I am in the process of selling my flat so that I can move to an area closer to my new job. Despite all the doom and gloom being reported about house prices, I received multiple bids and have now accepted an offer over the asking price.
Earlier this week I spotted a flat in the area where I’m looking to buy, which seemed perfect. However, when I called the agent they refused to let me view it as they said it was already under offer.
So I offered above the asking price over the phone. They still seemed reluctant to take me seriously and the agent said he would put me on a reserve list in case the current buyer pulled out. Eventually after a couple more calls, they finally put me through to the manager who agreed to put my offer to the seller.
My question is can an estate agent refuse viewings or even to put an offer forward once a property is under offer? Why would they do this when surely it is in their financial interests to sell for a higher price? And also, why was it showing as available on Rightmove if it had been under offer for over a week?
Shut down: Our reader was initially told he couldn’t put in an offer and ‘gazump’ another buyer, as the property was already under offer
Ed Magnus of This is Money replies: It’s great you managed to secure over the asking price on your current home.
In terms of the property you are looking to buy, estate agents must treat buyers fairly.
They must relay any offers quickly and in writing to the person selling the house.
Estate agents are also legally obliged to pass on any offers for the property right up to when contracts are exchanged.
We can only speculate as to why the agent seemed reluctant at first to put forward your offer.
It may be down to a lack of training or inexperience, or perhaps even down to the financial self-interest of one particular negotiator trying to protect their deal from being gazumped.
Although most agents will want to get the best possible price for the seller, they may also favour a buyer who they believe is fully committed and in the best position to transact quickly.
It’s worth remembering that most agents get paid commission when the property is sold.
For example, the estate agency might charge a 2 per cent fee meaning that if a property sells for £300,000, they’ll take a £6,000 cut.
The sales negotiator involved typically also gets a small cut from this fee. For example, 10 per cent. So in this example, they’d get £600 of £6,000. This is usually paid to the negotiator whose buyer is the one purchasing the property.
This means that whilst £10,000 more might mean a lot to a seller, it may not be such a motivation to the estate agent. On a 2 per cent fee, that equates to £200 more for the company or just £20 more for the negotiator responsible for the deal.
Access denied: When our reader called the agent they initially refused to let them view it as they said the property was already under offer
In terms of the property showing as available on Rightmove, this remains relatively common practice despite it being immensely frustrating to buyers.
From a business perspective, it can make sense for an estate agent to keep a property available for sale even after it has gone under offer.
They want people to get in touch so they can add them to their books for future listings, or potentially get them to view a different home.
It also allows the estate agent to line up replacement buyers for the property in case the deal falls through.
We spoke to Henry Pryor, a professional buying agent, and Paul Offley, compliance officer at The Guild of Property Professionals for their advice on the matter.
Can an estate agent refuse to put forward an offer?
Henry Pryor replies: An estate agent is legally obliged to report any offer to their client at any stage in the process and you were right to insist that they did.
An estate agent can only refuse to arrange access for a viewing or reject an offer if his client has formally instructed him to do so.
However, as well as being morally frowned upon there is always a risk when gazumping that the second buyer doesn’t perform.
Going back to the original buyer is humiliating and often unsuccessful. Whilst the agent gets the blame when it happens, it is the seller who makes the decision to gazump.
The agent is unlikely to recommend doing so unless the new offer is significantly better, and an increased bid in real terms is unlikely to make a huge difference to his commission.
Paul Offley replies: Any further offers received should always be referred to the seller unless they involve certain conditions, or are lower than any threshold set by the seller.
When a seller decides to accept an offer, it is up to them to liaise with their estate agent and decide whether they are open to further offers.
If an estate agent has refused your viewing, it is likely due to the seller wanting to finalise the sale as quickly as possible.
Although a prospective buyer may be willing to outbid the accepted offer, some sellers may hesitate due to fears of turning away a reliable initial offer.
Homeowners with an emotional attachment to a property might prefer to go with a buyer they believe will properly appreciate the home, regardless of the price offered.
Shouldn’t the property be showing as under offer?
Henry Pryor replies: If a deal has been formally agreed then best practice says that a property should be described as being ‘under offer’ or ‘sold subject to contract’.
This is to avoid a buyer going to the trouble and expense of viewing a property when an offer has already been accepted.
It also reduces the chances of an original buyer being gazumped by the seller deciding to take another offer and having to write off their abortive costs.
Slim chance: Henry Pryor believes the agent is unlikely to recommend going with our reader unless the new offer is significantly better
Paul Offley replies: Sellers may choose to keep marketing their property in case there are any higher bids and to show previous viewers that now is their last chance to bid.
When an offer has been accepted and the seller wishes to continue with other viewings, all parties should be made aware of the situation.
Many estate agents list their properties on third-party websites like Rightmove and Zoopla, and while these should be regularly updated, there have been delays owing to the frenzy of activity in recent years.
Nevertheless, the property’s correct status should be shown at all times on these portals. The Property Ombudsman Code of Conduct for Residential Sales states that how the agent is describing or advertising the property must reflect its true status.
Tell the truth: The Property Ombudsman Code of Conduct for Residential Sales states that how the agent is describing or advertising the property must reflect its true status
If the transaction is somewhere between having an offer accepted and the exchange of contracts, the status of the property should be sold subject to contract or simply ‘under offer’.
Once contracts have been exchanged, then it should only be advertised as sold.
To avoid disappointment, check with the estate agent what stage of the sales process the property is in prior to viewing it.
If there is a gap of more than a few days between the initial conversation and the viewing, check again on the day with the agent conducting the viewing.
Is Gazumping allowed?
When it comes to buying and selling property an offer is not legally binding in England and Wales until contracts are exchanged.
This means that once a buyer’s offer is accepted it may still be vulnerable to being gazumped by another bidder.
Gazumping is when another party makes a higher offer on a property, which a buyer is in the process of purchasing, forcing the initial’s buyer’s agreement to collapse.
Only once contracts have been exchanged, is there no possibility of being gazumped.