House sellers warned over ‘quick sale’ companies criticised by OFT

The Office of Fair Trading (OFT) has today warned potential house sellers of so-called ‘quick sale’ companies, who offer to sell a house in less than a week. Quick sales companies provide a service in which home owners can sell their property, in around seven days, but at a discounted price.

Overview of houses in a local town centerThere have however, been problems where home owners have signed a contract with the ‘quick sale’ companies for a set price, but the ‘quick sales’ companies have then reduced the price by several thousands, sometimes tens of thousands.

Because the home owner has signed the contract, they are bound by the terms and have to then accept the hugely reduced price.

The OFT are currently investigating such ‘quick sale’ companies, but in the meantime warn potential house sellers that: “Any losses could be very high. Businesses offering quick house sales may provide a useful service for homeowners who need to unlock cash in a hurry,” said Cavendish Elithorn of the OFT.

He added: “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.”

The rise of these so-called ‘quick sale’ companies is thought to be prompted by the need for home owners, who are potentially likely to default on their mortgage payments, and in an effort to reclaim some of their money, they sell the house before the default notice is served.

This means that the house does not fall back into the ownership of the bank, and the owners will receive some money. The pressure to sell the house quickly however, before the bank forecloses on the mortgage is what has led to the rise of such unregulated ‘quick sale’ companies.

The OFT state that their concerns are primarily that the ‘quick sale’ companies do not have any kind of fee structure, they are able to reduce the price quite substantially at the last-minute, they make misleading valuations in the first instance and have exclusive contracts with the customer, which prevents them selling to others.

Malcolm Haywood from Lincolnshire on 'quick sale' companies issues

Malcolm Haywood

The BBC, who were investigating quick sale companies, spoke to two people who had been affected by them. Malcolm Haywood, from Lincolnshire had to sell his house quickly, and dealt with Gateway Homes UK, who valued his house at £120,000.

However, before the deal was signed they dropped the price to £80,000. Mr Haywood said: “I was very angry – very angry indeed. I thought this would be a quick method of doing a deal. Gateway Homes leave a very nasty taste in the mouth.”

Pat Hardy from Teesside on Quick Sale Property issue

Pat Hardy from Teesside

Pat Hardy, from Teesside had agreed a price of £75,000 with Tom Craven Property, but as she was intending to move out, they also dropped the price to only £40,000. She said: “The day before the removal men were due to arrive I got a phone call. I had agreed to sell the property at £75,000 – they offered £40,000. They made me feel like I was worthless. What we had worked for years to put into the property – they were saying it was worth nothing.”

The companies named however, state that they have only received around 1% of complaints from their customers.

David Lodge, a spokesman for West Yorkshire Trading Standards, said that they had received 40 complaints about the companies, and that the most common complaint was in relation to the purchase price.

He said: “Other things include long delays. This company claims on its website it is going to take the pain out of selling your property but what people don’t always realise is that process can take up to 12 months and that’s actually in their terms and conditions.”

If you have been affected by so-called quick sale companies, the OFT would like to hear from you. You can contact them with your story by emailing quickhousesales@oft.gsi.gov.uk.

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