OFT inquiry into quick house sale schemes
The OFT has concerns about the growth of businesses providing quick house sales and is asking for people who have been involved in using such schemes to contact them to discuss their experiences.
The attraction of quick house sales is that they can be very quick. The providers will often offer to buy the properties themselves or find an immediate third party buyer, but this is usually at a discounted price from full market value. The OFT have stated that they are concerned that some practices might lead to homeowners receiving much less for their property than it is worth, with such losses being potentially very high.
The OFT have indicated that they are 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.
The OFT state that 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.
- 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.
Cavendish Elithorn, OFT Senior Director for Goods and Consumer, said: ’Businesses offering quick house sales may provide a useful service for homeowners 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
“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.”
Andrew Swan, solicitor at Newcastle-based law firm Short Richardson Forth LLP commented: “Many of the providers are offering a legitimate means of selling property quickly, which is perfectly fair and legal. However, there are others who will prey on homeowners in a vulnerable position, such as the elderly looking to release equity or those facing repossession. By the end of 2012, over 150,000 households had fallen behind with their mortgage payments, which natrually creates a target for unscrupulous practices”.
This was posted in Bdaily's Members' News section by Andrew Swan .
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