When you’re eager to sell your house or flat in a hurry, whether for financial needs or any other reason, you might be tempted by companies promising “we buy any house” because they promise that they’ll buy your property quickly and for a generous price.
But it’s important as a homeowner to be wary of such promising deals, because there are unfortunately a handful of scam property buying companies in existence. They will use a wide range of tricks to make more money for themselves while paying you less for your home, so it’s important to know how to guard against this.
LDN Properties have been buying houses and flats across London since 2003 and operate with an efficient, transparent and straightforward process for making competitive offers for buying homes. No matter where you’re located, be sure to look for comparable qualities before deciding to sell to a property buying company.
You’ll know you’re heading in the right direction with a legitimate property buying company when they don’t charge you any fees, when they are completely upfront with how the sale process will play out, and when they will answer any questions you might have about selling. There are a number of other important tips to follow to help you detect a potential scam.
Do your research before negotiating
A great way to prevent being the victim of a scam is to do research online into the company that you might want to buy your home. Simply put the company’s name into an internet search engine and it should turn up any negative results, including news articles or poor customer reviews online that will warn you against selling to the business.
Contact property selling associations
If a property buying company is legitimate, it is likely to be a member of the National Association of Property Buyers or The Property Ombudsman (TPO). Both have lists of their registered members who are required to adhere to official guidelines and standards for buying properties, and if a business is a member this is a positive sign when looking for a company to trust when buying your home.
Avoid companies offering “sale and rent back”
One warning sign to look out for is if they offer “sale and rent back” deals through which they will buy your home quickly and allow you to stay in it as a tenant renting the property from them. While this might be initially something you’d be interested in – for example if you have an urgent financial need to sell – there’s no guarantee that the company won’t try to force you out as early as six months after buying your home.
Still, this is just a warning sign because not all property buying companies that offer sale and rent back agreements are dubious. The Financial Conduct Authority (FCA) is a regulatory body that maintains a list of authorised firms that are permitted to provide sale and rent back services.
“Down valuations” can happen with scam companies
Some homeowners who have made the mistake of working with bad property buying companies have suffered from “down valuations” through which the business promises you a large sale price but the actual final amount you receive is less. Promises are made in order have you take your property off the market, and then change the price closer to the actual sale date.
Companies that undertake this type of scam can sometimes impose expensive fees for buying your home, which further cuts into the profit you could make from selling your home.
Don’t fall for contracts with “lock out” provisions
You should be extremely cautious of any property buying company that tries to get you to sign a contract with “lock out” provisions, which are binding terms that give the business sole authority over marketing or buying your home. This means you’re stuck with the one company and can’t seek or accept offers from anyone else. And these contracts also typically include provisions with large fees for breaking the restriction, so it could end up costing you a lot of money.
Indeed, there’s no reason why a property buying company that promises to quickly buy your house should need any type of contract for long-term sole purchasing rights.
Many property buying companies are legitimate
Although the tips above are designed to alert you to a potential scam, the good news is that many property buying companies are legitimate and can help you secure a great sale.