Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Friends of ours recently bought their first house, the estate agent told them two things, 1/ that they must use the estate agent’s conveyancer and 2/ that they must also use the estate agency mortgage broker, 3/ they were also told unconditionally that if they didn’t do these two things then the house would be sold to another interested party as bids were close, however, they weren’t told why which understandably upset them.
Our friends called me that evening asking for help. I explained to them that this type of scenario happens often and that they are not legally obliged to use the estate agent’s conveyancer or mortgage adviser.
Bottom line is, estate agents are obliged to present all buyer bids to a vendor fairly according to the Estate Agents Act 1979, so to suggest that their bid would be disregarded if their in-house conveyancer and / or mortgage adviser wasn’t used is actually a breach of their professional code of conduct.
We then went on to discuss the reasons for why the estate agents would behave in such a way.
To cut a long story short, it seemed likely to us that the estate agent’s mortgage broker was passing information to the estate agent regarding the financial situation of buyers hence giving the estate agent more control over which bids to shortlist. It also seemed possible, in this instance anyway, that the conveyancer and mortgage adviser may have been passing a ‘finders fee’ to the Estate Agent. By keeping the process ‘close to their chest’ the estate agents would be able to keep ‘informed’ and ‘in control’ throughout the process and possibly be able to speed up the purchase if need be. We also found that the estate agent’s broker was a tied to using just a handful of lenders.
There is a happy end to this story btw, after our chat the couple told the estate agency they weren’t legally obliged to use their conveyancer or mortgage adviser and that they had made other arrangements with a local financial adviser and a local conveyancing firm. They also reminded the estate agent of their obligations; ‘To represent all bids without prejudice according to their professional code of conduct’. As they wanted the house, they also made sure to reassure the estate agents that their financial situation was good and they ended up buying the house without any major problems.
To summarise, buying a house is one of the most important decisions you will make in your life and being in control throughout the purchase process so important if you are to make a successful acquisition.
Being in control means:
– Not being manipulated by the estate agent or the vendor for that matter to do things you don’t feel comfortable with.
– Remaining level headed and relaxed throughout the process. Although sometimes this can be a challenge, especially when dealing with difficult people!
– Getting the best mortgage possible – the only way to do this is by going through a whole of market mortgage broker or financial adviser. A financial adviser will be able to present you with ALL mortgage options including ‘direct mortgages’ where you can go directly to the lender, however, should you want the financial adviser to represent you and guide you throughout the purchase you can still instruct them, even with a direct lender mortgage. A good financial adviser will also identify other areas in line with your objectives where you might need help with valuable suggestions for how to go about achieving these.
– Basically, doing what’s right for you.
There is no question that in this market it is difficult for people looking to buy their dream home and I genuinely empathise with buyers. I sincerely hope this post helps people to understand the house buying process better and specifically why home buyers need to keep control to succeed.
Good luck and as always any questions feel free to get in touch.
See below a link to a good article from bbc news which addresses frequently asked questions (FAQs) for home buyers. Definitely worth a read.