How To Identify Common Signs Of Scams And Unethical Practices To Be Wary Of
Thinking of selling your home shortly? There are many different property scams that you’ll want to watch out for as you work to sell your home. These days, it seems as if property scams in the UK abound for those who are ready to sell their home as quickly as possible, and once you put it on the market, you may find many scam property buyers at your door. What should you know about property-buying scams before you sell your home? This guide can help you better identify potential problems.
Common Property Scams
Whether you’re the buyer or the seller, you’re likely to encounter lots of different property scams across the country today. Here are a few of the most common you’ll want to think about as you enter the property market either as a buyer, a seller, or even an investor.
- Phishing Scams: Phishing property scams typically involve fraudsters posing as legitimate estate agents or solicitors and contacting individuals who are in the process of buying or renting a property. The fraudsters often send emails or make phone calls that appear to be from legitimate companies and request personal and financial information from the victim.
In some cases, scammers may send emails containing links to fake websites that look like the real thing but are designed to steal the victim’s login credentials or financial information. They may also use tactics such as urgency or limited-time offers to pressure victims into making payments or divulging sensitive information.
Once the scammers have obtained the victim’s personal or financial information, they may use it to commit identity theft, steal money or even take out loans or credit in the victim’s name. Individuals need to be cautious when providing personal or financial information online, particularly in response to unsolicited emails or phone calls.
- Identity Theft Property Scams: Identity theft property scams work by fraudsters stealing personal information and using it to impersonate someone else, typically a property owner or a solicitor. With this information, they can then try to sell or rent out a property that doesn’t belong to them, taking the money and disappearing without a trace.
The fraudsters may use various tactics to obtain the personal information needed for this scam, such as phishing emails, hacking into online accounts, or stealing mail. Once they have the necessary information, they may create fake documents, such as deeds or tenancy agreements, to make the scam appear more legitimate.
To avoid falling victim to identity theft property scams, it’s important to be cautious when sharing personal information online or in response to unsolicited emails or phone calls. Always verify the identity of the person you’re dealing with and double-check any documents or information they provide. If you suspect that you may have been a victim of identity theft, it’s important to report it to the authorities and take steps to protect your personal information in the future.
- Property Hijack Scams: Property hijack scams, also known as property fraud, involve someone posing as the owner of a property and selling or mortgaging it without the true owner’s knowledge or consent. They typically work like this. First, the fraudster obtains personal information about the true owner, such as their name, address, and other identifying information. Then, they create fake identification documents and forge the owner’s signature on paperwork related to the sale or mortgage of the property. Next, they find a buyer or lender who is interested in the property and go through the transaction, usually involving large sums of money.
The true owner of the property may not be aware of the scam until they receive a foreclosure notice or eviction order.
To avoid property hijack scams, it’s important to be vigilant and take steps to protect your personal information, such as shredding documents containing sensitive information and keeping your details safe online. You can also register with the Land Registry’s Property Alert service, which will notify you if there is any activity on your property’s title.
- False Valuation Scams: This typically happens to investors in the UK. False valuation scams in the UK property market typically involve a fraudster misrepresenting the value of a property to a potential buyer or seller to obtain a financial advantage. This can be done in several ways. One way it happens is with the overvaluing of a property. A scammer may overvalue a property, making it appear more attractive to a buyer or lender. This can be done by providing false documentation, manipulating data, or relying on the buyer’s lack of knowledge about the local property market. It can also happen with the undervaluing of a property. Alternatively, a scammer may undervalue a property to convince the owner to sell it at a lower price. They can then sell the property for a higher value, keeping the difference for themselves. False valuations are the other way this commonly happens in the property market in the UK. Scammers may also create false valuations for properties, either by inflating or deflating the value, which can be used to deceive buyers or lenders.
To avoid falling victim to false valuation scams, it is important to use reputable estate agents, solicitors, and surveyors who have a good reputation in the local property market. It is also recommended to obtain multiple valuations for a property to compare and ensure that the value is accurate.
Scams That Often Happen to Property Sellers
While those kinds of scams can happen to almost anyone involved in the property market, some different kinds of scams tend to affect sellers more than anyone else. For example, sellers are at particular risk of dealing with fake buyers. In this case, scammers pose as interested buyers and make an offer on the property. They then ask for personal information such as bank account details, which they can use for fraudulent purposes.
