by Mark Johnston
Warnings That Home Buyers are Being pressured!
It seems that currently pressure is being applied to property buyers from both estate agents and property developers alike.
Some experts have warned that a growing number of building developers are pressuring their clients into using their preferred solicitor and mortgage broker.
A senior mortgage expert has suggested that there has been a ‘marked increase’ in developers forcing buyers to use their proffered mortgage broker and solicitor in return for ‘incentives’ such as free flooring.
Incentives come in various forms, such as paying 5 per cent of the deposit, covering the stamp duty or legal costs or having different flooring put in at no extra cost.
Reports have revealed that developers are not allowed to insist that potential use their finance professionals unless an incentive was being offered.
Ray Boulger of John Charcol, a mortgage broker said “estate agents were also pressuring house buyers in to using their in house mortgage advisers rather than allowing them to seek independent advice”.
Recent research found that one homebuyer in 20 who had taken a mortgage from an estate agent had been told he or she had to do so to secure the purchase. although the findings did not record the number of buyers who had walked away when faced with such a choice.
It appears that the most common tactic seems to be that, when making an offer, buyers are told they must see the in house mortgage adviser to make sure they can afford the mortgage. Otherwise the agent will say they can not recommend acceptance of the buyer’s offer, even if the finance has already been arranged in principle.
Some estate agents are even telling clients they would not be allowed to see any of the properties on their books unless the buyer used the agent’s mortgage adviser.
It is illegal for estate agents to block buyers who will not take a mortgage or other services. However, a series of reports published by the Office of Fair Trading (OFT) suggests that this has been happening.
Consumer Direct, the consumer advice service, received 3,565 complaints about estate agents between January and October this year, a 10 per cent increase on the same period last year. More than one third referred to substandard services, while 22 per cent concerned misleading claims.
The fact is mortgage broking is an activity that creates profit and estate agents sometimes enter in to the market to earn a share of the profit.
However, the problem arises when the ‘mortgage broker’ is really only there to facilitate the purchase of houses rather than being a fully trained mortgage specialist with the client’s best interests at heart.
Many industry insiders have stated that some of the ‘in house’ mortgage brokers operate on a very restricted panel of mortgage lenders, which means the client may not always be offered the best deal available to them. This could therefore make a very substantial difference to the cost of the mortgage.
Aaron Strutt, of Trinity Financial Group, an independent mortgage broker, says, “Buyers should not be fooled into thinking they have to take a deal when putting in an offer for a new home. However, it appears that as house sales pick up, more buyers are falling into the trap.”
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