Can Estate Agents Lie About Offers?

Can Estate Agents Lie About Offers?
While they may not rate highly in honesty surveys for professions, can estate agents lie about offers?

Part of the process when buying a property often leads to speculation over whether an estate agent is being honest about other potential buyers making a bid to push the price up.

You may believe that you are being told to ‘move quickly’, or there is a ‘bidding war’ to buy the property in question. Estate agents also use other terms to encourage buyers to offer more.

It may appear to be tempting since the estate agent will be earning more if they push up the offer price for a particular property.

However, estate agents are legally obliged to be honest and abide by a professional code of practice.

There’s no doubt that someone buying in a fast-moving house market may believe the estate agent is lying in a bid to entice a higher offer from them.

Here, we take a closer look at the issue of whether an estate agent can lie about the offers they have received – and we offer advice at the end on what to do if you suspect the agent is being less than honest.

The legal position

Reputable estate agents are normally registered with the Property Ombudsman.

Technically, it’s against the law for an estate agent to lie about an offer. However, the legal implications are hardly severe, because it’s rather difficult to prove that someone has intentionally lied.

A lying estate agent is hardly going to prison, that’s for sure. However, the industry is regulated by a governmental body, the Property Ombudsman. Any reputable estate agent will be register with the Ombudsman.

It’s part of their membership that all estate agents must agree to their Ombudsman’s code of practice, and if found guilty of breaching the code, they will be penalised and potentially expelled from the scheme.

Part of the scheme’s rules make clear:

  • An estate agent must not make up or invent details about any other offer they may, or may not have, received.

There’s more information about the Property Ombudsman’s Code of Practice on their website.

If you have a complaint about an estate agent and this cannot be resolved amicably, the Property Ombudsman is where you go if you want to escalate a complaint and have it resolved.

The Ombudsman offers advice and a mediation service to come to a satisfactory conclusion, and they can also award compensation if all else fails.

So while the legal implications for a lying estate agents might not be particularly bad, they could get expelled from the Property Ombudsman scheme, which would hurt their reputation and this could mean a loss of customers.

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Reputational harm

Reputation and trustworthiness are everything for an Estate Agent.

Displaying the membership of the Property Ombudsman shows that an estate agency is reputable and trustworthy.

It’s unlikely that vendors and buyers will want to deal with an agent who isn’t part of that redress scheme.

Reputation is an important asset for any estate agent. After all, you use them to sell your home, which is probably one of the most expensive things you own. So you will want to hire someone who you can trust.

The potential reputational damage that a lie about an offer could cause, is just not worth it. So most estate agents are unlikely to risk it.

Financial impact

Apart from potential legal implications and reputational harm, lying about an offer can also have a financial impact for the estate agent. A lie could risk:

  • The buyer withdrawing from the sale
  • The agent losing the commission worth several thousands of pounds

And here’s why: most estate agent is working on a commission earned from the final sale price of the property.

The amount extra they would gain for an increased offer, given that is likely to be only a few hundred pounds, is too small to risk it.

Say they are earning the average 1.5% in commission, and you increase your bid by several thousand pounds, that has a minuscule effect on their final invoice amount.

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Our experience of estate agents lying about offers…

Before we go too far into this, I just want to say that we simply do not know whether we have ever had an estate agent lie to us about offers. It would be almost impossible to find out for sure.

However, we have had a couple of interesting experiences that could be legit, or could be complete lies.

The ‘you can’t have a second viewing unless you put in an offer’ agent

When we were buying our first home, we viewed a property that we quite liked, but as it was our first ever home, we naturally had some reservations.

The first viewing hadn’t been ideal. Because the property was quite far from the estate agent’s office, they would only agree to conducting viewings on their way to or from the office (yes, that’s a bad estate agency!). As a result, it was getting dark when we had our viewing so wanted a second one to literally see the property in a different light.

When we asked for a second viewing, the estate agent said “well, are you going to put an offer in? We can’t do more viewings on the property unless you’re putting in an offer.”

Naturally, we didn’t like this high-pressure tactic and told the estate agent his approach wasn’t fair and we need a second viewing to know if we want to put in an offer.

At this point, he informed us “there’s an offer on the property so we can’t do another viewing unless you’re putting in an offer too.”

We’ll never know if that was true or not, but if it was, why not say that at the start? It felt more like he was lying about the other offer just because he couldn’t be bothered to do a viewing.

The ‘there’s a second viewing on Monday’ estate agents

This one isn’t specifically about estate agents lying about offers, but it’s happened to us twice so it’s still worth a mention.

On two separate occasions we have viewed a house on a Saturday morning and have been keen to put in an offer. Both times, when we spoke to the estate agent and started negotiating, they used the claim that someone else was had a second viewing booked on the property as a way to get us to increase our offer.

