A dream house, but is the buyer dreaming?

They talk big and bid high. Your house is just what they're looking for. But do they have the price of a cup of tea?

Overnight millionaires created by the National Lottery are reducing estate agents to the brink of tears. It's not that they don't like selling grand houses to the hoi polloi, but that the sudden surfeit of common folk brandishing fistfuls of fivers makes it even harder to tell the fantasy buyer from the real thing.

The Hyacinth Bucket type who dresses up like Lady Muck every weekend in order to poke around houses she can't afford is a well-known nuisance. Still, estate agents say they can cope with nosy parkers who like to get inside other people's houses to criticise the decor and check picture rails for dust. The Mrs Buckets normally withdraw, saying in their poshest voice, "No, thank you very much, it's not quite what I'm looking for."

It is the fantasists, many suffering from hypermania who are really dreaded by the agents. These people may not have enough money to pay their next gas bill, but because they actually believe they can afford to buy houses costing millions of pounds, they are extraordinarily convincing.

One clue to the fantasist is that he or she tends to make a generous offer, often gazumping a bid from a genuine buyer. Sadly, while this puts an estate agent on guard, the vendor tends to become deliriously happy and refuses to listen to warnings. The law now obliges estate agents to pass on every offer to sellers, no matter how silly.

Jennifer Collyer wasted six months trying to sell her manor house in Hoath, near Canterbury, to a man who described himself as a currency dealer. It wasn't until she saw him pictured on a television news programme and heard he had been jailed for 30 months for conspiracy to pass counterfeit currency that her suspicions about him were confirmed.

During the endless tours of her house, her "buyer" and Mrs Collyer got on first-name terms. He brought his builder round to talk about converting the loft and stables. He arrived with his daughter and girlfriend to measure up. He claimed that his money was coming from Malta. When he saw Mrs Collyer's son's vintage Mini in the garage, he offered to buy that, too. She admits that she got quite fond of him, despite a family joke that if the money ever arrived it would be in a supermarket carrier bag.

Simon Backhouse, of Strutt & Parker, ruefully remembers his attempts to check out the man's bona fides for Mrs Collyer. "He seemed to own a nice house," says Mr Backhouse, "although in a seedy area. When we saw the house, we were slightly dubious. Then his solicitor, who was unco- operative, as buyers' solicitors often are, suddenly started being very forthcoming, and we realised that he had his doubts too.

"I never met him personally, but I met his girlfriend. She wore stiletto heels, an ankle chain, and short skirts which left little to the imagination, but just because someone is not quite the usual type, it doesn't mean they can't afford to buy a pleasant five-bedroom country house."

Mr Backhouse is in good company. Every other agent dealing with houses of above-average value admits that they, too, have been caught out. One, who pleaded for anonymity to spare his blushes, admitted, "We were selling a multi-million-pound house in London. A man came along, made an offer, and then niggly little things started to go wrong, causing delays. He had fantastic references from a top firm of solicitors. After a while, I decided to check out his address, which was in central London and sounded quite respectable. I drove up expecting to see a stucco-fronted house, and instead found it was a dossers' hostel. He had completely fooled his solicitor, who hadn't checked his financial position."

In a bid to deter big-talking men of straw - and for some reason the offenders are usually middle-aged men - agents occasionally include a caveat in advertisements for whacking great houses, warning: "Financial references of those wishing to view, indicating an ability to proceed at the asking price, will be required."

A more successful way of deterring the "dopey dreamers", to use the politest nickname employed by agents to describe the breed, is for agents to tip one another off.

David Bedford, of Bedfords, the East Anglian estate agency, says: "We have a very good local grapevine. The first time I was caught was 35 years ago, when I was an innocent young man. I took an offer on an expensive house and rushed to tell the boss. He asked me what I knew about the buyer, and I said he was driving a Rolls-Royce. The governor looked scornfully and said, 'Bedford, you can hire them by the day.' He was right. The man was a joker.

"Last year, someone strung us along, offering pounds 650,000 for a house. We found out later that he was living in a council house and had been up for falsely claiming housing benefit.

"One dreamer is doing the rounds at the moment, but the local surveyors have been tipped off and they are asking for their fee up front, which is spoiling his fun.

"The most dangerous type are the conmen who make offers on expensive houses to ward off their creditors. They say that far from being on the brink of bankruptcy, they are about to buy a big house, and suggest that creditors ring us to check.

"Generally, fantasists have no ulterior motives except the joy of kidding themselves and their friends that they are big shots."

The psychologist Jane Townsend says, "These people get super-confident and believe they can overcome enormous obstacles. They go about things with such style that they convince others. Most suffer from low self-esteem and move into a fantasy world to boost their self-image."

Ian Stewart, from Savills' country house department, boasts that he can always sniff out fantasists, despite a brief dalliance last summer with a Nigerian "princess" purporting to be looking for a big house. "At the top of the market," he says, "the majority of people in a position to buy will be those we have already heard of, and they will have accountants and lawyers.

"The fantasists usually come out in the summer. It is as if the heat sets them off.

"They can be very convincing and cunning. Some telephone us from someone else's office, so when we ring them back we think they have a solid job.

"There are three giveaways. One, they are too enthusiastic, and make offers too close to the asking price. Two, they tend to turn up in a taxi or on a train. The third sign that something is a bit dubious is that they only give their mobile phone numbers. They tend to like to show off to their friends, so you can expect two or three visits with chums or girlfriends in tow."

The one lesson all estate agents have learnt is never to snub a potential buyer because he or she looks down-at-heel. James Gubbins, of Daunton's, was irritated by a woman who kept asking to look at houses that he was convinced she couldn't afford. Then came the day when she wandered into the office with a pram full of banknotes and actually bought one.

On the other hand, David Allason, from Hamptons, blesses the day he met a man off the train and decided he was simply too smelly and tramp-like to trail around the Georgian gem he had come to inspect. Thinking quickly, he apologised profusely, saying that the house owner had been taken ill and the visit couldn't go ahead. He felt vindicated when another agent boasted a few days later that he had just sold a pounds 1m house. The "buyer" was Mr Smelly, and of course he never completed.

A bogus buyer is currently infuriating agents, surveyors and house-sellers in Suffolk. Guy Jenkinson, of Bidwell's Ipswich office, who is chairman of the National Association of Estate Agents, is seeking legal advice about circulating the man's name and address to all member agents in Suffolk and north Essex. "He has three aliases. He has had a number of structural surveys done by different firms, and paid for none of them. He is reasonably smart and plausible, and strikes in different places every time.

"I can't imagine what he gets out of it. Maybe he needs to feel and have other people believe he is a man of substance. He has caused a lot of grief. People who take him seriously rearrange their lives, fix up new schools for their children, instruct solicitors, have surveys done on houses they hope to move to, and then in the end find it was all a waste of time."