7 August 2018
Unfairly labelled as shrewd gazunderers, ‘quick house sale’ operators are frequently blasted by the wider property community.
Much of the negativity stems from media horror stories of routine pouncing on unsuspected homeowners’ in vulnerable situations.
Upon closer scrutiny, however, the reality is often different.
What is the Quick House Sale Model?
Emerging in the early 2000s, private investors typically use on and offline marketing to target sellers in search of a speedy property sale.
Depending on the funding structure, the transaction can be completed between 7 and 28 days. Exchange can occur in as little as 24 hours where required. Most firms also pay the vendor’s legal costs and do not charge any additional agency commissions.
The Upsides
The main advantage is that the sales are concluded within pre-agreed timeframes.
Quick house sale firms are in the business to buy frequently. Several offer legally-binding guarantees and cash advances.
The Catch?
The most commonly cited downside is that vendors invariably must accept hit on the market value of the property – typically anything from 15-30% depending on its condition.
It’s this aspect of the business that gets the most criticism. Some see it as unethical to buy property at a discount, especially when the vendor’s back is against the wall.
However, it’s worth bearing the following in mind:
- The majority of properties can be dealt with by estate agents and sold on the open market. Bar the more serious scenarios, it makes little sense for a vendor to work with a quick sale company when a slight adjustment to the asking price and a little patience is all that’s needed;
- These firms take on the stock that is struggling to sell through estate agents and often lingering on the market for months (if not longer). This is often due to physical / structural issues (including subsidence, serious damp, flooding history, Japanese Knotweed) and/or legal complications (restrictive covenants, negative easements, third-party consents, ransom strips);
- The prominent firms are genuine cash buyers that do not rely on mortgage finance and cover the risks of legal issues and unfavourable search results with suitable indemnity insurance policies. This means the chances of any chain break are slim;
- The faster sale means that the vendor saves on ongoing mortgage payments, monthly bills, council tax etc. whilst waiting for the sale to go through;
- Alongside legal and estate agency savings, there are no ‘for sale’ boards, time-wasting viewings and other hassles typically associated with conventional sales;
- Vendors usually have a direct contact to deal with at the firm as the sale progresses.
Are Quick House Sale Operators Regulated?
Of course, to say the industry is squeaky clean would be misguided.
Sell house fast firms have been known to drop the offer price prior to exchange, when the vendor has little other choice but to move forward with the completion. Others provide erroneous information on the property’s value and engage in sell and rent back contracts, despite not being regulated to roll out this service.
Back in 2013, following a series of complaints and media reports, the Office of Fair Trading (OFT) investigated a handful firms. Whilst not suggesting any form of explicit regulation, several recommendations were made (see the full report here).
As many firms felt tarred by the same brush as the unscrupulous few, a number of companies decided to adopt a more self-regulatory approach by forming the National Association of Property Buyers (NAPB). This non-for-profit body collaborated with The Property Ombudsman (TPOS) to draft a Code of Practice which all members must adhere to.
Where Next?
Whilst many in property will continue to frown at the quick house sale sector, it will ultimately be the customers that judge.
These days, Google the prominent firms and it’s actually quite hard to find negative feedback and reviews. More than ever before, homeowners can undertake a simple search on Companies House and other online resources to check the credentials of the company and its directors.
Moreover, the ever-rising power of social media means that fleecing homeowners and expecting to get away with it is going to be tough.
With both the Property Ombudsman and wider top-down oversight on the cards, quick sale firms will struggle to operate in the shadows.
Property Solvers is a quick house sale firm and express estate agency operating across the UK.
This content has been provided to us by the writer. Whilst believed to be factually correct, we cannot accept responsibility for content contained within it.
