Quick house sales
Start date: 18 April 2013
Closed date: 7 August 2013
Case reference: CRE-E/28691
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Purpose of the study
In April 2013, the OFT launched a study looking at the UK's 'quick house sales' sector. By carrying out the study, we wanted to find out whether this sector works well for home sellers. We had particular concerns about the risks to sellers in vulnerable situations, such as older people (for example when they need to move due to declining health) or those who need to clear debts and/or avoid repossession. We also noted that where sellers get a bad deal, they could lose a lot of money.
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Quick house sale providers, as a distinctive feature of their service, offer to buy a house or find a third party buyer very quickly, usually at a discount on the full market value.
Quick house sales can be beneficial to home sellers who want a quick, guaranteed and hassle-free sale. Our study has shown this to be a dynamic and innovative sector where some businesses have modified their business models to try to offer a better service to home sellers. However, we have also identified business practices that may not comply with the law and practices that fall short of the standards we would expect of businesses in this sector.
We also found that home sellers are not always able to make confident use of the quick house sale service. This includes sellers in vulnerable situations, such as those in financial difficulty and, sometimes, older people.
The business practices of most concern relate to:
Offer prices. Home sellers are not given enough information about the status of the initial offer price and that factors such as an adverse survey may cause it to be reduced later on. Last minute and often significant reductions in the offer price raise concerns that providers may be exploiting sellers' circumstances, especially when providers do not give the reasons for reductions in the offer price.
The speed of the service. On their websites and in other marketing, providers tend to stress the fastest possible times to completion (for example 'seven days'), rather than the more typical times (three to four weeks). Few explain clarify the basis for their claims or the factors that may lengthen timescales. We are also concerned when providers require home sellers to sign long-term exclusivity agreements. We cannot see how lengthy tie-ins square with the promise of a quick house sale. Home sellers who want a speedy sale should question why quick house sale agreements should last much longer than four weeks.
The identity of the actual buyer. Not all providers are being clear with home sellers about their service: are they going to buy direct from the seller, find a buyer (and broker a deal), or pass on details to another provider?
How the purchase will be paid for. Not all providers are explaining clearly the buyer's financial position: does the buyer have cash funds available now or must they borrow or raise finance first?
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Action following the market study
As a result of our study, the OFT has:
- Published the Quick House Sales Market study report (pdf 800kb). Setting out our key findings, the report gives businesses in the sector a clear steer on what they should and should not do, the main legal obligations and suggestions on best practice. The report also offers suggestions on how home sellers can help themselves as they engage with the sector.
- Published top tips for homesellers (pdf 1.2Mb) and engaged with several stakeholders to ensure that these tips are disseminated in a targeted way. We are encouraging providers to share these tips with home sellers too.
- Written, following discussions with Trading Standards' representative bodies across the UK, to almost 120 providers to advise them of the issues in this report, remind them of their legal obligations, and ask them to check that their business practices and contract terms comply with those obligations. This includes a warning to any providers that carry out estate agency work that they must comply with the requirements of the EAA (and associated legislation) or else face the risk of action.
- Opened an investigation into three providers, which focuses on business practices that potentially raise serious concerns.
- Opened a dialogue with the sector encouraging them to develop some form of self-regulation.
- Engaged with relevant bodies - such as the Royal Institution of Chartered Surveyors (RICS) and the law societies of England/Wales, Scotland and Northern Ireland, asking them to notify their members of our report and raise awareness of the issues faced by home sellers in quick house sales.
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Contacts and media enquiries
Team leader: David Hart, 020 7211 8849, email@example.com
Project director: Gaucho Rasmussen, 020 7211 8497, firstname.lastname@example.org
Senior responsible officer: Cavendish Elithorn, 020 7211 8170, email@example.com
Media enquiries: Any media enquiries should be directed to a member of our Press Office.