'Quick House Sale' Market Investigated
The Office of Fair Trading (OFT) is investigating fears that people desperate for money are being preyed on by firms offering "quick house sales".
Fifty unidentified companies operating in the market have been contacted by the watchdog for details on their business models, while consumers are being urged to contact the OFT with information on their experiences.
Firms in the sector offer to buy a house themselves or find someone else to snap it up, often for less than the full market value of the property.
The OFT said that while such companies may offer a "valuable service" for people who need fast access to cash, it is concerned that stressed and vulnerable home owners looking for a way out of financial difficulties could be misled into selling for far less than their home is worth.
There have been suggestions that some customers have been told at the final stage of the 'quick sale' process that the price they were getting had been considerably reduced.
Other practices the watchdog is watching for include firms hiding their fees behind initial valuations which appear to offer a good price and severe penalties for breach of contract.
The number of 'quick sale' operators has grown as the tough economic climate has continued.
More than 157,900 UK households had fallen behind on their mortgage payments at the end of 2012 and over 110,000 couples divorced in 2011 in England and Wales.
The OFT plans to publish a report on the quick house sale sector in July.
The new regulator, the Financial Conduct Authority, welcomed the investigation and said it will work with the OFT to tackle any concerns.
Peter Bolton King, global residential director of the Royal Institution of Chartered Surveyors, said that anyone considering a quick house sale should take a step back and consider other options.
He said they should get an estimate of what their house could sell for on the open market, even if their house is priced for a quick sale.
Mr Bolton King said: "Naturally, people feel under financial pressure. You think: 'I can sort out my problems in one fell swoop'.
"But you should take a breath, take a step back and make sure you totally understand what it will mean."