For many, the experience of selling a house is a mountain of stress. Every decision, from selecting an agent, to the slow crawl of time as they wait for an interested buyer is a frustrating process.
And within the sectors surrounding house sales there are, of course, shady companies that will attempt to prey on vendors, either escalating prices or outright attempting to defraud them. Unfortunately, the same holds true for house-buying companies, which will agree to buy your home for cash. While the great majority of house-buying businesses are genuine and reliable companies, offering to buy up homes in an extremely short period of time, there are a number of companies whose practices give the industry a bad reputation.
So how can you identify who to avoid to ensure you do not fall victim to the 'we buy house for cash’ scams?
In this article, we will look at:
One of the most significant benefits of selling your house to a quick buying company is that you can expect a quote for how much they will pay you to purchase the property and you can make a decision to accept or decline. For those with little experience in property value, it is possible to be taken advantage of by accepting an offer that is significantly lower than the market value. Whilst you can expect a tradeoff of a little lower valuation in exchange for a speedy sale, don't be fooled into accepting too low. Ask an estate agent to visit and get a free estimate of your property value, so you are working with all the facts when that offer comes in.
A genuine house-buying company has no need to ask for fees upfront. Any claims of processing fees or deposits are not to be trusted. By taking money upfront, a company can allow the sale to fall through and taking the deposits, as no doubt they will state is their right within the terms and conditions.
Any company that markets itself as capable of buying houses must reliably have a large amount of liquid assets to facilitate these purchases. If a company refuses to disclose information on its reserves, take care to do all other checks before going any further. You may be able to obtain the previous year tax return details online, which will declare the amount of capital in the business.
Whilst all businesses should be able to provide addresses, phone numbers and VAT registration numbers, these can be fake. They provide these knowing that the majority of customers will not check this information. We advise that you check the company number and VAT number with Company House, and google the business. Check the reviews. If you see anything that doesn't ring true, trust your instinct and do not do business with them. A genuine company will always publish its company name on its website. If there is no mention of a company name, it is best to move on.
A slick website does not make a legitimate company. Given the amount of money at stake, it should be no surprise that they would spend a little time and money to make sure their page appeals to as many people as possible. This is how all scams work, appeal to the many, catch the few and take money from them. A search online will tell you how long the company website has been up and running. Be suspicious of anything brand new, especially if it claims to have had thousands of customers yet has only been up for a short time. A legitimate limited business is required to show their company number on their website. Find and check this, as mentioned above.
So you received a fantastic offer, much closer to the market value. You've signed the contract that says you will pay a financial penalty if you pull out and suddenly a problem is found with the property, or they are struggling with current market conditions, and the expected offer is significantly dropped. The reality here is that they hope you are going to drop out and pay the associated fees, or carry on and hand over your house for a bargain-basement price. After the valuation has been undertaken there should be no reason for the price to drop. If a company tries this on just before exchange, move on they are dodgy.
Be careful what you sign as some agreements can contain lock-in clauses. If you sign this, you are agreeing that you will not be able to withdraw from the sale and that if you do so, you can expect financial penalties. If the company changes the amount of the price they pay you, you should have the right to withdraw without any financial penalty.
Keep an eye out for the term 'Option agreements' Any company that refers to these is more interested in the profits they can make in charging you fee's than they are in buying and reselling your home.
When it comes to selling your home fast, you will no doubt instinctively know that the company needs to offer you a below-market price in order to resell it for a profit. As such, if they are offering you 90-100% of the market value, they simply can't be trusted. Almost certainly they will be looking to lock you in then dropping the proce..
Do not provide the deeds to your property until your mortgage has been paid off by the house-buying company. Despite claims by such companies that the receipt of the deeds will speed up the process, unfortunately, once the deed is in their possession you will lose many of the rights that you should have in such situations, and you will have limited your legal options if anything goes wrong.
At the end of the day, it is always prudent to trust your instincts. If you've got any suspicions about the company, even if you can't quite put your finger on why it's because you may well be right. Do your research, and if in doubt, go with your instincts.