Another pretty common one is advance fee fraud. In this situation, the scammer poses as a legitimate estate agent or property buyer and asks the seller to pay an upfront fee for various services such as valuations, surveys or legal fees. The fee is often paid but the promised services are never delivered. Title fraud is another scam you should be aware of. Here, the scammer fraudulently changes the ownership details of the property to their name and then sells the property to an unsuspecting buyer. Deed theft is something else to look out for. In these situations, the scammer forges the property deed and then sells the property to an unsuspecting buyer.
Home sellers need to be aware of these scams and take appropriate measures to protect themselves from fraud.
When You’re Selling Your Home to a Cash Buyer
If you’re considering selling your home to a cash-for-houses buyer, you may worry about the risk of fraud and scams there, and for good reason. Many have made headlines in recent months. Cash for home buyers, though, is becoming ever more prominent in the property market today, and they can offer you a fast way to sell a house. Protecting yourself by learning as much as you can about cash buying situations and how they work, though, is key to avoiding scams in this situation.
What is a Cash for Homes Company?
A cash-for-homes company in the UK is a type of property buyer that specializes in purchasing properties quickly and for cash. These companies typically target homeowners who need to sell their property quickly, often due to financial difficulties or other urgent circumstances. Cash for homes companies typically offer a fast and hassle-free sales process, often with minimal legal fees, and can complete the purchase within a matter of days. However, they may offer a lower price than the market value of the property in exchange for the convenience and speed of the sale. It is important for homeowners to carefully consider their options and seek professional advice before entering into a transaction with a cash-for-homes company.
What are the Benefits of Selling Your Home for Cash in the UK?
Selling your home for cash in the UK has five key benefits:
- Quick sale: One of the primary benefits of selling your home for cash is the speed of the transaction. Cash buyers can often complete the sale within a matter of days, which can be particularly appealing if you need to sell your property quickly.
- No chain: Cash buyers are often able to purchase your property without a property chain, which can help to simplify the sale process and reduce the likelihood of delays or complications.
- No fees: When you sell your home for cash, you may be able to avoid paying estate agent fees, conveyancing fees, and other associated costs, which can help to increase the amount of money you receive from the sale.
- Certainty: Selling your home for cash can provide a greater level of certainty and peace of mind, as you won’t have to worry about the sale falling through due to issues such as broken chains or issues with mortgage approvals.
- As-is sale: Cash buyers often purchase properties in their current condition, which can be beneficial if your property needs repairs or upgrades.
It’s important to note that selling your home for cash may not always result in the highest sale price, so it’s important to consider your options carefully and seek professional advice before making a decision.
Are there Drawbacks to Selling Your Home to a Cash Homes Buyer?
Just as there are five key benefits to selling your home with one of these kinds of buyers, there are some potential drawbacks as well.
There are several potential drawbacks to selling your home to a cash-for-homes buyer in the UK, including:
- Lower sale price: Cash buyers often make offers below market value, so you may receive less money for your home than if you sold it through traditional methods.
- Limited options: Cash buyers may not be interested in all types of properties, such as those in need of extensive repairs or located in less desirable areas.
- Scams: As with any industry, some fraudulent cash home companies may try to take advantage of homeowners. It’s important to do your research and work with a reputable buyer.
- Quick sale pressure: Cash buyers often promise a fast sale, but this can put pressure on homeowners to make a quick decision without fully considering their options or negotiating the best possible sale price.
- Lack of transparency: Cash buyers may not provide the same level of transparency as traditional buyers, and the transaction may happen quickly without much opportunity for due diligence or inspection.
How do you Protect Yourself When Using Cash for a Homes Buyer?
If you do decide to sell your home to a cash-for-homes buyer, be aware that many property scams happen in this market, so you’ll want to watch out for them. Start by looking out for any buyer that isn’t registered with the National Association of Property Buyers, or the NAPB for short and the Property Ombudsman, sometimes called the TPOS. You’ll want to check both of those websites to verify that the company you’re using is listed on them. They should have a visible Company Registration Number on their website.
Additionally, if the company you’re considering uses either options agreements or contracts of any kind, be concerned that you’re using a company that may be unethical or simply trying to scam you. If you are considering a cash-buying company to sell your property directly, be cautious of any house buyer company that uses “lock-in” contracts, “option agreements,” or “RX1” forms. These tactics are often used to limit your options and enforce cancellation fees, which can be unethical and restrictive.
