The Property Ombudsman (TPO) has ordered an estate agent to pay compensation for failing to disclose the existence of a competing buyer, reinforcing the importance of transparency during the sales process.

The complaint

The complaint was brought to TPO by Margaret and Alan, whose offer on a property was accepted in December 2024.

Following acceptance of their offer, a Memorandum of Sale was issued, and the couple were led to believe that the property would be removed from the market.

Acting on that understanding, they instructed solicitors and began the mortgage process, including commissioning a mortgage valuation survey at a cost of £790.

However, on 7th January 2025, the agent informed the buyers that the seller had decided not to proceed with the sale. No explanation was given at the time. Three days later, Margaret and Alan learned through a third party that another purchaser, Ashid, had been progressing a transaction on the property at the same time as their own.

The agent explained that Ashid had originally agreed to a sale in October 2024. Although that transaction stalled after he attempted to renegotiate the agreed price, the seller later chose to continue discussions with both parties. According to the agent, the seller decided to proceed with whichever buyer could complete the sale most quickly.

The investigation

In its adjudication, TPO considered the requirements of the Code of Practice for Residential Estate Agents. The Code requires agents to keep buyers informed of the existence of other offers and to promptly notify them if they become involved in a contract race.

The Ombudsman found no evidence that the agent had informed Margaret and Alan about Ashid’s continuing interest in the property when their offer was accepted or at any point afterwards.

There was also no evidence that they had been told they were involved in a contract race – importantly, the seller’s decision to allow a contract race had been made before Margaret and Alan had incurred costs for their mortgage survey.

The ruling emphasised that buyers should be made aware of competing offers and rival purchasers.”

The ruling emphasised that buyers should be made aware of competing offers and rival purchasers so they can make informed decisions about whether to continue with a transaction and incur further costs.

Transparency is particularly important where a buyer may wish to withdraw or reconsider their position before spending money on surveys, legal work or mortgage arrangements.

While recognising that either party can withdraw from a property transaction before exchange of contracts, the Ombudsman concluded that the agent had failed to meet its obligations under the Code.

By not disclosing the existence of another purchaser and the contract race, the agent denied the buyers the opportunity to make an informed choice about how to proceed.

Outcome

The complaint was upheld, and the Ombudsman awarded £790 in compensation, equivalent to the cost of the mortgage valuation survey.

The decision concluded that, had the buyers been aware of the competing purchaser and the contract race, including the fact that the competing buyer was in a more advanced position, they would have been able to make an informed decision on the risk that was involved with any further expense.

In addition to the financial loss element, TPO would also consider whether compensation should be awarded to recognise the aggravation and inconvenience to the Complainants arising from the shortcomings of the agent.