22 March 2019
Back in 2013, the Office of Fair Trading (OFT) criticised those operating in the quick house sale industry that take advantage of vendors in vulnerable circumstances.
Amongst a range of activities that came under fire, the practice of gazundering – or dropping the purchase price at the last minute – was particularly flagged up.
The potential of fast house sale companies to engage in such behaviour drew concerns due to firms like ours often being privy to vendors’ personal circumstances. There are a handful of unscrupulous operators that use this knowledge to take advantage of what can be a complex situation.
Yet, these days, it’s unusual to hear of gazundering occurring in our industry – especially amongst National Association of Property Buyers (NAPB) members. Any firm that gazunders risks severe reputational damage, being struck off from the relevant trade bodies and even prosecution. Moreover, it’s simply a dishonourable way to do business.
However, the problem still happens – oftentimes under the radar.
Below we’ve highlighted some of the main precautions you may want to take as a seller...
Head to Companies House website where you can check a range of information including the directors details, accounts and any others issues of concern. You may want to download the Directors’ credit reports from agencies like Experian or Check My File.
Note that it’s fairly common practice for quick house buyers to own multiple companies. These are usually in the form of ‘special purpose vehicles’ or SPVs (companies that own/manage properties). The buyer may also use a different trading or holding company. Either way, make sure your solicitor verifies all the details.
Remember also to check social media pages (Facebook, LinkedIn and Twitter), reviews and their general online presence.
Active fast house buying firms will be able to show you evidence of sales they’ve completed on in recent times. This will usually be in the form of completion statements from their solicitors.
Although our industry is not regulated in the same way as, say, financial services, there are a number of bodies out there that can help if things start to go wrong.
Sell house fast firms are not obliged to join these bodies, but it is generally considered to be good practice.
If you’re reading this and feel like you may be on the verge of getting gazundered, you should immediately get in touch with the two main trade bodies in our sector: The Property Ombudsman (TPOS) on 01722 333306 or the National Association of Property Buyers on 01903 331329.
You should not be afraid to ask for real evidence of the property buyer firm’s funds. Although seeing this information wouldn’t necessarily stop a price drop at the eleventh hour, it would at least show that the firm operates transparently.
The fast sale company should have no issues in showing scans of up-to-date bank statements and/or provide a letter from their solicitor.
Some firms may also be using pre-agreed finance facility of some sort which has become normal practice within the industry. However, double check that the money is definitely there to buy your house on the agreed date.
You may find that some quick house sale companies propose using specific legal arrangements. Although there are a range of legally-sound ways to structure transactions, it’s important to run through the details with a fine-tooth comb.
For example, if the buyer mentions the use of ‘option agreements’ or placing a ‘Land Registry restriction’ on your property, make sure you speak with your solicitor about what this will mean. You don’t want to sign anything that you’ll regret down the line.
For instance, here at Property Solvers, we sometimes discuss ‘assisted sales’ with our clients. This may be an appropriate solution if there are underlying legal issues, the property is in negative equity or in need of extensive renovation works. Generally, however, we prefer a clean cash sale (which we can complete on in as little as 7 days) or to refer vendors to our express estate agency.
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.