Quick house sale providers offer to buy a house or find a third party buyer very quickly, usually at a discount from the full market value. While providers may offer a valuable service, the OFT is concerned that some practices might lead to home owners receiving much less for their property than it is worth. It wants that losses can be very high.
The OFT is particularly concerned about the risks to people in financial difficulty, including those who have worked up large amounts of debt or are facing repossession. Consumers at risk may also include those who need to sell their property quickly following a relationship breakdown or the elderly, who might need money to pay for their care.
Practices that would give rise to concern include unclear fee structures, for example imposing an unexpected fee following an encouraging initial valuation, as a condition for progressing the service.
Other concerns surround the reducing of the price offered at the last minute after someone is financially committed to the transaction, misleading claims about the value of a property or the level of discount to be applied to the sale and even falsely claiming to be a cash buyer.
There are also cases of sellers being induced into entering into agreements that prevent them from selling to other buyers, with severe penalties for breach of contract.
The OFT has asked over 50 quick house sale firms to provide information on their business models and practices. ‘Businesses offering quick house sales may provide a useful service for home owners who need to unlock cash in a hurry. However, they are often used by consumers in vulnerable situations and therefore we are concerned about the risk of consumers being misled and losing out on large sums of money,’ said Cavendish Elithorn, OFT senior director for goods and consumer.
‘We want to hear from anyone who has used a quick house sale provider, whether they have had a good or bad experience with the business. We will protect the confidence of anyone who contacts us and their information will be invaluable in helping us to build up a picture of the market and establish whether we need to take action,’ added Elithorn.
Christopher Woolard, director of policy, risk and research at the Financial Conduct Authority, said that it is important that those in a vulnerable position, such as home owners facing repossession of their home are not pressured into making poor decisions.
‘This market study is an important piece of work that will explore current practices in the market and, where necessary, make recommendations to improve outcomes for these vulnerable consumers. We will continue to work with the OFT and others to address any concerns in this market,’ he added.
Peter Bolton King, global residential director of the Royal Institution of Chartered Surveyors, said that the organisation recommends that owners should get an estimate of what their house is worth on the open market even if their home is priced for a quick sale.
‘Anyone considering a quick house sale should take a step back and consider their other options. Naturally, people feel under financial pressure but they should make sure they totally understand what it will mean,’ he added.
