Companies That Buy Houses – OFT Take Action!

Quick house sales

Quick house sales Companies are to face action by OFT

Quick house sales firms which sell houses for homeowners needing a fast sale are formally investigated by the OFT.

For a knock down price these companies promised to get a quicker sale for their clients, days or weeks (as opposed to waiting many months or even years on the open market through a traditional estate agent).

The Office of Fair Trading found many operators were ‘fair and open’ in their dealing with clients, however some clients were being exploited by reductions of up to 53% of their homes value. Compare this to Flying Homes’ clients, many of whom have received in excess of 94% of the full sale price of their homes.

Some of the most vulnerable clients the OFT identified were those facing illness or repossession or clients who needed to relocate for work reasons.

The OFT’s investigation into Companies that buy houses discovered that mostly the sector was “dynamic, even innovative”, and helped many consumers wanting a fast hassle-free sale of their home.

The findings of the OFT highlighted the main concerns:-

  • Last minute price reductions when the house seller was committed financially elsewhere.
  • Customers were being mislead about the discount offered and the value of their homes.
  • Over reliance on the quickest possible sale time-frame of seven days or less as opposed to a more realistic three or four weeks for a quick house sale.
  • Getting house sellers to sign exclusive contracts with large penalties for cancellation.

Three firms are being investigated currently and another 120 have had correspondence from the OFT asking them to check that they are operating within the law.

Sellers’ Tips

  • Consider whether a quick sale is the best option
  • Check the provider’s credentials
  • Do not proceed until vital details, such as how they are valuing the property, are explained
  • Do not accept verbal promises
  • Watch out for long tie-ins
  • Get independent legal advice if you are unsure what you are signing
  • Be honest when answering providers’ questions

Source: OFT

“Responsible quick house sales firms offer a valuable service to consumers who want a fast sale. However, we have also seen potentially illegal behaviour,” said OFT director Gaucho Rasmussen.

“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.”

Sale prices

During an investigation last year, the BBC spoke to two people who were angry at the way they had been treated by quick sale companies.

Malcolm Haywood, from Lincolnshire, wanted to sell his house quickly and agreed to a sale price of £120,000.

But just before the deal was signed, the company involved, Gateway Homes UK, dropped the price to £80,000.

Pat Hardy, from Teesside, signed a similar deal with Tom Craven Property.

She had agreed a purchase price of £75,000, but the day before the removal men were due to arrive, they lowered the offer to £40,000.

Both companies insisted that the number of complaints amounted to less than 1% of their customers.

The OFT has published a series of top tips for consumers considering whether to use quick house sales companies.

They include taking time to find out how the process works, making sure all the information required to make an informed choice about a sale is provided, and making sure providers put promises in writing.