In its recent report into quick house sales, the Office of Fair Trading (OFT) found evidence of unfair trading practices. Three firms are currently under investigation, while the OFT has written to 120 other businesses asking them to check that their practices and contractual terms comply with their legal obligations.
Quick house sale firms offer consumers a faster sale than might be achieved on the open market, with the seller usually agreeing to receive a below market value price. The OFT report found that some firms use trading practices that may prevent customers from making informed choices when selling their home or exploit their difficult financial circumstances, and warned agents to comply with legislation or face the risk of action. Practices of concern include:
- Reducing the price offered at the last minute after the seller is financially committed to the transaction.
- Making misleading claims about the value of the property or the level of discount to be applied.
- Emphasising the fastest possible times to completion (for example, seven days) rather than more realistic times (three to four weeks) on websites and marketing materials.
- Inducing sellers to sign long-term exclusivity agreements that prevent them selling to other buyers, with severe penalties for breach of contract.
The sector managed to avoid a market investigation by the Competition Commission, which would have involved a detailed two-year probe into business practices. We would advise estate agents to respond appropriately to OFT market studies to avoid unnecessary scrutiny into their business activities.
Click here to view the OFT report