OFT investigates quick house sale firms
The announcement comes as the OFT publishes a report on the sector which found that quick house sale firms can be beneficial to consumers who need a fast, hassle-free sale.
Gaucho Rasmussen, OFT Director, said: “Responsible quick house sale firms offer a valuable service to consumers who want a fast sale.
“However we have also seen potentially illegal behaviour and as a result the OFT has opened investigations into three companies.”
Quick house sale firms offer consumers a faster sale than might be achieved on the open market with the seller usually agreeing to receive a below market value price for their home in return.
This is typically a reduction of between 10 and 25% of the market value of the property.
The OFT found the sector to be dynamic and innovative with some businesses dealing with customers in an open and fair manner.
But the OFT’s report also found that some firms risk giving the industry a bad name by using trading practices that may prevent customers from making informed choices when selling their home or exploit their difficult financial circumstances.
Some of these practices may result in sellers receiving significantly less than they were originally expecting.
The report highlighted a number of practices which raised concerns.
In some cases the price offered for the property was reduced at the last minute after the seller was financially committed to the transaction.
Some websites and marketing material were found to be stressing seven day completion times rather than three to four weeks.
These misleading timescales were inducing sellers to sign long-term exclusivity agreements that prevented them selling to other buyers, with severe penalties for breach of contract.
A high proportion, 70%, of the complaints received about quick house sales came from vulnerable consumers who may be particularly attracted by claims of a hassle-free service, with no viewings or hold-ups.
Older people may wish to sell their property quickly due to declining health or homeowners in financial difficulty may look for a quick sale to help reduce their debts.
Others using quick house sellers included those disposing of an inherited property or relocating due to a change of job or to emigrate.
The OFT has also written to almost 120 providers advising them to check that their business practices and contractual terms comply with their legal obligations.
Discussions are also underway with businesses in the sector on developing self-regulation.
The OFT has published top tips to help people thinking of using a quick house sale firm. These are being used by consumer advice bodies including Citizens Advice, Money Advice Service and Which?. Alongside this, quick house sales providers are being encouraged to share these tips with their customers.
Rasmussen said: “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.”