Quick house sale firms, offer to buy the seller’s house for much less than it’s worth. Generally, firms will pay between 10% and 25% less, than the current market value of the property, taking advantage of the seller’s need to sell quickly.
Recently, the OFT published a report into the quick house sale industry and said the sector was ‘dynamic and innovative’. However, the actions of a handful of firms risk damaging the positive reputation of the industry.
The three firms, which are currently under investigation by OFT, are alleged to have dealt with customers unfairly, with many suggesting they targeted vulnerable homeowners.
Some unfair practices, which have come under scrutiny include:
- Reducing the sale price after the seller is committed to selling their property
- Leading the customer to believe their house is worth much less than it is
- Trying to complete the deal exceptionally quickly, usually within seven days, when the usual time is three to four weeks
- Leading customers into unfair, long term, exclusivity contracts, which would prevent the customer from selling their property to another seller and are often filled with harsh penalties
A large amount of complaints received, around 70%, have come from customers who are vulnerable and have been attracted to quick sale firms by an offer of hassle free service, a quick sale with no viewings or delays.
There could be a number of reasons why homeowners are looking to sell quickly, including a decline in health, unemployment, and financial difficulty. Other people could look to use this sector to sell inherited property; the service is also popular to those moving due to a change of job or emigration.
Following their report, the OFT has confirmed they have written to almost 120 quick house sale firms, asking them to study their business practices and contractual terms, to ensure they comply with legal obligations. They also confirm that talks are well underway with firms in this sector, to develop self-regulation.
The OFT has also published important tips to help those individuals who are considering using these types of firms. These new tips are being used by Citizens Advice, Money Advice Service and Which?, who offer advice throughout the entirety of the United Kingdom. As well as the advice bodies, quick house sale firms are also being urged to share this information with their clients.
Gaucho Rasmussen, OFT Director, said: “Responsible quick house sale firms offer a valuable service to consumers who want a fast sale. However we have also seen potentially illegal behavior and as a result the OFT has opened investigations into three companies.”
Gaucho continued: “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.” (Source: OFT)