Let’s not beat around the bush. If you are trying to sell your house fast and for cash you are most likely experiencing financial difficulties or are in a distressed situation – like going through a divorce or in the process of getting your house repossessed.
We are not here to judge. Our service is designed to help people move on from difficult times and start anew.
A fast cash sale can be just the solution that you need, but it can also be a nightmare!
In this article we look at quick house sale scams and how you can avoid them.
Disclaimer: We are a fast cash house buyer so are obviously not totally unbiased, but we have tried to be as transparent and impartial on the issue of We Buy Any House scams, as it is serious and something we want you to avoid!
If you would like to sell your house for cash quickly then please contact us using the form at the top of this page for a free cash estimate.
We Buy Any House Scams
In the UK there are many quick house sale companies.
A simple Google search for ‘Quick House Sale’ or ‘We Buy Any House’ will return dozens of companies. Some are totally legitimate, but unfortunately others are less so.
All, however, purport to offer fast cash solutions to buying your home.
For the past few decades the quick house sale industry has been largely unregulated. Only in recent years, due largely to increased scrutiny from the media and after the publication of a scathing Office for Fair Trading (OFT) report, has the industry started to clean up it’s act and be better regulated.
However, there are still a number of less reputable companies (read: scammers and fraudsters) who operate in the quick house sale market.
Here are the 6 most frequent we buy any house scams to look out for:
We Buy Any House Scam 1: Down Valuations
Down valuations occur when a quick sale company offers you a flattering valuation for your house and then offers you a substantially reduced value after contracts have been exchange. This is a major issue, as you may have already made plans on the agreed price and are now stuck.
This as you can imagine is a deplorable act. But folks, it happens so be careful. Remember, if it sounds too good to be true it probably is.
Here is how the process should work and this is how Accelerate Homes conduct our business.
After you make an enquiry, for example, by competing our enquiry form you will get an initial estimation for your property. Generally our team turn this around in 24 hours and base our valuation on a bespoke methodology that uses local market research tools and our cash valuation model (this is to say that we generally work at around 80% of the market value to get you the best cash price for your property). At this stage we will call you to discuss your circumstances and explain in an upfront manner the initial estimation and how it is subject to an independent survey.
If, after the call, you want to proceed we will arrange and pay for an independent Royal Institute of Chartered Surveyors (RICS) valuation of your property. A perk of working with Accelerate Homes is that we cover all costs including the RICS report.
Depending on the outcome of the RICS report we may increase or decrease our offer price in-line with their valuation. We will confirm this in writing and will not change the final offer price at this point.
Throughout the entire process with us you are not obligated to proceed and can back out at any point.
We Buy Any House Scam 2: No Access To Real Cash Funds
Many quick sale companies don’t actually have cash funds to buy your house. They are either using mortgages to purchase your home, which defeats the purpose of being a “cash buyer”, or are reliant on investor funds.
As you can imagine, without access to cash funds the idea of achieving a fast sale is often negated. This issue ties in closely to Scam 3 and 6 below.
To avoid this issue you should find out upfront how your buyer plans to finance the purchase of your property and whether they have ‘real cash funds’.
In terms of Accelerate Homes, we have access to a significant cash property fund, which allows us to always guarantee our cash offers and never rely on mortgages lenders or third party investors to buy your house.
We Buy Any House Scam 3: Unrealistic Timescales
Some quick house sale companies promise unrealistic timescales to complete their sale. Many say they can do so in under a week! If you do need to sell your house incredibly quickly then you need to make sure that the company you are dealing with is indeed a cash buyer. Without access to immediate cash there is no way that a buyer can complete the sale in a really short time span.
With Accelerate Homes we have access to a cash fund that allows us to literally move as fast as you need. The quickest we have competed a sale in is 7 working days. But to do so means everyone, including you, needs to be on the ball. On average we complete sales in 28 working days. We tell our customers to expect sales to complete in 2-4 weeks.
If you need more time to get your affairs into order we will never put you under pressure to move faster.
