speak to a cash buying company and arrange to get a quick cash sale. Choose the right company (see other articles about how to select a cash buyer) and you’ll be able to enjoy a hassle-free sale with all legal fees covered by the company.
Boiler Plan – a retailer and installer of boilers – surveyed just over 1,000 people to reveal the issues that British homeowners would choose not to disclose to potential buyers to make sure their house sale was not jeopardised.
Almost half (47%) of Brits said that they would keep any problems with their neighbours a secret to help increase their chances of selling their home. However, in order to meet legal obligations, sellers must be completely accurate; that includes disclosing issues that have involved official bodies, such as noise complaints made to the council.
Furthermore, Boiler Plan reveal that 13% would hide news of crime sprees in the area. Similarly, 13% of Brits claim they would keep any surface damage issues from a buyer; such as broken fences that could cost those looking to buy the property.
The 2008 Consumer Protection Against Unfair Trading Regulations requires a seller to inform their estate agent – and any potential buyer – of material information that may affect an average consumer’s transactional decision, not only to buy a property but even ‘an omission that may affect a potential buyer’s decision to view a property’.
According to the Boiler Plan survey of homeowners, those in the North-West are more honest about disputes in their home and are also the most likely to disclose any issues about their neighbours. Londoners are the second most likely to provide information on bad neighbours to potential sellers, with 58% saying they would mention any issues. This compares to just 46% of Brits in West Midlands, East of England, Northern Ireland and Wales who said they would disclose any issues they had with their neighbours.
You must tell potential buyers about information that could affect their decision to purchase your home, including:
Ian Henderson, Managing Director at Boiler Plan said: “It’s very concerning the number of people who would hide information regarding their property to potential buyers. We advocate being as honest as possible to make sure the buyer has everything they need to make the right decision. Not doing so could potentially cost you so much more, as buyers could look to seek compensation and repair costs.”
A couple who answered ‘no’ on a standard conveyancing form that asked if they were aware of any disputes about the property they were selling were found liable for fraudulent misrepresentation. As a result, they had to pay their buyers £67,500 in compensation and costs.
Mr Justice Astill ruled that Ian and Julie Long fraudulently misrepresented to buyers Angus and Barbara McMeekin that there were no neighbour disputes involving their property at 14D High Trees, in Waterlooville, Hampshire. The judge found there was “an atmosphere of constant confrontation” between Les and Geraldine Cooper, the owners of 14A High Trees, who owned the freehold of the access road shared by four houses, and the occupants of the other houses.
The McMeekins “had their lives devalued by a running dispute” about the use and parking of vehicles on the access road, said the judge. “That is precisely the kind of information which must be disclosed to a potential purchaser for them to be able to make up their minds on whether they wish to buy a property with constant disputes and antagonism existing between the owners of the access road and those who have rights of way over it,” he added.
The Longs argued that there was no dispute over the access way because they and the owners of 14B and 14C had taken advice from solicitors who told them that the Coopers had the legal right to prevent parking on the access road, and they had accepted the position. They also failed to reveal that there had been an argument over rubbish dumping.
“The seller’s property information form could not be expressed in clearer language,” said the judge. “It is not a lawyer’s form, but one which is designed for everyone to be able to understand.” He added that it was “impossible to conclude other than that [the Longs] must have known that they were not being truthful.”
Misleading a buyer, whether intentional or not, could be a breach of the Misrepresentation Act 1967. The Misrepresentation Act exists to protect consumers from false or fraudulent claims that induce you into buying something or entering into a contract. It also allows you to file for damages, so compensation can be claimed. The onus is on the seller to prove that they did not mislead the buyer. If they cannot prove this, the most likely outcome is that damages will be paid to the buyer. This is often the difference between the amount they paid for a property and the amount it would have been worth had they known about the issue.
As well as declaring disputes, a seller must also leave all the fixtures that they agreed would either be included in the sale or paid for separately (such as fitted carpets or a fireplace). If a buyer finds that something has been removed, they must check with their solicitor or licensed conveyancer whether or not the item should have been left in the property.
In the event of a property being damaged after the contracts have been exchanged but before the sale is completed, the seller cannot withhold this information. They must inform the buyer. However, it is the buyer’s responsibility to insure the property from the date of exchange of contracts and to have the repairs carried out. The buyer will therefore have to make a claim on their insurance policy.
It’s a criminal offence to lie on a mortgage application about:
If you’re a buyer and you submit an application that contains a lie (such as your income), it’s likely that you’ll have problems with repayments in the future. If you do, a review would be conducted by your lender to discover why you are facing difficulties. The lie you made would then be uncovered. If you are caught, there are a number of possible outcomes:
As well as the penalty, it’s likely that you’d also lose your house, so it’s really not worth lying on an application form.
We hope that this article has answered questions you have about whether estate agents can lie to buyers and sellers, the facts that sellers have to declare, and how buyers can lie as well. If you have problem neighbours or a home that requires repairs to be carried out (or simply don’t want to risk selling your home to a lying buyer) and you’d like to chat with us about a fast cash sale, our experts are available 24/7. Send an email or call us for more information.