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Investigation
The buyers viewed the property through Agent 1, giving positive feedback following this viewing. The Ombudsman was satisfied that the buyers made the transactional decision in the month prior to the sellers dis-instructing Agent 1. Agent 2 was not instructed until two months after this.
Rebecca Marsh
The asking price of the property was then set at £1,695,000 (after being marketed for £1,750,000 through Agent 1). Agent 2 was aware that the property had previously been marketed, as was communicated via the sellers in an email. With this knowledge, Agent 2 should have been alert to the risks of a dual fee situation developing; however, they did not ask to see the sellers’ contract with Agent 1, nor did they proactively seek a list of previously introduced parties. Instead of warning the sellers and looking to protect them from dual fee liability, it was the Ombudsman’s view that they ignored the risks.
The agent had not asked the buyers if they had viewed the property before…
The same buyers then viewed the property through Agent 2, some 3-4 weeks after they were instructed. They went on to offer through Agent 2. From Agent 2’s comments in correspondence with the sellers, the Ombudsman was satisfied that they did not ask the buyers if they had viewed the property previously, as expected under Code and Guidance.
Explicit interest
Prior to submitting an offer, the buyers explicitly indicated their interest in the property, suggesting it was likely generated through another agent. In an email to Agent 2 about making an offer, the buyers stated, “I understand that the property was on the market with Agent 1 before for some time, and the sellers have put the property on the market with you now.” If Agent 2 hadn’t considered it earlier, the buyers’ email should have prompted them to enquire about the buyers’ previous viewings through another agent.
Upon learning of the buyers’ offer through Agent 2, Agent 1 emailed the sellers. Agent 1 said that, as they had introduced the buyers earlier in the year, the sale should be referred back to them. To support their claim, Agent 1 attached a dis-instruction letter, explicitly mentioning the buyers’ name within a list of parties introduced by them.
The sellers forwarded Agent 1’s email to Agent 2 on the same day. In response, Agent 2 confirmed that the applicant had indeed viewed the property with Agent 1 but emphasised that the subsequent viewing occurred with them. Agent 2 expressed frustration, noting that the buyers showed no signs of having viewed the property before. They assured the sellers that they would discuss the matter with their manager and provide further updates shortly.
Key information failure
The Ombudsman was satisfied from the wording used that Agent 2 had not asked the buyers if they had viewed the property before, as expected as a matter of best practice and specifically paragraphs 5t and 8d of the Code. Furthermore, at the time of instruction, Agent 2 failed to ask for a list of previous viewers of the property. Given the buyers had subsequently offered this information, it is reasonable to conclude that the sellers would have provided information to Agent 2 about previous viewers.
The Ombudsman was critical that Agent 2 failed to obtain key information about previous prospective buyers at the beginning of their relationship with the sellers, exposing them to the risk of paying two commission fees.
Despite Agent 1’s effective introduction of the buyers, Agent 2 claimed they were the effective cause based on a previous court case covering a similar issue and due to the significant price reduction during their marketing period. However, Agent 1’s positive feedback and the buyers’ ongoing interest indicated an uninterrupted connection.
Agent 2’s service fell short of the requirements of the Code by not taking appropriate steps to protect the sellers and attempting to claim an undeserved commission fee. They should have checked if the buyers had previously viewed the property through another agent, especially since it occurred within the 6-month period specified in the contracts. According to the Code, the sale should have been referred back to Agent 2, and Agent 2 should not receive any commission.
Outcome
The Ombudsman supported the complaint concluding that Agent 2 did not meet the relevant requirements of the Code at the crucial times in this case. In their failure to do so, they failed to protect the sellers from the risk of dual fee claims for their sale.
The Ombudsman directed that Agent 2 cease any pursuit of payment of sales commission from the sellers as doing so would have represented a financial loss to the sellers. The decision put the sellers back in the position they would have been in had Agent 2 met the requirements set out in the Code of Practice.
TPO is wrong and their code of practise is wrong in this regard. If an agent is ineffective in creating the sale but a second agent is effective then why should the first agent be paid. Without the second agent there would be no sale. Introducing a purchaser to a property is not enough. They need to introduce them to the sale. TPO do not understand what it’s like to be in an office and how much work goes into creating the right environment and conditions for a sale not just a viewing. This needs to be looked at. At very least there should be something the TPO’s code for the position of a split fee which was always the way that ‘old school’ agents would agree to move forward. The code actually rewards poor estate agency and is not in the best interest of clients. If agents find out that someone has viewed it before with agent 1, what do you think the likely outcomes could be???? Not a sale, in many instances. How is that in the best interest of the seller?
Fascinating and in my opinion – the wrong outcome. Let’s ask some better questions. If no agent 2 would an exchange have taken place? Is it in the vendor’s interest to get an exchange of contracts? Was the second agent better at selling property? Did agent 2 originally suggest a realistic sale price, but lost the opportunity to sell first as agent 1 topped the price to secure the instruction … frustrating and delaying a sale opportunity for both seller and buyer. Does the vendor not hold a duty of care to agent 2, after all they had a list of viewers, were they sailing close to the wind, until the situation came out in the wash? Of the 1.6m agreed sales a year what % of agents ask the question at point of offer ‘did you view this property with another agent?’ my thoughts are a very low number do, so while The Ombudsman can sit in its Ivory Tower maybe regulation should fit day to day business practice.