'Quick house sales' probe by OFT

keysThe trading watchdog has launched a probe into firms offering "quick house sales" amid fears that desperate home owners are losing large sums of cash.

The Office of Fair Trading (OFT) has asked more than 50 un-named firms operating in the market to provide details of how they operate and it wants to hear from consumers about their experiences of dealing with such businesses across the UK.

Firms in this sector offer to buy a house themselves or find someone else to snap it up, often for less than the full market value of the property.

The OFT said that while they may offer a "valuable service" for people who need fast access to cash, it is concerned that stressed and vulnerable home owners who are looking for a way out of financial difficulties could be misled into selling up for a big loss compared with their home's true value.

The watchdog said practices that would give it cause for concern include if it found that firms were hiding their fees behind initial valuations which appear to offer a good price or if sale prices were being slashed at the last minute once sellers were too far down the line to pull out.

Alarm bells would also be rung if the OFT found evidence that firms were making misleading claims about how much someone's home was worth or trying to induce customers into agreements that prevented them from considering selling to other buyers by imposing severe penalties for breach of contract.

The investigation is taking place as part of the OFT's plan for the coming year to root out problems in the market which are particularly affecting people who are struggling in the tough economic climate. It will look at the risks in the quick house sale sector to people who are under threat of repossession or who have built up large amounts of debt.

People could also be particularly vulnerable if they suddenly find themselves in financial difficulty because their circumstances have changed, for example if they are going through a divorce or if they are an older person with care bills to pay, the watchdog said.

More than 157,900 UK households had fallen behind on their mortgage payments at the end of 2012 and over 110,000 couples divorced in 2011 in England and Wales.

The OFT will publish a report on the quick house sale sector in July. As with other market studies, there could be various possible outcomes, ranging from the industry being given a clean bill of health to enforcement action or recommendations for changes to the law.
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