If you're thinking of selling your home to a "we buy any house" company, the first thing you need to know is that these companies are completely unregulated.
There are hundreds of them operating too. Many rely on unethical practices, and because there's no regulation they keep getting away with dodgy tactics.
These can cost home sellers tens of thousands of pounds.
I've seen just about every trick in the book over the years, and I want to share them with you here and help you avoid them.
So what are the most common "we buy any house" scams?
- Reducing their offer at the last minute;
- Mis-selling option agreements as cash offers;
- False advertising and misleading statements;
- Manipulating online reviews;
- Untraceable directors.
In this article we'll delve into these tactics in more detail, but I wanted to start with a recap of the pros and cons of using house-buying companies.
If you want to cut right to the chase and see whether or not a house-buying company is right for you, AND get a recommendation for a scam-free house-buying company I know and trust, start with the quiz below:
1. Pros and Cons of selling to a house-buying company
Selling your house the "normal" way can be a difficult and lengthy process:
- According to a 2022 study by Zoopla, the average house sale takes 25 weeks.
- The process is also laden with setbacks, with 31% of sales falling through.
- These are the main reasons that selling a home ranks as one of the most stressful life experiences we go ever through.
You can avoid these problems by selling your house directly to a cash house-buying company instead. (Also known as a "we buy any house company", "cash house buyer", or "property buying company").
There are 2 main advantages and 2 main disadvantages of selling to one. Let's cover them here, then we'll get into the scams in more detail.
Pro #1 - a fast house sale
By selling to a house-buying company you can have your sale done in as little as 2-3 weeks, without the stress or uncertainty of an estate agent sale.
So without a doubt, house-buying companies are the fastest way to sell your house.
House-buying companies aren't just about speed though.
Pro #2 - a certain house sale
Selling to a "we buy any house" company can remove all the uncertainty of selling your house as well. (Did you know estate agents only sell around 51% of the properties they take on? They're far from a sure-thing. Auctions are better, but still only manage to sell 70-80% of the properties they take on). House-buying companies can offer you certainty in your home sale.
This combination of speed and certainty makes house-buying companies a great option for a whole host of reasons.
But if companies who buy your house are so great, why doesn't everyone sell to them?
Well, there are two major disadvantages.
Con #1 - a lower selling price
The main problem is that house-buying companies offer a reduced price for your home:
- Because of the costs they incur, they have to offer a low price for your home in order to cover all their costs and make a profit.
- This is why genuine house-buying companies will only really be able to offer you around 80-85% of your property's full value.
- This is the main reason house-buying companies aren't right for everyone.
But for those who are happy working with a a reduced sale price in exchange for a quick and certain sale, there's one more big turn-off...
Con #2 - unregulated industry and dodgy companies
Unfortunately, house-buying companies are completely unregulated.
Many house-buying companies display the Property Ombudsman badges or National Association of Property Buyers (NAPB) badges. These organisations have no regulatlory powers though.
This is what The Property Ombudsman and the National Association of Property Buyers each say about their powers:
- The Property Ombudsman: "The Ombudsman is not a regulator and does not have the authority to take regulatory or legal action against an agent, impose fines or dictate the way agents conduct their business." - source
- The National Association of Property Buyers: "The NAPB is not in itself a redress scheme or regulator, it can provide information to anybody who feels that they have been unfairly treated." - source
So cash House Buying Companies are not regulated. These organisations give the illusion of safety, but have no powers to keep the industry clean.
How many house-buying companies are there?
Unfortunately, because there are no regulations creating barrier to entry there are hundreds of these companies operating.
I was able to find over 100 quick sale companies in just 5 minutes using Google. I estimate there are around 200-300 in total, with more cropping up weekly.
Because of the lack of regulation there's no punishment for bad practices - meaning most companies use so sort of unethical practice.
Horror stories have trickled into the media over the last few years, leading to a huge amount of distrust from the general public.
Can you trust property buying companies?
We carried out a survey of 562 people in November 2022 to see just how bad the distrust of "we buy any house" companies was.
While many people were still unfamiliar with these companies, the opinion of everyone else was pretty bad...
So if you're here on this page because you're feeling suspicious of these companies, then you're right to, and you aren't alone!
But let's keep moving... next we'll cover the unfortunate state of regulation in the industry, and get into some of the common tactics I've seen these companies use.
I'll also show you what you can do spot the scams and avoid them.
If you want a helping hand, take this 1-minute quiz below. I'll help you figure out if a house-buying company is right for you, and I'll put you in touch with a scam-free one if you want to get a cash offer. Take the quiz now to get started.
2. The 5 biggest scams used by house-buying company
I get calls on a weekly basis from home sellers who've picked the wrong company and fallen victim to one or more of the unethical tactics these companies use on their customers.
Unfortunately, this is a really easy trap to fall into.
We often have the pre-conception that scammy companies are small business and they're easy to spot. This couldn't be farther from the truth for this industry though.
Sadly, many of the biggest house buyers are the most unethical.
