OFT to investigate "Quick House Sale" firms
Times are tough for many people at the moment, and rather than face personal bankruptcy or repossession, some people have been turning to “Sell your House Quick” merchants to try and salvage some of their equity. However, it seems these helpful sorts are not necessarily quite as altruistic as they might like to appear, with the Office for Fair Trading (OFT) launching a new investigation into the business practices of this type of firm.
Now it might sound blindingly obvious to say that the sort of people doing this kind of thing are out to make a quick buck for themselves. The OFT has no quarrel with this and actually thinks these arrangements might constitute a “valuable service”, but they are also concerned that these services “might lead to homeowners receiving much less for their property than it is worth. Any losses could be very high.” You don’t say.
The OFT is “particularly concerned” about advantage being taken of “people in financial difficulty,… those who need to sell their property quickly following a relationship breakdown or the elderly, who might need money to pay for their care.” Pretty much everyone who would be considering using this type of quick sale service then. However, specific bad practices they are keen to investigate include:
Unclear fee structures, for example imposing an unexpected fee following an encouraging initial valuation, as a condition for progressing the service.
Reducing the price offered at the last minute after someone is financially committed to the transaction.
Making misleading claims about the value of the property or the level of discount to be applied to the sale.
Falsely claiming to be a cash buyer.
Inducing consumers to enter into agreements that prevent them from selling to other buyers, with severe penalties for breach of contract.
Last year, the BBC investigated claims of improper behaviour by such firms, with examples such as Malcolm Haywood, from Lincolnshire who wanted to sell his house quickly, and agreed to a sale price of £120,000. However, just before the deal was signed Gateway Homes UK dropped the offer price to £80,000. Similarly, Pat Hardy, from Teesside, signed to sell her property to Tom Craven Property for £75,000, but they lowered their offer the day before removal to £40,000. Both companies told the BBC that the number of complaints amounted to less than 1% of their customers.
The OFT has asked over 50 quick house sale firms to provide information on their business models and practices, but has also asked for evidence from other people, just in case these firms are less than forthcoming with the truth. The OFT would like to speak to valuation experts, estate agents, debt advisors and home owners about their experiences.
In any case, any findings and subsequent recommendations will take a number of months to be processed- which doesn’t really help anyone thinking of dealing with one of these companies right now.