It was basically saying to us, ‘if you don’t get an offer accepted today, someone else might beat you to it on Monday’.

Again, we have no idea if there was a genuine second viewing booked in in either case, but the fact it’s happened to us twice is suspicious. I certainly wouldn’t be surprised if some agents lie about second viewings in order to ramp up the pressure on someone to increase their offer.

What to do if an estate agent is lying about bids

If you can prove your estate agent is making up bids, you can communicate to the Property Ombudsman and receive compensation.

Should you suspect that the estate agent you are dealing with is making up rival offers, you need to consult the Code of Practice published by the Property Ombudsman.

It’s here that you’ll find the information you need to challenge the agent and if it’s not resolved satisfactorily, then you will have the right to escalate a complaint to the Property Ombudsman.

They will then offer a mediation service, and if the agent has been found to be lying, they offer compensation.

When you challenge an estate agent about rival offers, they don’t have to tell you how much the rival bid is for, but you should ask for written proof that someone else has made a counteroffer.

If no written proof is forthcoming, then this will bring an end to the situation, and you’re probably right to suspect that the agent is trying to push up the price, probably on behalf of their client.

But if written proof is provided, then the estate agent is being honest and working in their client’s best interests by asking you to offer more.

Can the estate agent disclose other bids?

This can be a tricky situation because there’s nothing in the law, or in the Property Ombudsman’s Code of Practice, to prevent an estate agent from disclosing how much someone else is bidding on a particular property.

However, this is not standard practice for estate agents working in the UK – they will simply highlight that someone else is making a bid.

We mention this because should an estate agent be reluctant to give you details of the amount being offered, this does not mean that there is no offer being made.

It’s simply that the estate agent is reluctant to tell you what the counter bid is.

Again, it’s important to appreciate that the estate agent is not working for the buyer, they are working for the seller’s best interests.

They might give you a guide as to how much is being offered and this is part of their negotiation tactics.

How do I know if a counter offer is real?

It is your right to ask for written proof of another bid.

Put simply, you won’t.

As we have explained, you have to take it on good faith that the estate agent is being honest in telling you that a third party offer has been made, but they will not tell you exactly how much that offer is for.

For many people, this means you’re unlikely to know whether the offer being made is real or not and is simply a way for the estate agent to bump up the selling price.

You are within your rights in asking the estate agent for written proof, and the agent should be happy in giving you the evidence necessary to placate your fears.

This written proof usually takes the form of a signed letter that comes from the seller’s own solicitor and will acknowledge that a legitimate offer has been made and received.

Obviously, should the estate agent be unwilling to offer written proof, then this should be a warning sign that there is no counteroffer and the rival bidder is possibly being faked by the agent.

Will most estate agents pass on rival offers?

The simple answer as to whether estate agents have an obligation to pass on an offer is ‘Yes’.

That’s because the estate agent has a legal requirement to present all the offers being made by potential buyers to the seller.

This must be done up until the point when the contracts are being signed.

However, this also means that as the buyer who has had an offer accepted, another potential offer can be placed in front of the seller, which may be accepted before the contract has been signed.

Remember, the selling process once you put in an offer can take several weeks to complete and unless you ask for the house to be taken off the market, then you run the risk that another offer will be made.

When you have a rival offer that is higher than yours accepted, this is known as gazumping.

How do I protect myself from dishonest estate agents?

Here are some tips from the Propertyroad team on how to protect yourself if you suspect that the agent is being less than honest:

  • Research: Before you make an offer, check the market value of the property, the local area, the seller’s situation, and the demand and supply of similar properties. This will help you to make an informed and realistic offer, and to avoid overpaying or under-selling
  • Be cautious and discreet: When you are viewing a property or negotiating with an estate agent, be polite and friendly, but do not reveal too much personal information or show too much emotion. Do not let the agent know your bottom line or your maximum budget
  • Get everything in writing: If you make an offer, ask the estate agent to confirm it in writing, and to inform you of any other offers or changes in the seller’s situation. If the agent claims there is a higher offer, ask them to provide proof, such as a copy of the offer letter or an email from the other buyer

If you suspect that an estate agent has lied to you or breached their code of conduct, you can report them to the relevant authority, such as the Property Ombudsman.

Buying or selling a property can be a stressful and complex process, but it can also be a rewarding and exciting one.

By being aware of the potential estate agent tricks of the trade, and by following the tips above, you can ensure that you have a fair and honest transaction.

Authors

  • Steve Lumley

    Steve Lumley has years of experience writing about property. His output has covered everything from property investment, news for landlords and student tenants to articles on how to run a successful portfolio and starting out as a property investor. He has also written several books on the subject.

  • Paul James

    Paul James, is a marketing expert with a passion for property. As well as being a property investor, Paul has also worked within the marketing departments of some of the UK’s leading estate agents. Paul is the founder of Property Road.

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