Don't make the mistake of thinking you can use online reviews to spot the goodies from the baddies either. You can't really trust online reviews for house-buying companies. As I'll outline below, online review-tampering is rife, meaning many of the worst companies seem to have great online reviews.
Let's start discussing some of the worst and most common tactics in more detail.
Scam #1: Dropping the offer
The first thing you need to know when selling your house is that offers essentially mean nothing. They are not legally binding. The price can change at any time.
Many house-buying companies exploit this to the maximum. This is how it happens:
When most people decide to look into selling to a house-buying company they'll contact two or three companies to get offers. The following events often unfold:
- Shopping around. When most people decide to look into selling to a house-buying company they'll contact two or three companies to get offers.
- Companies "outbid" each other. The house-buying companies know they're competing against others, so it's in their interest to start with a really high initial offer. (After all, if their offer is low then you'll just go with another company).
- Accepting the offer. The seller likes the sound of this high price, so they agree the sale and start moving forward.
- The price drop. In the days running up to completion, the company calls you and drastically reduces their offer.
- A rock and a hard place. The seller's left with an ultimatum: they can go right back to the start and try again, or move forward with the lower price.
You might think you wouldn't accept the lower offer if that happened to you, but unfortunately it's easier said than done.
That's because these companies are experts at putting you in a position where you simply don't have a choice. This is why so many people do end up having to accept the lower price, and why companies use this tactic in the first place: it works.
Is this legal?
Unfortunately there's no regulation in place to stop this. Here's what a couple of organisations say about it:
- Gov.uk: "An offer is not legally binding in England and Wales until contracts are exchanged... this means the price can still be negotiated." (source). In other words, it's fine for the price to be changed after it's agreed. So the offer you accept means nothing. Remember that when you're comparing prices from different companies.
- The Property Ombudsman: "The offer price should not be reduced late in the process without a valid reason and these reasons should be fully explained to the client in writing." (source- see paragraph 4i on page 3). In other words, as long as house-buying companies manufacture a reason to reduce the price, it's fine!
It's really shocking how poor the regulation is around this. One reader from Leeds recently contacted me because a "we buy any house" company had dropped their offer from £204,000 to £161,000 at the last minute. She tried another company, and they reduced their offer from £200,000 to £170,000.
This stuff happens all the time. I could find 100 of these reviews if I had to. This is a review of one of the biggest house-buying companies.
I'm hoping this price-drop tactic will be criminalised in the future.
Commenting in a BBC article, Lee Reynolds, a barrister specialising in Trading Standards Law said "dropping the price of someone's house is a potential breach of what's called Consumer Protection from Unfair Trading regulations... That's punishable by up to two years in prison and/or an unlimited fine."
But regulation of this industry could still be years away.
Until then, you'll have to watch out for yourself:
- Check out the section below on how to avoid "we buy any house" scams,
- Alternatively, I can put you in direct contact with one of the largest cash house buyers in the country, and the only one I personally trust. Take this quiz to see if you're a good fit for a Cash House Buyer, and I'll be able to recommend the best company on your quiz results page.
Scam #2: Rampant mis-selling (option agreements)
Many house buyers will act as if they're buying your house for cash, and they'll actually tie you up in knots with an option agreement (or "purchase agreement").
Here's how it works:
- You'll sign this contract, and the company will then try and find a buyer to pay a higher price than they agreed with you.
- If they're successful they'll make an enormous commission for doing nothing more than an estate agent...
- If they're unsuccessful, it's your problem and not theirs. They'll just walk away from the deal and leave you back at square one.
This contract is so popular with scammy "we buy any house" companies because:
- Option agreements give you the downsides of selling to a Cash House Buyer (the lower price)...
- AND you get the downsides of selling to an estate agent (a long, drawn-out sale with no certainty).
- Meanwhile, the cash house buyer gets the upsides of both!... no wonder unethical firms love these agreements.
For some reason, the National Association of Property Buyers, established in 2014, chose to allow this tactic in their Code of Practice. (I guess that's the downside of leaving an industry to regulate itself).
Danny Luke, managing director of Quick Move Now, identified this problem at the time: "There are still practices against which the NAPB doesn’t guard, such as allowing brokers to misrepresent themselves as buyers. So this body lacks any teeth – it can’t properly vet members and it can’t sanction those who abuse their position."
To avoid getting tied up in an option agreement, never sign anything with a house-buying company. No matter how innocuous the sales rep claims the contract is.
Scam #3: False Advertising
There are many examples of false advertising within the industry, but this is one of the most baffling:
Nearly every scammy company has their own version of this sort of comparison table. The above picture is the exact table one of the biggest companies uses.
It says you'll get more money by selling to them than you'd get through an estate agent, and it only takes 7 days instead of 6-9 months.
Unfortunately, the reality in the property market is that you have to pick one or the other: A fast sale, or a top price.
To say you can have both is shamelessly misleading. The numbers are so far from the truth it's shocking to see. People make major financial decisions based on information like this, and to misrepresent their service so blatantly should be clamped down on.
Scam #4: Untraceable directors
If you're making one of the biggest transactions of your life you probably want to know who you're dealing with... so why would businesses intentionally conceal their identities and make themselves untraceable?
