OFT investigation

Jeremy has been instructed in respect of an OFT investigation into the business practices of a company in the Quick House Sales Sector following a study in April 2013 that rasied a number of concerns about the market sector. 

For information about the OFT powers under the Enterprise Act 2002 Click here. 

Click here for a link to the OFT report on Quick House Sales.

Summary of the Report’s Findings

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.

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?

Originally posted 2013-09-01 00:00:00.