'Quick-sale' schemes finally come under the spotlight

Beware of companies which promise to find a speedy buyer for your home, warns Chiara Cavaglieri

Property firms offering a "quick-sale" have at last caught the attention of regulators, but this sector could prove a ticking timebomb when mortgage interest rates eventually go up and more homeowners find themselves struggling to meet payments.

The Office of Fair Trading (OFT) has opened formal investigations into companies offering speedy sales to desperate homeowners. While the new OFT report on the sector found that some companies were offering a useful solution in a fair way, others have been exploiting customers and using unfair practices.

The way some of these firms work is to offer below market value price – typically between 10 and 25 per cent less – for your home in return for a swift sale. While this may be a price some people are willing to pay, a major concern is that some firms knock as much as 53 per cent of the market value and others reduce the price offered at the last minute, i.e. after the seller is already financially committed and paid hefty upfront fees.

Many firms are also unclear as to the type of service being offered, i.e. whether they are genuine cash buyers, lead generators passing on your details to other quick-sale providers, or brokers who introduce you to third-party buyers. But even worse, some firms persuade sellers to sign long-term exclusivity agreements so they can hit them with severe penalties for breaching these contracts if they try to sell to other buyers.

The OFT says 70 per cent of the complaints received about quick house sales came from vulnerable consumers such as older people in declining health, homeowners wanting to avoid repossession and people needing to reduce debts quickly. Other people may be trying to relocate after a divorce or a new job.

So far the OFT has written letters to more than 100 providers and prompted discussions on developing self-regulation, but this has not filled everyone with confidence.

Christopher Hamer of The Property Ombudsman (TPO) says: "This report reveals that there is yet another area of the property sector where there is no formal regulatory framework. Consumers using 'quick house sale' firms have no access to independent redress and the risks associated with this are significant. Whilst I note that the OFT is pursuing a self-regulatory approach, the only way of realistically ensuring all such firms provide consistent service is through legislation."

Until there is stronger regulation in place make sure you protect yourself if you are looking to sell your home quickly. First and foremost consider the alternatives, including negotiating with your lender if you are struggling to keep up with mortgage payments. You can also talk to a Citizens Advice Bureau for help with your debts, and they may help you to talk to your lender about extending the term of your home loan, taking a "mortgage payment holiday" or reducing your payments for a set period to give you some breathing space.

If you simply need to sell up, consider all of the pros and cons of using these firms over a traditional estate agent.

"You might find that the amount you need to drop the price by is less than the typical 25 per cent discount that a quick sale company would ask for," says Caroline Rookes of the Money Advice Service. "Before making any costly and irreversible decisions which they might regret, we urge home sellers to pause, and take free advice from an independent source".

If you are determined to go down the quick-sale route, compare services and confirm any claims to be a member of any professional body or code of practice. Read the marketing material carefully to determine whether they are a cash buyer, passing on leads, or a broker matching you with investors. A genuine cash buyer should be able to provide proof that they have the funds in place, and if it is a broker check it is registered with an approved redress scheme for estate agents (see www.ombudsman-services.org/property.html and www.tpos.co.uk).

Danny Luke, director of Quick Move Now, explains that there are two ways to check that a company has cash funds available to honour its promise of a quick sale: "You can look at turnover in their company accounts. If it is very small or they don't publish accounts, it is likely they don't buy with their own money and instead are just a broker. Or you can ask their solicitor to provide proof of funds available. If a company cannot provide this within 24 hours, leave well alone".

Ask lots of questions and do your own research. First of all talk to traditional estate agents and use sites such as Mouseprice, Nethouseprices and Zoopla to determine the likely selling price.

Make sure you are absolutely clear as to how the purchase will be financed, how long the sale will take, how much you will be charged in fees (including surveys and solicitor fees) and how the offer price will be adjusted later on.

Before you sign along the dotted line get an independent solicitor to look it over – never sign any agreement if you don't know exactly what you are agreeing to.

"Don't, under any circumstances, sign any option agreements or pay a deposit at any point during the process. You should be able to receive an offer, take reasonable time to consider it, and change your mind even if you've accepted the offer with absolutely no cost," says Mr Luke.

Watch out for long tie-ins too. If a typical estate agency contract only lasts up to 12 weeks, supposedly speedy home sellers shouldn't need longer than four weeks to find a buyer. If they do, there is no point losing out on the true value in the first place.

If you've been treated unfairly, complain to the company first of all, but you can then refer your case to the relevant redress scheme (if they are a broker), the Advertising Standards Authority or your local authority Trading Standards Service.

If you have a particularly strong case it may be worth going to court, but seek legal advice first.

Discover more property articles at Homes and Property
PROMOTED VIDEO
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
Arts and Entertainment
Singer songwriter Bob Dylan performs on stage
films
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games
News
i100
Arts and Entertainment
Jenna Coleman, Peter Capaldi and Nick Frost star in the Doctor Who Christmas Special, Last Christmas
TV
Property search
Property search
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Austen Lloyd: Commercial Property Lawyer - Cheshire

Excellent Salary: Austen Lloyd: CHESHIRE MARKET TOWN - An exciting and rare o...

Austen Lloyd: Residential Property Solicitor - Hampshire

Excellent Salary : Austen Lloyd: NORTH HAMPSHIRE - SENIOR POSITION - An exciti...

Recruitment Genius: Gas Installation Engineer

£29000 per annum: Recruitment Genius: A Gas Installation Engineer is required ...

Recruitment Genius: Domestic Gas Technical Surveyor

£28000 per annum: Recruitment Genius: A Domestic Gas Technical Surveyor is req...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital
In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran