I'm a property expert that still remembers the days when having broadband was a selling point! My articles cover issues that homesellers face in the UK and answer the questions we're all asking. I've bought and sold properties and helped others do the same, so my writing comes from years of experience.
Read Full Bio >Although there has been something of a revolution in the world of cash buying companies in recent years, this area of the property sector still has no official government regulation.
This means that a plethora of opportunities remain for unscrupulous organisations to con and scam unassuming “clients” out of thousands of pounds.
It has become more difficult for companies in this industry to successfully dupe potential clients.
This is partly due to heightened awareness of activity of this kind, and partly because there are now a greater number of mechanisms and resources in place that have been designed to prevent this.
However, it is still very possible to fall foul of a range of tricks and tactics employed by unethical firms in order to take advantage of individuals who are struggling under time constraints or financial pressure.
If you are planning to sell your property to an organisation of this kind, it is worth taking great care to select the right service provider and to undertake as much research as possible to avoid issues of this kind.
To help you, this article will explore the most common scams run by “we buy any house” companies and how to avoid them.
Gazundering
One of the most notorious scams in the world of fast home buying and cash buyers is that of “gazundering”. This involves a company dropping their offer at the last minute, when the seller has no choice but to accept their new terms.
The technique usually goes as follows:
The client approaches the company and receives an offer for their home
- The client is happy with the offer and accepts it
- The company then delays the buying process, providing a range of excuses to try and avoid suspicion
- The client becomes desperate to get their property sold. They may be subject to a range of deadlines or ongoing expenses – or they may have entered into contracts or made an offer on another property
- At the last minute, the company reduces their offer significantly
- Now trapped, the client has no choice but to accept the new lower amount
Historically, instances of gazundering were so rife in the property industry that this type of scam remains one of the chief concerns of sellers looking for a fast sale today.
Option Contracts
Through the use of cleverly-worded small print, unscrupulous ‘we buy any house‘ buying agents may be able to manipulate their clients into unintentionally entering an “option contract” – an agreement that provides the company with the exclusive right to purchase the property.
This means that the vendor cannot then go elsewhere to sell their home, meaning they are trapped and must accept whatever offer the company provides.
As we will explain below, these contracts may include a “get-out clause”, but this will usually involve the payment of a significant fee.
Hidden Fees
Many “we buy any house” companies choose to waive their agency and valuation fees and may even cover a client’s legal costs, usually to “sweeten the deal” when offering below market value for a property.
Others may provide a certain amount towards conveyancing, or will pay for the use of one of their own recommended legal specialists – but not for the customer’s chosen solicitor.
Whatever their standard arrangement, trustworthy companies in this sector will display all of their fees clearly on their website – or, at the very least, will explain them to you as part of a no-obligation consultation before you commit to their services.
However, there are still organisations that fail to reveal all the charges faced by their clients until they are well into the process. Sometimes, a vendor will not be aware of a fee until they receive a request for payment.
These charges may take many forms, from late drop-out penalties to “refundable” amounts that are never returned.
For example, some organisations may charge an upfront fee to cover expenses related to the valuation of a property. They will say that the amount will be refunded further down the line. In reality, the sum will only be returned if the client accepts their resulting offer.
It is important to look out for carefully crafted small print detailing the scenarios in which a company may retain supposedly “refundable” amounts, or levy charges and penalties against their customers.
If in any doubt, it is a very good idea to arrange for a legal specialist to examine any paperwork that you have received from a fast home buying company. You should give particular instructions to look out for references to fees and charges.
Fake or Manipulated Valuations
In order to validate a very low offer, fast home buying companies may value your property at a far lower price than its real worth. They may even cite “third party” valuers in order to make the figure more believable.
It is worth noting that all genuine “we buy any house” firms need to pay below market value for property, as they usually make their money by purchasing at a discounted rate, then selling on the open market.
Most companies are able to offer between 70 and 85% of market value. They should be clear about this when they enter discussions with potential clients.
If you have received a below-market-value offer from an organisation of this kind, it is not necessarily evidence of a scam. However, it is definitely a good idea to arrange multiple valuations against which to compare the figure that has been provided and see how close it is to market value.