We Buy Any House Scam 4: “Lock Out” Agreements
“Lock Out” agreements or long-term exclusivity agreements are complicated documents that essentially bind you into dealing with only one company. They lock you into an exclusive relationship with a company and to get out of the agreement you often need to pay several thousand pounds.
If a quick sale company asks you to sign one of these documents, run away quickly! If you sign this document you are legally restricted to selling to the counter-party company. Worse still the counter-party company is often not obligated to buy your property, so you could end up not being able to sell your house.
In short, do not sign a lock out agreement.
It goes without saying, under no circumstances would Accelerate Homes request you to sign a lock out exclusivity agreement.
We Buy Any House Scam 5: Unregulated Sale and Rent Back
Sale and Rent Back schemes occur when a buyer agrees to purchase your property and allow you to rent back. In effect, ownership of the property changes but you don’t need to move, instead you become a tenant, usually on much better terms than your mortgage repayments.
As you can imagine, sale and rent back schemes can be very attractive, but once you have sold your rights as an owner to the new investor, your rights as a tenant are considerably reduced. For example, your tenancy agreement could be only 6 month long and then you may have to move.
The Financial Services Authority (FSA), now the Financial Conduct Authority (FCA), recently starting regulating companies and investors offer Sale and Rent Back (SARB) solutions. To offer a SRAB service a company now needs to be registered with the FCA.
If your buyer is offering you a Sale and Rent Back option make sure to check that they are registered with the FCA. If they are not, then do not do business with them (regardless of how good the offer is!)
We Buy Any House Scam 6: Requesting False Sale Price
This issue ties into scam 2: no access to cash funds. A clear indicator that a company or investor does not have cash funds is if they ask you to state that your property is being sold for the full market value rather than the price you have negotiated with them.
They do this so that they can go to their lender and get a larger mortgage based on the full market value. For example, if you are selling to the investor for £90,000 and the full market value is £120,000, the investor may want to say to the lender that they are buying at the full market value but only need to borrow £90,000 (or 75% of the inflated price). They are more likely to get a 75% loan to value than a 90% or 100% (thankfully these types of loans are not prevalent in the market anymore).
Making a false claim to a lender like the example above is in fact fraud and both the buyer and the seller could face prosecution.
In short, if your buyer is asking you to make any false claims or do things that don’t seem above board, then we recommend avoiding them and changing suppliers.
Safety Checklist to Avoid We Buy Any House Scams
Here is our handy checklist of things to consider when engaging a quick sale company:
- Check if your buyer is a genuine cash buyer: How are they planning to finance the purchase of your property? If they are planning to use a mortgage lender or a third party investor, then we would suggest proceeding with caution.
- Check what fees are involved: Do they charge an admin fee? Do they cover your RICS valuation and legal fees? Generally we recommend only engaging a company that covers all fees and does not charge an admin fee.
- Check what their policy is with ‘down valuation’: If possible get their valuation policy in writing.
- Check and verify customer testimonials: Ask for customer testimonials and follow-up with previous sellers to get a real sense of how dealing with the company you are looking to engage works.
- Check that the company conducts an independent RICS valuation: Some companies do not use RICS surveys to provide their final offer price. Make sure the firm you engage has a policy to use a RICS survey to make their final offer on your property.
- Check if they have long-term exclusivity agreements: If they do then choose another company.
- Check that they are legitimate: Do they have a registered office address? Can you visit them in person? How long have they been in the property business?
- Check their industry affiliations: At a minimum they should be members of the Property Onbudsmen and the National Association of Property Buyers.
- Check if they are FCA registered: If you plan to sale and rent back check that they are registered with the Financial Conduct Authority. Do not engage a company that is not registered
If the company you are looking to engage can meet all the criteria set out in the checklist above then you will likely have a positive experience and avoid any scam.
Should you wish to discuss how Accelerate Homes could help you please contact us today.
Tags: We Buys Any House Scams, Quick House Sale Scams, Fast House Sale Scams