The stress test

The Property Ombudsman (TPO) was asked to investigate a vendor’s complaint against a quick-sale agent and related to their communication and approach to the purchase of her property. The seller said that the agent had confirmed that they were the buyer but she believed this was false. She also said that they advised they would offer 80 per cent of the market value, which she was willing to accept as she required a quick sale. However, there were delays in the agent presenting their market valuations and when they eventually did it was £30,000 below her expectations, which meant their offer would be significantly below her requirements.

No contract was entered into between the agent and the seller and as such, the agent said the seller was not obliged to accept their offer. The seller felt that the agent’s approach was, in her view, dishonest and took advantage of her requirement to achieve a quick sale.

Investigation

Following an investigation, which involved listening to telephone conversations, the Ombudsman noted that the seller made the agent aware that a sale had fallen through, and she was looking to sell the property swiftly as she had an onward purchase to complete.

The agent’s approach, in her view, was dishonest and took advantage…”

The agent confirmed they would be ‘the buyer’ and would offer 80 per cent of the market value. The seller confirmed the property had been valued by a surveyor at around £265,000 and in response, the agent advised that they would be looking at £200,000 to £210,000 as an offer.

It was confirmed that the agent would be seeking two independent estate agents to value the property and that they were independent to the agent. A follow up email was sent to confirm the facts discussed in the telephone conversation the same day.

One valuation took place but the second was delayed and then cancelled. The agent was informed by the third party responsible for sourcing and arranging valuations, that they were having difficulty getting a second agent to agree to provide a valuation.

The agent confirmed by text that they were organising a desktop valuation and the seller replied to ask whether the other report had been received. The agent confirmed that it had been received but the valuation was quite low at £220,000. The seller expressed her disappointment and the agent confirmed that as they could not help, they would close her file. A total of nine days elapsed between interest being submitted by the seller and the withdrawal of the agent’s willingness to purchase the property.

The seller expressed her concern that the agent identified themselves as cash buyers but believed they were acting as ‘middlemen’. As the process did not proceed beyond initial valuations and no contract was signed, there was no basis on which to dispute that the agent was intending on purchasing the property with cash themselves.

The valuation report provided three figures; a market value, an achievable value and a quick turnaround value. Given the valuation of a property relies on many factors in order to determine, the Ombudsman did not consider this practice to reflect an unethical or unfair approach. The agent’s approach to also use two independent agents to provide a value was also considered fair.

Quick turnaround

However, given the seller’s disclosure of the need for a swift sale in order to complete on her onward purchase, the Ombudsman would have expected the agent to make the seller aware that given the need for such a swift sale, their offer would not be based on the ‘open market’ value, but rather that of the ‘quick turnaround’ figure which was significantly less.

Accordingly, there was an expectation on the agent to inform the seller from the outset that their offer would be based on the lower ‘quick turnaround’ figure and the reason for this – that being that they would have to negate certain checks to achieve the quick sale the seller was seeking and thus meant increased risk for them.

By not informing the seller of this, the Ombudsman understood that the seller’s subsequent awareness of the three figures and, specifically the ‘quick turnaround’ figure, had led to the seller’s perception of the agent’s actions being dishonest and unfair.

Outcome

The Ombudsman noted that the agent’s shortcomings were not in keeping with 1d of the Code – to act with fairness, integrity, and best practice. Although it was noted that the stress experienced by the seller was inherent to her circumstances at that time – needing a quick sale to continue her onward purchase. This inherent stress also amplified the necessity for more transparency by the agent on the ‘quick turnaround’ figure from the outset. The Ombudsman supported the complaint on this basis and made an award of £200 in compensation.