Below market value property firms are under investigation for unfair sales methods that are costing home sellers thousands of pounds.
Consumer watchdog the Office of Fair Trading (OFT) is investigating three firms that are allegedly exploiting sellers who are struggling financially with sharp sales tricks.
Below market value traders typically offer a fast sale – often within 28 days – but often at between 10% and 25% less than the property’s value. The biggest discount was 53% of a home’s open market value.
The OFT explained that many firms in the sector deal with customers fairly but explained others acted in ways that gave below market value businesses a bad name.
“The sector is dynamic and innovative, with some businesses dealing with customers in an open and fair manner,” said a spokesman.
“However, 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.”
Causes of concern for the OFT include:
- Slashing the offer price at the last minute when the seller is financially committed to the deal
- Making misleading claims about the value of the property or discount
- Stressing the fastest completion times, like seven days, rather than the more typical three to four weeks on websites and marketing materials
- Making sellers sign exclusivity agreements that stop them selling to other buyers, with heavy financial penalties for breaching the agreement
- Seven out 10 complaints came from vulnerable consumers particularly attracted by claims of a hassle-free service.
The OFT has also written to around 120 providers advising them to check their business processes and contracts comply with their legal obligations.
OFT Director Gaucho Rasmussen 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.
“’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.”
The OFT revealed the below market value sector represents less than 1% of all home sales and is worth around £0.5 billion to £0.9 billion.©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.