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 homeowners receiving much less for their property than it is worth. Any losses could 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.
• 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.
The OFT has asked over 50 quick house sale firms to provide information on their business models and practices and would welcome evidence from people with experience of this sector, including valuation experts, estate agents, debt advisors and home owners.
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.”
Mark Hayward, president of the NAEA, said: “Our members have noticed a significant increase in the number of companies purporting to offer cash purchases on properties in whatever condition within 24 hours.
“While this might sound like a great solution for people looking to sell their property in a hurry, we are finding that it is often families who are in desperate financial circumstances which are targeted through website advertising and a door-to-door sales approach.
“The tough economic conditions mean that in some cases sellers are pressurised into making quick decisions to sell their property. They sign the contract at an agreed price only to find that they are offered a vastly reduced rate just before the sale. In a highly pressurised situation it is understandable that many people are following the advice of quick sell services to accept these last-minute lower offers."
The NAEA is urging sellers to use common sense and think through the risks of using this kind of service to sell their home.
Christopher Woolard, director of policy, risk and research at the Financial Conduct Authority, said: “We welcome the OFT's market study. Consumers facing repossession of their home are in a very vulnerable position and it is important that they 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.”
