Not all house buying companies are genuine.
Follow these four essential steps to avoid the rogue traders.
As a genuine house buying company we pride ourselves on being honest, open and transparent in everything we do. Simply put, we do what we say we'll do.
Sadly though, as with any industry, there are also many “back street”, rogue companies you need to steer clear of at all costs.
During an investigation in 2013, the Office of Fair Trading identified numerous misleading, unscrupulous operators in the house-buying sector who operate outside of regulative guidelines. These rogue traders have no place in the housing market, but are incredibly difficult for regulators to stamp out - they're still around today.
As a homeowner, they could cost you tens of thousands of pounds, and a great deal of stress and heart ache.
To avoid this happening to you, we've provided a list of four essential steps to follow when selling your house to a house-buying company. These steps will help protect you from these dangerous rogue traders, and could save you from being conned out of thousands and thousands of pounds.
Step 1. Never sign anything with a house buying company.
A genuine house buying company will never ask you to sign anything up front.
The only time you sign anything when selling your home is when your solicitor asks you to.
Why would a company get me to sign something with them?
Because many companies only pretend to be property buyers. Really, many are just property brokers.
How do property brokers work?
They’ll agree a fixed price with you on paper and sign you into a contract called a Purchase Agreement or an Option Agreement. These are very one-sided contracts that give many rights to the property broker and take many rights from you.
In some cases these contracts can tie you in for months, with huge penalty clauses if you try to cancel.
What does this mean for me?
Instead of them buying your house from you, the company will tie you in with this Agreement then try to sell your house for £10,000 to £20,000 more than they’ve agreed with you, and they pocket the difference.
Besides how misleading this practice is, the other big problem is that the quick sale they promised takes months! You may not be able to cancel because of the contract you’ve signed!
Finally, they have no control over the buyer they’ve found either – the buyer will often come back and reduce the price, and can pull out at the last minute too.
DO NOT FALL FOR THIS.
You would get more money and less stress by selling through a local estate agent
Step 2. Never be forced to use a solicitor the company recommends to you.
A genuine house-buying company will never force or pressure you to use a specific solicitor.
Why would a company insist I use a solicitor they already know?
In Step 1 we warn about companies using Option or Purchase Agreements. A rogue company can sometimes make tens of thousands of pounds from these agreements, leaving you out of pocket.
Of course, a solicitor genuinely acting in your best interest would never allow this to happen, so the rogue company needs a solicitor they already know to act for you in the sale.
The solicitor helps facilitate their contract, and ultimately pays them the money.
Is there anything else the solicitor might do behind the scenes?
Unfortunately, yes. The solicitor they recommend may also help them by hiding the fact that they’re trying to find a real buyer for your house behind the scenes.
Or even worse, by hiding the Option or Purchase Agreement in the genuine paperwork they send to you – so you aren’t even aware of what you’re signing.
DO NOT FALL FOR THIS.
If the company is forcing or pressuring you to use a solicitor who they know, it’s a serious alarm bell.
If you sell to us and don't have a solicitor in mind, we can recommend one to you. This is to offer you complete convenience - you're under no pressure to use them though, and the choice is entirely yours. Either way, we cover your legal fees.
Step 3. Never agree to pay your own legal costs.
A genuine house-buying company will always pay your legal fees – and must put that in writing to the solicitor acting for you as well.
Why would a company want me to pay my own legal fees?
It's not to save themselves a few hundred pounds.
Many companies work off a process called “gazundering”. This is where they offer you an inflated price at the start, then reduce their offer just before completion.
Why would they do this?
The high starting price is to entice you in to accepting the offer from them – instead of one from a genuine house buying company who may have made you an offer as well.
But they already know they're going to drop the price later to the amount that they really want to pay. Many of these companies will leave it until the last minute – right up until you’re all packed up in boxes and removal men are outside.
This can be extremely traumatic, and the company knows that a lot of people who wouldn't have accepted their offer originally will have no choice but to accept it now.
It's an horrible underhand tactic and, sadly, many many house-buying companies use this tactic all the time.
How does this relate to legal fees?
If the company gazunders you and you choose not to accept their low offer you may be left with as much as £1,000 in legal fees for the work your solicitor has done. The company knows that a lot of people cannot afford this, so many will have no choice but to accept their offer.
DO NOT FALL FOR THIS.
If the company has not offered to pay your legal fees it's a sign that they may be planning on gazundering you later in the process.
If this happens you may be left with £1,000 to pay in legal fees. If you can’t afford to pay the fees you may be forced to accept their low offer – costing you even more.
Step 4. Never deal with a House Buyer who are not regulated.
A genuine company will be regulated by the Property Ombudsman and should be members of the National Association of Property Buyers.
Being regulated does not guarantee that they’re a genuine house-buying company - but it's a bare minimum.
Why would a company choose not to be regulated?
As we see time and time again on TV shows like Rogue Traders, some business owners have no regards whatsoever for their customers.
Organisations like the Property Ombudsman exist to protect consumers, and they have the powers to fine, punish and publicly reprimand any regulated companies who break the rules.
This is why rogue traders choose not to be regulated. If they're unregulated then they have no one to answer to, so they can act in unscrupulous ways and get away with it.
Can't unregulated companies be caught, and shut down?
Unfortunately these companies tend to change their name often so they can’t be caught. This makes it very difficult for regulators or law makers to stamp them out. This is why you need to look out for yourself - and why we've put these steps together to help guide homeowners.
Why might a regulated company still not be safe to deal with?
Companies can be regulated but still just be property brokers trying to tie you into option agreements, or they may be a house-buying company who rely on gazundering.
This is why dealing with a company who are regulated is only the bare minimum. You still need to follow the other three steps above as well (never sign anything, don’t be forced to use their solicitor, and never pay your own legal fees).
If you follow all four steps, you can avoid the rogue traders. If you’re unsure about a company you're engaged with then ask your solicitor, or one of the team at Yes Homebuyers, to make the relevant checks.
DO NOT FALL FOR THIS.
If you go with an unregulated company and get scammed, you will have no recourse, and might not even be able to find the company owner responsible.
The good news?
We are one of the few companies in the UK who follow each of the four essential steps set out above.
We will never ask you to sign anything
Use whichever solicitor you're happy with (we can recommend one for your convenience, if needed)
We'll always pay your legal fees (and we'll put that in writing to your chosen solicitor as well)
We're proud to be a fully regulated house buying company.
We are working to help stamp out unregulated and unscrupulous companies, and all the team here at Yes Homebuyers are trained to help spot rogue traders.
We offer clients a free service where we can conduct a regulative check on any other house buying company you may have been dealing with, in order to highlight any potential issues in their practices. This can help determine whether the offer you’ve received looks to be genuine or not.
We aim to beat all offers from other genuine house buying companies
The even better news? If the offer you’ve received does appear to be genuine, we will always look to beat it for you too.
If you'd like an offer from a genuine house buying company, or if you'd like us to take a look at an offer you've received elsewhere, call us now on 0330 223 0178 (local rate) or 0800 133 7687 (freephone).
Alternatively, complete our short enquiry form below, and our team will be touch within 24 hours.