It may be tempting to sign a contract with these companies, but it’s important to remember that they are not estate agents, but “direct” buyers. As a homeowner, you should only sign a contract when your solicitor is representing you and advising you to do so before completion.
Along with that, if there are any cancellation or withdrawal fees in a contract or the paperwork you’re given, you may be dealing with a scam company.
It’s important to note that this industry is not currently regulated by any government body in the UK. So, any cash-for-homes company that claims to be regulated by a government authority is simply lying to you.
Moreover, you should be concerned about any company that is asking you for any payment at all, particularly upfront payments. No ethical buyer will have you pay them to buy your house.
Finally, know that any company that claims to offer guaranteed sales for 100% (or somewhere close to that) of the market value of your home is also likely lying to you. If they did that, they’re not likely to be able to make very much money on your home, thus most reputable companies simply don’t make offers like that one.
What Questions Should You Ask a Cash for Homes Company
If you do decide you’d like to work with a cash-for-homes company, there are several different kinds of questions you’ll want to ask before you decide to work with them to help prevent yourself from getting scammed. Here’s a quick list you can use:
- Are you a member of any redress schemes such as the Property Ombudsman? You can check their website to ensure they are a member.
- Do I need to sign any option or purchase agreement with your company? It’s important to know if you’ll be tied into any contracts.
- Are you direct buyers with finance in place, or will you be sourcing an investor or third party?
- How will you value my property and how long until completion? Also, how long after completion will I receive the money?
- Is the valuation completely free and without any obligations?
- If the company requires a purchase agreement, ask these additional questions:
- What fees will I be obligated to pay, including any charges if the sale doesn’t complete?
- Can I cancel our agreement without incurring any fees or penalties?
- Will I be restricted from using your services, similar to a ‘sole agency’ agreement?
- Can you change your offer, and if so, on what grounds? If you change your offer, can I cancel our agreement without incurring any fees or penalties?
Will you put a ‘restriction’ against the title of my property with the HM Land Registry? If so, they will be able to register a charge on your property, which is important to know.
Ways to Sell Your Home Fast
If you’re a bit wary of using a cash-for-homes company because you’re concerned about the potential for scams in the market, there are other ways to sell your home fast that are fairly safe.
One option is to sell your home through a property auction service. Selling your home at a property auction in the UK can be a quick and efficient way to sell your property. You’ll start by finding an auctioneer to handle your property sale. Research auctioneers in your area and choose one that you feel comfortable with. Start by doing some research online and asking for recommendations from friends, family, or your real estate agent. Look for auctioneers who have experience selling properties similar to yours and who have a good reputation in the industry. Then, attend a few property auctions hosted by different auctioneers to get a sense of how they work and how successful they are in selling properties. Next, you’ll want to check the auctioneer’s accreditation. Ensure that the auctioneer is accredited by a professional body such as the National Association of Valuers and Auctioneers (NAVA) or the Royal Institution of Chartered Surveyors (RICS). This ensures they adhere to certain standards and ethical practices.
- Consider their marketing strategy: Check the auctioneer’s marketing strategy to ensure that they have a comprehensive plan to advertise and promote your property to the right audience.
- fees: Find out about the fees associated with selling your property through the auctioneer. Some may charge a percentage of the sale price as a commission, while others may charge an entry fee.
- Communication: Choose an auctioneer who communicates well and is easy to reach throughout the entire process. They should be able to provide regular updates on the marketing, sale, and completion of your property.
Selling your home through Auctioneer
- Contact the auctioneer: Contact the auctioneer to discuss your property and determine if it is suitable for auction. They will also advise you on the auction process and fees.
- Set a reserve price: This is the minimum price you are willing to accept for your property. It is important to set a realistic reserve price to attract bidders.
- Prepare the legal pack: This includes important documents such as the title deeds, searches, and any planning permissions. The legal pack must be prepared before the auction and made available to potential bidders.
- Marketing: The auctioneer will market your property to potential buyers through their website, catalogues, and other marketing channels.
- Auction day: On the day of the auction, potential buyers will bid on your property. If the reserve price is met or exceeded, the property is sold to the highest bidder.
- Completion: If your property is sold at auction, the buyer will be required to pay a deposit and sign a contract on the day of the auction. Completion will typically take place within 28 days.
It is important to note that selling your property at auction may not always result in the highest sale price. It is important to weigh the pros and cons of auctioning your property and seek advice from a professional before making a decision.