Stop property firms pulling a fast one
As the trading watchdog uncovers evidence of “shoddy practices” within firms that offer quick house sales, Vicky Shaw looks at the benefits and the downsides of selling your house at speed
Over 100 firms in the ‘quick house sale’ sector are being urged by the Office of Fair Trading (OFT) to make sure their business practices are up to scratch.
These companies function by offering to buy a property directly from the owner, or to find a buyer very quickly, then in return for fast access to cash, the seller will accept a below market value price for their home. Firms that offer these speedy sales can help homeowners looking for a guaranteed and hassle-free way to get their property off their hands, and the OFT said it can be a “dynamic and innovative” way to make a house sale.
Of course though, there is a big catch – people who sell their home in this way usually receive around 10-25% less than the market value of the property, and the OFT’s investigation found some hard-pressed consumers end up handing over their home for less than half of its market value. It has seen firms dropping the prices they will pay by 53% on initial offers which were already below market price, leaving people tens of thousands of pounds out of pocket compared with the market value. The average price for a quick house sale is around £100,000.
The watchdog has found that some home sellers, particularly those in vulnerable situations or older people, are not always able to use the sector confidently. Concerns have also been raised that some firms will offer one price and then sharply reduce it at the last minute, when the seller is too far down the line to back out of the deal. In one case seen by the OFT, a seller approaching retirement accepted an initial offer from a firm of £73,000, only to have it reduced to £58,000 later that day. The seller agreed to the new offer because they felt caught “between a rock and a hard place”.
A sudden drop in a firm’s offer can sometimes be caused by factors like a survey bringing up problems with the house, but the OFT is concerned that firms are not always being clear enough about how the initial price they’ve offered can change.
The watchdog said some firms are also making misleading claims about the value of the property or the level of discount, and are trying to lock consumers in with heavy penalties if they decide to sell to someone else.
It warns that by acting in such a way, certain firms are giving the whole industry a bad name.
Gaucho Rasmussen, OFT director, says: “When sellers get a bad deal, they could lose a lot of money. We want to ensure that consumers can have confidence in this sector and put an end to these shoddy practices.”
:: So what factors should you consider before agreeing to a quick house sale?
You might have a pressing need to sell your property, but try not to get rushed into making a deal with a particular firm before you have checked out all your options and made sure you understand the process. Not all firms offering a quick house sale service are the same, so look at what different ones can offer. Do not accept claims at face value.
If the firm says they will complete the deal in a certain number of days or that they pay close to full market value, ask for more detail and how often this actually happens. The OFT found some firms stress the fastest possible time in which a sale could be completed, such as a week, rather than the more typical time of around one month .
Make sure you have all the information you need. Get answers to questions such as: Who is buying the property? How will they pay? How will the property be valued? Will the offer price change? and Will I have to pay charges if I decide not to go ahead?
If a bad survey has been given as a reason for a reduced offer, ask to see it.
Make sure you get the firm to put their promises in writing and check to see what any code of practice or redress scheme they have signed up to offer you if something goes wrong.
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