Recent media coverage about a gentleman who had his house ‘stolen’ whilst he was away on a trip have made a lot of homeowners cautious, and rightly so. We all like to think it wouldn’t happen to us, but with fraudsters using increasingly sophisticated techniques, even the most savvy among us can find ourselves the victim of rogue operators. We’re going to look at some of the biggest scams and what you can do to avoid them.
SELLING A HOUSE THAT DOESN’T BELONG TO THEM
Made famous by the recent case in Luton, it’s difficult to believe that an entire house can be stolen, but that’s the situation that Mike Hall found himself in this summer.
After an investigation, it was found that Mike’s identity had been stolen and fraudulent documents had been used to slip through the ID checks that are routinely carried out as part of the property selling process.
It is part of a conveyancer’s job to ensure robust checks are carried out to prevent this sort of thing happening, but it is also important that everyone does everything they can to protect themselves from identity theft.
Things you can do:
- Keep any physical documents that contact personal information securely. This includes passports, driving licences, birth certificates, National Insurance cards, bank statements and any other documents that could be used to identify you.
- Protect yourself online. Password-protect any computers, tablets or mobile phones that contain, or could provide access to, sensitive information. You should also use a password manager to keep track of your passwords, and ensure you update passwords regularly.
- Check your credit score regularly and follow up on anything that looks unusual or suspicious. If your identity has been stolen, it’s likely to impact your credit score fairly quickly.
- Check through your bank account and any credit card statements and report anything unusual straight away.
- Shred any paperwork that contacts personal details rather than putting it in the bin.
BEING ASKED TO TRANSFER DEPOSIT FUNDS TO A FRAUDULENT ACCOUNT
Another scam we’ve seen recently is home buyers being contacted by someone posing as their solicitor, saying their bank details have changed. The email will then ask the buyer to transfer their deposit funds to the new account ready for exchanging of contracts. Unfortunately, a significant number of buyers – and even home sellers – have been caught out with this one, especially during the pandemic when so much of the property buying and selling process has been conducted via email.
If you receive an email of this nature, always telephone your conveyancing solicitor and confirm whether the email is genuine. It would be very unusual for a law firm to suddenly change their bank details, so be on alert if you receive any correspondence suggesting that they have. Any reputable company would inform you of this well in advance of it happening.
UNREGULATED HOUSE BUYING COMPANIES
A growing number of homeowners are choosing to use home buying companies for their house move. The premise of a cash home buying company is that they can buy your home quickly (in as little as a week, if needed) and the sale is guaranteed. This means you don’t need to worry about your buyer pulling out or the property chain collapsing etc.
It’s a relatively new concept and one that has helped a lot of people, but unfortunately, the industry is not regulated and, as a result, there are lots of tales of homeowners who have been scammed.
Some of the most common stories feature companies asking for upfront payments or getting homeowners to sign contracts, with promises of a quick sale at full market value. Once the contract has been signed or the payment has been made, the company will significantly drop their offer and leave the home seller trapped, having to choose between accepting an offer maybe 40% (or even more) below market value, wait out the contract (often at least 6 months) before they can sell to anyone else, or pay the hefty cost of buying themselves out of the contract.
Things you can do if you want to use a cash home buying company:
- Check the company’s credentials carefully, especially their accounts. Any company claiming to be able to offer you a quick and guaranteed sale will need to have significant funds in the bank. You would expect any genuine cash homebuying company to have at least £1million available in the bank (with the average UK house price now having exceeded £250,000, a balance of £1million would enable them to directly buy around 4 properties), and turnover of around £5 million-plus.
- Read reviews and make sure they’re genuine. If they only have £200,000 in the bank (which would allow them to buy one below-average price property) but have multiple reviews in one month, you should be suspicious! Make sure you read a mixture of reviews, positive and negative to get a true picture of what the company is like to work with.
- Don’t sign any contracts. Any genuine company has no need to tie you in to working with them. You should have the freedom to walk away, cost and obligation-free at any point up to exchange of contracts, just like when you sell a property on the open market.
- Ask questions. If you’re not sure whether a company buys properties directly, ask them (and ask them to provide proof). Remember, a company can only offer you speed and certainty if they’re buying your property directly. Anyone acting as a middleman to sell your property to an investor will not have control over price or timescale, and therefore can’t offer you any guarantees.
Check out these IDEAL tips on understanding the jargon behind buying and selling your home for more help on this complex topic.