Homeowners at risk from rogue operators
Dirty tricks are being employed to maximise sale commissions
Friday 09 August 2013
Rogue property professionals are set to home in on unsuspecting homebuyers as prices continue to rise, legal specialists have warned.
The average cost of a UK home rose by almost 1 per cent in just four weeks in July to £169,624, according the Halifax House Price Index, with sales in the first six months of 2013 6 per cent higher than this time last year.
Improved economic data, consumer confidence and lending criteria, along with the effect of government homebuyer and funding schemes have all had an effect. In some regions, the increase has been so marked speculation abounds over a property bubble.
But unsuspecting purchasers are at far greater immediate risk from rogue operators looking to cash in on a rising market by overvaluing property to maximise their commission on the sale.
"There is greater opportunity for property valuations to be distorted as rapid price rises mask overvaluations," said Stephen Hill, partner at solicitors Bolt Burdon Kemp. "In some instances, this could amount to a fraudulent attempt by a rogue valuer, acting on behalf of the mortgage lender but in the interests of the seller, to overvalue the property. A rogue solicitor may also be involved to help tie up the transaction before the buyer notices that anything might be awry."
With the transaction complete, the buyer is left with the legacy of overpaying on the property. Should they face financial difficulty or indeed, a property bubble, they could very quickly be facing the effects of negative equity if they have to move.
"During a housing market bubble, overvaluations are not uncommon. Many were found to have occurred during the housing market boom that preceded the credit crunch in 2008 and previously during the housing boom of the 1980s. There is now concern that the current market bounce could cause the same to happen again," Mr Hill added.
"It is vital that buyers use extra caution. Instead of relying on the services of professionals [suggested to them] – they should seek their own independent advice and carry out some of their own basic online research too."
He urges buyers and sellers to seek their own independent advice, to go to reputable, high street estate agents and avoid websites offering to sell property quickly.
Quick-sale property firms are also coming under scrutiny from the Office of Fair Trading (OFT) for allegedly duping so-called "distressed sellers" – often vulnerable or elderly adults – out of a significant proportion of their house value.
Opening a formal investigation into three quick sale companies this week, the OFT has highlighted that, in addition to forgoing between 10 and 25 per cent of the value of their property in exchange for a very rapid sale, some vendors may also suffer from tactics designed to further reduce the price paid.
These include reducing the price offered at the last minute, making misleading claims about the value of the property or level of discount to be applied and inducing sellers to sign long-term exclusivity agreements that prevent them selling to other buyers, with severe penalties for breach of contract.
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