You can approach traditional high street estate agents in order to do this, as many will provide the service for free in an attempt to attract your custom. You should be aware that these valuations may even be slightly inflated to encourage you to sell!
We also highly recommend that you undertake your own research from websites or from a reputable estate agent to develop a clearer idea of what your property is worth.
Take a look at the sale prices of the most recent properties purchased in your area (you can find this information on portals such as Rightmove and Zoopla).
The properties you research should be directly comparable to your own in terms of size, age, outdoor space, style and quality of décor, state of repair etc. If the valuation with which you have been provided is well below any of the figures you discover, you may have been duped.
Again, it is vital to take into account that a fast home buying company will almost always offer 25 – 30% less than your home’s true market value.
When it comes to the validity of any valuation provided by a “we buy any house” company, it is often best to err on the side of caution and opt for an organisation that mentions its use of RICS-qualified surveyors on its website.
Third Party Buying
Companies in this sector will work to convince sellers that they will purchase property using funds directly from their own “coffers”. However, in reality, some organisations utilise third party buyers and investors to raise the capital required.
While, in principle, there is nothing wrong with harnessing third party funding to purchase property – as long as all parties are aware and in agreement – an organisation should never mislead their client with regards to the source of their funds.
What is more, a reliance on third parties introduces additional risk to a transaction. It may take some time for the company to secure a buyer – and even then, that buyer has the potential to drop out, or to take longer to complete their side of the arrangement.
This means that the timescale – and even the completion – of the purchase is not assured and the vendor may not receive the service for which they had “signed up”.
Selling Your Data
Some cash home buying companies benefit from a “side hustle” that involves pedalling customers’ personal data to third parties.
This means that, even if they are not able to strike a deal with a vendor regarding the purchase of their property, they will make some form of profit from the interaction.
At the same time, the customer will be plagued with marketing emails from a range of organisations in which they are likely to have no interest at all.
Not only is this infuriating, but it also means that companies that take this approach have less of an incentive to pursue a successful property transaction – as they always have the sale of data on which to “fall back”.
Of course, due to the stipulations of GDPR and the Data Protection Act, in order to keep these actions legally “above board”, a company must provide their customers with the chance to opt in or out of certain forms of data usage.
For this reason, as is the case with many “we buy any house scams”, this activity is made possible by the clever application of small print. It is vital, therefore, to read all paperwork provided with significant attention to detail.
Again, the best way to avoid having your data dispersed among marketing companies against your will is to arrange for a legal specialist to take a look at all documentation that has been provided by your chosen property buying company.
You should check for disclaimers that explicitly state that your information will not be shared with third parties, as these may well be the mark of a more trustworthy organisation.
How to Avoid We Buy Any House Scams
Due to the underhanded behaviour of a number of “we buy any house” companies, the reputation of the entire sector has taken a considerable hit over the last decade or so.
Naturally, this has significantly affected the success of legitimate home buying companies – and, as a result, many organisations of this kind have voluntarily opted to be regulated by a number of bodies.
Most notably, the National Association of Property Buyers (NAPB) was formed in 2013 by a group of fast house sale organisations who were keen to assure customers of their integrity and to hold themselves – and other companies – accountable for the proper execution of their duties.
Members of the NAPB must also register with The Property Ombudsman (TPO). Launched in 1990, this public advocate reviews complaints and resolves disputes between property buyers, sellers and agents.
There is also the Property Redress Scheme (PRS), which became a government authorised service in 2014. The PRS also specialises in resolving consumer disputes on the subjects of estate, lettings and property management work.
While the property buying sector still has no government mandated regulation, these bodies now exist to ensure that the active house buying companies always act with fairness and integrity – and undertake all tasks transparently – for the benefit of their clients.
Many companies are also members of other regulatory organisations – such as Trading Standards Institute and the Federation of Small Businesses.
Since the creation of the NAPB and PRS, it has become far more difficult for scammers to successfully operate within the “we buy any house” industry. However, this is not to say that unscrupulous companies no longer exist within the sector.
It is, therefore, very important to ensure that you undertake suitable research in order to properly protect yourself when engaging the services of a company of this kind and avoid house scams. Here are a few ways to ensure that the company with which you are dealing is legitimate.