This can make it really hard to make a complaint or seek compensation if something goes wrong.
Scam #5: Manipulating online reviews
If you think you can find a genuine Cash Buying company using online reviews, think again.
Scammy companies thrive by manipulating their online reviews in four main ways:
- Companies post fake positive reviews for themselves to drown out the bad ones,
- There's evidence that they pay disgruntled customers to remove negative reviews,
- When customers don't accept payment, they campaign the websites to remove bad feedback,
- And they seem to farm for reviews early in the process (before they drop the price).
Here are a few examples exposing different tactics:
Paying customers to remove bad reviews
Getting reviews very early in the process
Posting fake positive reviews and removing bad ones
3. How to avoid "we buy any house" scams
I don't want to detail all these scams just to scare you off using a house-buying company. For some people, they're a great fit. They mean a quick, straight-forward sale arranged to fit your timeframes.
If you want to explore a fast sale I've got a few bits of advice you should follow.
If you'd rather leave the hard work to me, I can recommend a genuine house-buying company. Take this 60-second quiz to see if you're a good fit for one. If you are, I can put you in touch.
Here are the do's and don'ts of selling to a "we buy any house" company.
1. Make sure the offer is guarantee-backed
The house-buying company I work will give you a guarantee when they make their offer. It basically sets out that they'll have t pay you compensation if they reduce their offer later in the process.
The reason they give you this guarantee is so you know they won't drop their offer.
Ask other companies for a similar guarantee. If they're unwilling to put their money where their mouth is it might be worth questioning how genuine their offer really is...
2. Never sign anything
If you sell your house with an estate agent, no buyer comes to a viewing and slams down a contract for you to sign before they'll buy your house.
It's the same with house-buying companies.
There's no genuine reason you need to sign a contract with someone in order for them to buy your house. The only thing you should sign is the official contract for sale, which your solicitor will send you right near the end of the sale process.
If the cash house-buying company presents you with an "option agreement", "purchase agreement", or any other type of contract you should run a mile.
You probably started looking into "we buy any house" companies because you wanted to know how to sell your house quickly. But if the company you're working with are getting you to sign a contract like this, there's a good chance they aren't a real buyer. They're probably going to try and find you a buyer.
This locks you in to the downside of selling to a house-buying company (the low price), AND the downside of selling via an estate agent (slow and no certainty).
Don't sign anything.
3. Get proof of funds
If a company's supposed to be buying your house in 2-3 weeks, they should probably have some money for somewhere.
Ask for proof of funds when they make their offer.
If they can't present it that's a serious red flag. They might need to apply for finance (which might not be a sure thing), or they might have to go and find a buyer for your home.
Either way it's not a good sign.
4. Demand the survey is done at the start of the process
One of the worst tricks companies use is dropping their offer, and using the survey result as an excuse.
For this reason you should push to have the survey done right at the start of the process.
If the company is delaying the survey, it's probably because they want to drop a bombshell at the last minute when you're most committed, and least able to withdraw.
It's a dirty tactic, so make sure the company books the survey within a couple of days of you accepting their offer.
5. Demand exchange of contracts asap
...(and don't pack up until you've exchanged)
"Exchange of contracts" is the point where the sale becomes legally binding. There's no going after that - meaning the price can't change either.
You should push the company to exchange as soon as possible - maybe even a couple of weeks before you want to actually move.
This gives you time to get packed up in a situation where you have complete certainty. If you don't exchange and lock the sale in then the price can still change. Don't let the buyer stretch it out until the last minute so they can drop the price when you're at your most vulnerable.
6. Get a recommendation
As I've outlined throughout this article, these dodgy companies are sophisticated, and they set smart traps that are difficult to avoid.
If the sheer number of dodgy companies and the variety of dodgy tactics are making you nervous about using a house-buying company, I can help.
I've worked in and around the house-buying industry since 2014, and know most of the major players. Now, I work closely with one single house-buying company who I know are trust-worthy, and who buy your home without the dodgy tactics.
So I'd seriously suggest using the company I recommend. Yes, we earn a referral fee if you use them (that's how this site is supported). BUT I only recommend companies I believe in, and I know you can trust.
To get an introduction just read the short section below and then hit the quiz button to get started.
4. Who is the best house-buying company?
The "quick sale" market is a very messy industry with a lot of sharks waiting for new victims.
It bothers me how poorly the industry has been regulated because I end up dealing with so many of the victims and seeing first-hand the damage they cause.
Horror stories are happening all the time. I want to help try and stop them (and help you avoid the same fate).
If you want the benefits of dealing with a genuine fast house-buying company I can put you in touch with the one company who I trust.
Here's a recent review of theirs that sums it up nicely:
If you want to a fast house sale I can help you figure out whether a Cash House Buyer is right for you. Hit the link below to take the 60-second quiz I designed for you. If a Cash House Buyer seems like I good option, I can introduce you to the genuine House Buyer I work with.
By Matthew Cooper, Co-Founder of Home Selling Expert