Reporters with the BBC television show called Whistleblower went undercover to find out what "dodgy" practices British real estate agents are up to. She caught agents on tape lying to vendors (sellers) and purchasers (buyers), forging names on documents, misleading surveyors, and fabricating offers to get sellers to lower their prices, and advertising properties not actually for sale, among other acts of chicanery.
Ironically, the show aired the day that the Office of Fair Trading (OFT) set up a code of practice for "estate agents," proporting to ensure that buyers and sellers get a fair deal when working with professionals.
Codes of practice, it seems, are fairly worthless without regulation behind them, a lesson the Americans across the pond should take to heart, as the federal government, banks, third-party service providers and others seek to dismantle the real estate industry by side-stepping state regulations that are already in place.
Currently, anyone in England can hang out a shingle as an estate agent; the OFT has rejected demands for compulsory licensing.
Keep in mind this is exactly what could happen in the U.S. if real estate agency is removed from state oversight - there will no longer be a need for licensing, but real estate agents will still be around.
Here are some of the embarrassing tricks estate agents were caught doing on film:
- Supplying an undercover reporter with a false British passport in exchange for 750 pounds, so the buyer could apply for a mortgage
- Lying to surveyors about the value of other properties to drive up prices
- Insisting buyers turn in their financials to the real estate industry's lenders, who turn around and tell the estate agent how far to push the buyer
- Luring sellers into listing with a high asking price, and getting them to lower their price with false offers that are significantly lower than the seller was expecting
- Lying to sellers about the price of true offers to gain time to convince them they're getting a good deal
- Getting kickbacks from developers to buy a property from a seller by getting the seller to significantly lower the asking price
- Flyboarding - putting "For Sale" signs on properties that aren't in the agency's books
The biggest real estate company in England, Foxton's, led the parade of shame.
Says UK-based American executive Lisa McNew, "Reporters graced nearly every Foxton's store front the morning after the hour long expose'. They had a "sister" mortgage firm that was illegally sharing financial information with the agent side of the business, pushing people into more expensive homes and encouraging them to pay more. I am told the mortgage company was completely liquidated by authorities yesterday."
America has its problems with agency, including agents' lack of disclosure over whom they represent, and most agents wouldn't discourage a buyer from making a full asking-price offer, but that nothing compared to how bad it could get if the real estate industry isn't allowed to regulate itself.
That's why it's crucial that the government think long and hard about competitive practices that are regulated VS the potential of competitive practices in an unregulated bank-controlled environment.
There, but the grace of George, goes America.
