Why complaining about your Estate Agent might not be as straightforward as you might expect.
As one walks around and browses the windows of their local estate agents, they may feel confident with the observation of decals supporting the logo of the Office of Fair Trade. With membership to The Property Ombudsman, one would assume the public are fairly well protected when something doesn’t go to plan. It is not unreasonable to expect that in the event that they need to complain, all they have to do is pick up the phone and register their grievance with the all important ‘overseer’ of estate agents.
Taking Advantage of the Vulnerable.
Having been asked recently to advise an elderly lady who fell foul of an unscrupulous local estate agent (sorry, I’m not going to mention names!), I find myself firmly in the position of the consumer. In this instance, she has not only received a poor level of service, but she has been put on a long sole agency agreement at an excessively high fee, charged almost twice the going rate for her energy assessment, charged for legal work which she didn’t want and charged extra for photographs. She only chose the agent because they gave her the highest valuation – sadly far too high, so the whole relationship was kicked off with a lie.
Whilst I am no lawyer and made that clear to vendor, I was able to tell her about the Estate Agency Act (1979) and some of the rules that appeared to have been broken. In particular, the fees charged for photography did not appear on the written agreement and the agent didn’t provide evidence of the valuation (The Estate Agency act has recently been modified so that agents have an obligation to record how they arrived at a valuation. Clearly, over-valuing is becoming a well known problem!).
And when you need to complain.
So a quick call to the Ombudsman should sort things out nicely. Sadly this is not the way the Ombudsman works. Before you can complain to the Ombudsman, you must go through the individual company’s complaints procedure. Simple? No way! (Actually, one could be forgiven for thinking that some agents make it as difficult as possible for customers to make a complaint.)
Take a look at a typical complaints procedure from a well known national estate agency. Please note that this is an example of a complaints procedure and it was not the agency involved in the case I mention above. http://www.haart.co.uk/contact-us/compliants/ .
Thumbs up to Haart for publishing their complaints procedure on-line, but take note that before the Ombudsman will get involved, you have to make a complaint in writing to the branch manager. If he doesn’t deal with it to your satisfaction, you then have to write to the regional manager, and if you still haven’t got the answer you are looking for, then you have to write to the customer relations department. Only then will the ombudsman get involved if they have not sorted it out. So the agency get 3 opportunities to sort this out before they can be rebuked in any form at all. This is going to take weeks or months and hours of the consumer’s time! So how many complainants would fizzle out before getting their case heard by the Ombudsman?
The Ombudsman – a help or hinderance?
To comply with current legislation, estate agents are practically forced to be members of the scheme with a membership fee of £170 + VAT for a single branch. With the knowledge that there are some 13,000 member branches registered for Sales activities, that equates to over £2M for which they dealt with 587 complaints in 2011. Plugging this into my calculator, I work out that each complaint costs £3400 on average to investigate. Is this good value, especially given that 294 of the 324 awards made were less than £500?
And when one looks at the 2011 Annual Report from The Property Ombudsman, the satisfaction level from consumers is fairly shocking. In their own satisfaction survey, only 25% of complainants were satisfied with the level of the award made and 32% of complainants were satisfied with the decision made by the Ombudsman. In my mind, this doesn’t paint a particularly good picture of the industry on the whole. The annual report makes quite interesting reading.
http://www.tpos.co.uk/downloads/reports/TPO%20Annual%20Report%202011.pdf
If you do get a chance to have a look at this document, take a look at the level of compensation paid. The thought of being reprimanded by their Ombudsman should send a shiver down the spine of any business owner. Take a read of some of the cases involved. On page 30, an example is given where an agent has clearly done a pretty poor job. The problems included failure to arrange viewings correctly, even with the knowledge that a large dog was resident and would be in significant danger if it got onto the busy road. When the surveyor had to take cover from the owners’ Dog because the agents have slipped up again, the implications on the progression of the sale could have been huge. (Our advice to vendors is to feed surveyors on chocolate biscuits, not feed them to your dog! They have the power to make your sale fall through or be renegotiated by thousands of pounds.)
On top of the dog incident, the agents had clearly messed up on at least one viewing which had not been booked, could not find any evidence of sending out a memorandum of sale and had not followed up the transaction after the sale was agreed. The Ombudsman awarded the vendors £350 compensation. It doesn’t say in the report how much the agents had charged the client, but it is usual for estate agency fees to be in the region of several thousand pounds.
I know that if my own agency had let down a client in this way (and I really hope we never get close!), I would not feel it appropriate to make any charge at all. The whole reason for instructing an estate agent is to make sure that you maximise on the price you achieve for your home and that any sale goes through smoothly, which in this instance was not likely to be the case.
I frequently hear of fairly significant complaints against agents locally. Some are justified, some are unfair and others are quite serious. I’ve heard of instances where offers have not been put forward to the vendors and many others like my first example, where vulnerable clients have been taken advantage of. The problem in my mind is that the Ombudsman can only become involved in complaints after a serious amount of effort from the consumer. Even after the agency has been found ‘guilty’ by the Ombudsman, the penalty is usually fairly insignificant and the repercussions are fairly small whilst the general public will almost certainly never find out.
Name and Shame
When an agent under-performs or breaks the rules, should they not be severely reprimanded? Having survived 5 years without a single request to view the complaint procedure, my feeling is that any complaint that makes it as far as the ombudsman is likely to reflect poorly on an agency. If the complaint is upheld, then surely consumers have a right to know. Surely this makes for a fairly strong case for publication of the outcomes of such cases.
Perhaps to explain why the Ombudsman doesn’t come down particularly hard on its members, the whole set-up needs to be considered. Since both the Chief Executive and the Chairman of the Ombudsman used to be estate agents themselves and the simple fact the ombudsman is funded by its estate agents and run by estate agents, is going to mean that they are never going to be too harsh on their membership. Simply put, if they upset their members, then they are probably going lose members to rival organisations such as the RICS Ombudsman Scheme.
In the meantime, we’ll continue to display our Office of Fair Trade sticker in the window, in the knowledge that if anyone ever has a case against us, we can rest assured in the knowledge that it probably won’t break the bank or even damage our unblemished reputation!
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