OFT sees conflict in cash for referrals from estate agents
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The Office of Fair Trading says the Government should consider a ban on referral fees between mortgage brokers and estate agents to combat potential conflicts of interest.
In a report called Home Buying and Selling published last week, the OFT warned that the fees could offer incentives for estate agents to favour some clients over others.
The OFT has suggested that the Government should consider banning the payments.
It says: “The prospect of additional income may give the estate agent financial incentive to prefer some buyer over other.
“We recommend that Government consider the potential for conflicts of interest should be removed, including a ban on such payments.
Estate agents can currently charge fees for referring buyers to other service providers providing the seller is made aware of such fees.
National Association of Estate Agents chief executive Peter Bolton King says: “If everything is transparent, I do not think there is necessarily a conflict of interest. Referral fees are a fact of life around the world.”
Alexander Hall chief operating officer Andy Pratt says: “I cannot see the point of banning it, because what it does is leave customers in a position where they are not getting a good quality referral from a good company.”
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Readers' comments (1)
Property Match | 15 Mar 2010 10:01 am
I respond to Peter Bolton King's expressed view that it should be OK to take fees for referring buyers to other service providers, provided the process is transparent.
Its simple, agents ought to stick to what they are hired to do - i.e find buyers and negotiate with them to obtain the 'current' value of the house they are commissioned to sell? Thats all.
If they misrepresent market values of houses they are commissioned to sell - thats wrong. It causes the market to boom then bust, which is bad for everyone - including estate agents.
If they take additional fees for arranging mortgages for buyer - thats wrong. Likewise taking additional fees for arranging buyer's legal serves is absolutely wrong.
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