How to Avoid House Buying Scams?
On average a house takes two to three months to sell. This delay has led to many people who are in a hurry, looking into companies that buy your house very quickly. Whilst many of these companies are very reliable, before considering this option, it is important that you do your research to make sure the business you are dealing with is trustworthy, so you avoid house buying scams.
Selling your property is a huge financial commitment and therefore it is hugely important that you do things properly and deal only with established organisations and people.
There are some simple things you can do to ensure you don’t get scammed or misled by your house buyer or estate agent.
Here are some questions to ask yourself:
Is the company legitimate?
It might sound obvious, but the first thing you should consider is the legitimacy of the company you are dealing with. In the 21st century, it’s easy to get a website up on the internet that looks reputable, and market yourself as a professional ‘fast house sale’ company.
These ‘quick house sale’ organisations are often merely middlemen, who will pass on your property sale and information to a third party. You should be weary of this, as most of the time it means that you will not be getting as good a deal as you would if you were dealing with the company directly.
We have collated an important check list of questions you should ask your buyer and points to consider:
- Can they show you proof of available funds to purchase your home? Check that they really are cash buyers.
- Have they provided an office address and are you able to make an appointment to visit them in person if you wish to do so? You may feel more confident after a face-face discussion.
- Are they a member of the Property Ombudsman (TPOS)?
- Are they a member of the National Association of Property Buyers?
- How long have they been in in the property buying business? Do they have the necessary experience to complete on a property sale quickly and within the agreed time scale?
- Check their customer reviews and testimonials, do they have a positive image and reputation? Is feedback available from previous customers?
Can they actually sell your property fast?
Another way to avoid scams is to assess how long it will really take them to purchase your property. On average, quick house sale companies can buy your home in 7 days. If they have given you a longer timescale this may mean that they are operating with a third-party company as mentioned above. It is also a good indicator that you may be involved in one of the many ‘buy your house for cash’ scams found on the internet.
Are they real cash house buyers?
It is also important to be aware that although there are few real cash house buyers in the market, most people need a mortgage, which means that many people advertising themselves as cash buyers don’t actually have the financial means to purchase your property as quickly as they say they can. There are also certain house buying scams involving buyers who claim to be “genuine cash buyers”, who are not and just act as enquiry sellers and “quick sale estate agents” who will pass your enquiry to someone else to deal with. This means you don’t get the full advantages of dealing with a genuine cash property buyer. You’ll often only find this out later in the sales process when it is too late, and you have agreed to sell to them. You should also remember that non-genuine cash buyers will take much longer to purchase your home as they will require finance, a mortgage or another third party in place to sell your property onto which will cause you delays and further hassle.
Are they offering a Sale and Rent Back scheme?
A Sale and Rent Back Scheme is where a third party offers to purchase your property from you and then rent it back to you.
For those facing house repossession, this may seem like an ideal solution because you no longer need to make mortgage repayments, you get some of the equity in the property and you get to stay in your home. Although this looks like an attractive offer, you will have less rights over your property when you become a tenant and may be asked to move after just 6 months, leaving you in a difficult situation.
The best way to avoid house buying or renting scams like this is to check that the buyer offering a sale and rent back service is registered with the FCA. This is the only way to ensure that the scheme is regulated properly.
Is this quick house sale company too good to be true?
If it sounds too good to be true, it probably is. An offer that is above the market value of your property is probably just to entice you and will not be the value you get at the point of sale.
It is well known that using a property buying company means that you will get slightly less for your home. This is because you sacrifice some money for the convenience and speed of the transaction compared to other methods such as using an estate agency or selling property at auction.
The ‘initial high offer’ is a tactic used by fake companies and online websites. They will often reduce their offer before the final purchase of your property. They overvalue your property at the beginning so you choose their company, then when the process is near completion you will end up paying hidden fees (including survey or admin fees) or getting a new valuation, which they often blame on “external factors”.
After a few dealings with your agent you should get a feel for how they conduct business. Think of the types of questions you want to ask; they should be open, transparent and honest. Make sure you are told what to expect upfront and kept in the loop at every stage. If it doesn’t feel right, trust your gut. If any red flags are raised, you may want to consider taking your business elsewhere or avoiding We Buy Any House companies altogether.
What is the process of a legitimate We Buy Any House company?
After reaching out to the company, they will be in touch with a cash offer for your home – you should receive this offer quickly.
If you decide to accept the offer, a trustworthy firm will then deal with the rest (typically free of charge) – including all the associated admin that comes with selling a property. They will also cover your legal fees.
You will agree a completion date with the property-buying company, this shouldn’t extend over a month, if it does, this could be a sign that you are dealing with a scam we buy any house company.
The sale will then go through, and can enjoy your newly earned funds! Always be cautious when it comes to property transactions to avoid house buying scams.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.