Home buying companies

p00hsticks

Herzlos said:

You can always get a quote from them whilst avoiding getting into a contract,

Although be aware that (allegedly) they may well then come back with a much lower 'take it or leave it' offer just before the point of exchange...... 

Herzlos

p00hsticks said:

Herzlos said:

You can always get a quote from them whilst avoiding getting into a contract,

Although be aware that (allegedly) they may well then come back with a much lower 'take it or leave it' offer just before the point of exchange...... 

True, they are marketed purely at the desperate so there's no reason to expect them not to take advantage of that. I was only using the initial quote as an idea of how long you may need to go for a quick sale to a normal buyer.

eddddy

p00hsticks said:

Herzlos said:

You can always get a quote from them whilst avoiding getting into a contract,

Although be aware that (allegedly) they may well then come back with a much lower 'take it or leave it' offer just before the point of exchange...... 

The way at least some of the companies operate is as follows...

• They will require the seller to sign an 'option to purchase' for (say) £360k which lasts for 6 months

• That means that the company has 6 months to decide whether or not they want to buy your house for £360k

• If they decide they don't want to buy it, they can walk away

• During those 6 months you are not allowed sell to anyone else

So let's assume the seller is in dire financial difficulties (those are the type of sellers these companies target). The seller is unable to pay their mortgage, has debt collectors calling, and their debts are getting bigger every month.

After one month the house buying company says "We're struggling to find a buyer at the current price - so you have a choice. We can keep trying for another 5 months (during which time you cannot sell to anyone else) and your debts will get bigger and bigger, or you can agree to accept £330k"

RHemmings

eddddy said:

p00hsticks said:

Herzlos said:

You can always get a quote from them whilst avoiding getting into a contract,

Although be aware that (allegedly) they may well then come back with a much lower 'take it or leave it' offer just before the point of exchange...... 

The way at least some of the companies operate is as follows...

• They will require the seller to sign an 'option to purchase' for (say) £360k which lasts for 6 months

• That means that the company has 6 months to decide whether or not they want to buy your house for £360k

• If they decide they don't want to buy it, they can walk away

• During those 6 months you are not allowed sell to anyone else

So let's assume the seller is in dire financial difficulties (those are the type of sellers these companies target). The seller is unable to pay their mortgage, has debt collectors calling, and their debts are getting bigger every month.

After one month the house buying company says "We're struggling to find a buyer at the current price - so you have a choice. We can keep trying for another 5 months (during which time you cannot sell to anyone else) and your debts will get bigger and bigger, or you can agree to accept £330k"

The National Association of Property Buyers have a code of practice. Which includes a term that looks to me to be relevant to this discussion. 

https://napb.co.uk/wp-content/uploads/2021/04/property-buying-companies-code-of-practice-1.pdf

5c You must not reduce offer prices late in the process without a valid reason and you must avoid putting undue pressure on the house seller which restricts their ability to make free or informed choices

Note that I don't know what is accepted as 'a valid reason'. Nor do I know how the NAPB (and TPOS) respond to any complaints about this. But, the option to complain backed up by potential non-compliance with the code appears to be there. 

The website for the NAPB says that house sellers who deal with a NAPB member (including some well-known companies) have the option of complaining to The Property Ombudsman. Of course, not all such companies will be a NAPB member. 

I was wondering if lock-in options would be unfair terms as they seem to create a significant imbalance of rights and responsibilities of the two parties. On the other hand I believe that when deciding whether a term is unfair or not, terms are compared to other terms commonly used in the industry. So, if this is a common term, it may or may not be legally unfair depending on whether it is anomalous or common. This site: https://www.sellhousequickly.co.uk/property-buying-companies/  discusses option agreements in a section called 'Beware Property Option Agreements'. It says that the situation may be fair or unfair depending on the option fee that a property buying company  pays the house seller. If a large fee then the company stands to forfeit a significant amount if the property is not purchased. If a paltry fee, then effectively near-as-something no loss to the company. Note that this is a website of a property buying company, and me linking to them is not meant to recommend them in any way. E.g. as far as I can see they are not a member of the NAPB, and their code of conduct looks short and unimpressive to me: https://www.sellhousequickly.co.uk/code-of-conduct/

I don't know if these tie-in options are likely to be considered unfair terms or not. I can see the argument of 'sellhousequickly' that the unfairness depends on the size of the option fee. But, by unfairness I mean a personal view; I'm not saying that legally they are unfair terms. 

Albermarle

eddddy said:

p00hsticks said:

Herzlos said:

You can always get a quote from them whilst avoiding getting into a contract,

Although be aware that (allegedly) they may well then come back with a much lower 'take it or leave it' offer just before the point of exchange...... 

The way at least some of the companies operate is as follows...

• They will require the seller to sign an 'option to purchase' for (say) £360k which lasts for 6 months

• That means that the company has 6 months to decide whether or not they want to buy your house for £360k

• If they decide they don't want to buy it, they can walk away

• During those 6 months you are not allowed sell to anyone else

So let's assume the seller is in dire financial difficulties (those are the type of sellers these companies target). The seller is unable to pay their mortgage, has debt collectors calling, and their debts are getting bigger every month.

After one month the house buying company says "We're struggling to find a buyer at the current price - so you have a choice. We can keep trying for another 5 months (during which time you cannot sell to anyone else) and your debts will get bigger and bigger, or you can agree to accept £330k"

I am not saying you are wrong, but if the targeted sellers are those in dire financial straits, then taking the house off the market for up to 6 months without any guarantee of a sale, would not give the desperate sellers what they want - money quickly.
Does not add up really.

eddddy

Albermarle said:

I am not saying you are wrong, but if the targeted sellers are those in dire financial straits, then taking the house off the market for up to 6 months without any guarantee of a sale, would not give the desperate sellers what they want - money quickly.

Does not add up really.

Yep. And why sign up in the first place with a quick sale company who will buy your house for £200k, but only if they can resell it on the same day for £250k?

If you're in dire financial straits - why not get the extra £50k for yourself?

It doesn't add up really.


I think the real answer is that smooth-taking salespeople target unsophisticated sellers, who are in dire circumstances, and therefore might not be making the best decisions.


As an aside, I've spoken to people who explained their reasons for paying £80k for bitcoin based scheme, and £50k to a property investment scheme, and £5k to a share dealing scheme. They all lost their money.

Based on the information (or lack of information) they were given in advance, I can't understand why they did it.

It doesn't add up really. 

chanz4

I looked at a firm when our btl was peeing us around, 85% they offered but only if they could find an invester

GDB2222

jolittlejohnhotmail said:

We have had our property on the market for around 6 months and cannot find a buyer.  We have dropped the price 3 times from £585,000 to £500,000.  We are desperate to move as we are re-locating up North.  Can any one recommend a fast way of selling? There is nothing wrong with our property. No subsidence issues, etc… Are there any homebuying companies who are trustworthy? If so should we take our property off the market before we approach them, so they don’t see the vastly reduced price?
Any help and advice would be greatly appreciated.

You may be better off putting it in a (traditional) auction, with a reserve of say £400k.