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Explore Their Website
When seeking evidence of the integrity of a certain organisation, you should first explore their website and all associated online content, such as their social media channels.
Be sure to take note of any claims that may require further validation, including statements such as “we buy ANY house, in ANY condition” and “we will buy your home in SEVEN DAYS”.
It is also worth looking carefully at the wording of paragraphs wherein an organisation promises to cover agency, valuation or legal costs – and at any explanation of the way in which your offer will be calculated.
If a company’s website includes a breakdown of their property sale process, be sure to look at this in detail, too.
You should also seek out mentions of the regulatory bodies of which the organisation claims to be a member. Remember to undertake further checks by searching for the company in question on the websites of organisations such as the NAPB and The Property Ombudsman.
Comprehensively explore and study any and all small print. If there is anything that looks dubious, or that you do not fully understand, be sure to run it by a legal professional before going any further.
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Read Reviews
One of the most effective ways to check for scams is to read online reviews of the companies you are considering. The most popular platforms are Trustpilot, allAgents, Google Reviews, Reviews.io and Feefo.
Not every “we buy any house” firm will have a profile on all of these, but it is highly likely that the organisation in which you are interested will be present on at least one.
Remember: public reviews should be taken with a pinch of salt. Calling something a “scam” tends to be a knee-jerk reaction to any disappointing or less-than-successful professional interaction.
Exaggeration is rife, too – particularly as there can be a considerable amount of emotion tied up in the property selling process, and many sellers who have had a poor experience may be tempted to use hyperbole in order to cultivate a sense of validation for their feelings.
It is important to be able to differentiate complaints that represent a genuine cause for concern from those that describe an unfortunate but unavoidable negative experience.
Specifically, you should keep an eye out for write-ups that discuss hidden charges, unwanted option contracts and the last-minute lowering of offers.
You should also check whether the companyor estate agents in question has responded to any reviews that mention these matters – as this will help you to better understand both sides of the story.
Of course, it’s a good idea to keep an eye on the relevant platform’s star-rating of each company, too – and to check this against the number of reviews they have received overall.
Usually, an organisation with 1000 reviews that are 98% positive can be considered more trustworthy than one with 100 reviews that are 98% positive – as the sample size is larger.
In the case of the former, there has been more opportunity for problems to arise. However, in the vast majority of their cases, the user has had a positive experience despite this, suggesting an excellent level of service.
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Check with Companies House
All limited companies and limited liability partnerships must register with Companies House. You can search this register to find further information about the organisation to which you are considering selling your property.
It is a good idea to closely examine the information shared on this platform – looking out in particular for references to past fines and penalties, along with details of the company’s financial position.
Often, the accounts of the business will be displayed transparently on their Companies House profile, and will be free to access.
Some smaller companies are permitted to file abridged accounts, so you may not find a great deal of useful information if your service provider falls into this category.
However, if possible, it is worth taking note of the capital to which an organisation has access – as this will make it easier to determine whether they are likely to utilise their own funds to purchase property, or whether they would require financial input from a third party.
You should also try to find out about any parent or sister organisations associated with your chosen firm, or whether it is part of some form of “umbrella”. Any associated firms and their activities should be investigated too, in order to check for any unscrupulous behaviour.
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Communicate with the Company Directly
If, during your investigations into a particular “we buy any house” company, you come across any claims, statements or other matters that cannot be backed up or proven by further online research, you always have the option to discuss these with the company itself.
You may decide to call or email them in order to request clarification of a particular point – or, if they offer a “no obligation” consultation, you may choose to take them up on this option for a longer, more in-depth conversation.
Just be sure to check what they plan to do with any data or information you provide before agreeing to this.
Take care to make clear notes in advance of every aspect that you would like to have clarified, and present these plainly and directly during your discussion.
If you still feel uncertain about the company’s practices following this consultation, you should consider taking your business elsewhere.
Any Questions?
If you would like to find out more about the fast home buying process, or to receive a no obligation cash offer for your property, you can get in touch with our knowledgeable team today.
If you are happy to accept our offer, we can buy your house in just a few weeks.
You can learn about the ways in which we are regulated by taking a look at our About Us section for your peace of mind.
