Ruban Selvanayagam, Co-Founder of Property Solvers, on why most private house buying companies are not “scam artists”.
Today, more firms than ever before are buying properties directly from homeowners.
As these are largely cash purchases, sellers can exchange and complete in considerably shorter timeframes.
Sidestepping the need for estate agents, legal fees are usually paid for and some operators also offer cash advances.
Sounds too good to be true?
Let’s start with a bit of background…
A Short History of the Fast House Sale Industry
A private property sale industry of sorts has existed in the UK for millennia.
Historically, buyers and sellers would barter amongst themselves – using a legal professional to make sure everything was done properly.
Using an estate agent is, in fact, a relatively modern concept that’s grown over the last 50 years or so. These days, it almost seems strange to sell a property any other way.
Yet in the early 2000s, a handful of companies began to roll back the idea of buyers and sellers interacting with each other. As the sector matured, homeowners started to see the attraction of removing the risks involved with selling through middlemen.
Selling Property Under the Market Value
Perhaps the biggest “catch” is that quick sale companies buy properties at a discount.
As a result, most of us struggle to shrug off the stigma of being fly-by-night and out to exploit sellers. This is even though below market value sales occur every day through estate agents and auction houses.
Our Own Position
Although we cannot speak for our industry peers, it is worth highlighting some of the key factors we always stress to our customers:
- We won’t buy if there’s a feasible way to sell through the open market. In most cases, Property Solvers refer customers to our network of estate agency contacts. A simple tweak to the asking value usually gets what the seller wants;
- We’re actively looking for problem properties that most buyers have no interest in. We’ve acquired buildings with structural, legal and a range of other complex issues;
- We guarantee to buy for cash and there is no chance of any chain breaks;
- We can exchange contracts on the sale in as little as 24 hours, followed by completion over the following 7 days;
- There are no legal, estate agent or auction fees involved;
- Home sellers avoid property “holding” costs such as ongoing mortgage payments, council tax and utility bills;
- The sale is entirely private. There will be no “for sale” boards, countless viewings or other hassles;
- Throughout the transaction, we maintain an open line of direct communication and make ourselves available out of hours.
The 2013 Office of Fair Trading Report
To say that the industry is without its faults would not be fair either…
Following the credit crunch, a number of reports emerged of private property buyers fleecing vulnerable homeowners out of tens of thousands of pounds.
These incidents fuelled the public’s suspicion towards the sector, resulting in an Office of Fair Trading (OFT) investigation into a handful of firms.
Although many wondered whether this was the demise of fast house sale firms, the media attention ended up invigorating the sector. It didn’t seem fair that a few bad apples should characterise the work we do.
In response to the backlash, a group of quick sale firms formed the National Association of Property Buyers (NAPB). Collaborating with The Property Ombudsman (TPOS), this not-for-profit organisation serves to represent the interests of the sector, protect sellers and raise overall standards.
The NAPB’s work across the sector has been a force for good. As highlighted in my interview below with founder Jonathan Rolande, in the 5 years since the trade body’s inception, there have been no serious complaints.
What Homeowners Should Beware Of…
Given that there are some rogue traders out there, the negative sentiment towards the sector still lingers.
Some of the tell-tale signs of a shady fast sale company include:
- Misinformation regarding the property’s value. Sold house price data is widely available in the public domain (for free), so there’s no excuse for this;
- Taking advantage of the distressed situations homeowners are going through;
- Not running through all the viable options and stating that a fast house sale is the only solution (which is often not the case);
- A lack of cash funds to purchase the property, thereby delaying the sale;
- Inexplicably altering the offer price around the time of exchange;
- Not dealing with sensitive issues in the correct manner. If a homeowner is going through repossession, for example, they should be fully aware of their rights. In most cases, we find they can stop the process themselves and stay in their home (i.e. there’s no need to use a company like ours);
- Hastily forcing homeowners to decide;
- Tying homeowners into binding agreements without giving them breathing space or the ability to seek independent legal advice;
- Calling or messaging homeowners outside of agreed times.
Where Next for the Fast House Sale Industry?
Although it’s made notable strides in recent years, the quick house sale industry must continue to clean up its image.
As the industry moves forward, more firms are seeing the importance of taking a self-regulatory approach to dealing with sellers fairly. As an example, Property Solvers has developed its own Code of Practice that underlies our day-to-day activity.
It’s our belief that companies that prioritise sellers’ real needs and follow basic principles of business ethics will have the most chance of sustainable growth.
Ruban Selvanayagam is the Co-Founder of Property Solvers – a leading fast house sale company operating across the UK.