If you’re trying to sell your home to a professional real estate investor, you may have already come across some questionable propositions from allegedly seasoned real estate professionals.
While working with a professional real estate investor is often different than selling a home through the traditional route, it’s unwise to assume that everything being recommended to you is normal.
Unfortunately, there are a plethora of scammers that try involving themselves in real estate investing in an effort to steal money by using a cash for houses scam.
It’s not always easy to pick up on typical scammer behaviors, so if you’re thinking about selling a home to a real estate investor, you’ll want to inform yourself about what red flags you need to watch out for.
Check Out the Following FAQ To Avoid “We Buy Houses” Scams
To protect yourself from the predatory approach of “we buy houses” scam, take a look at the list of questions about proper investor behaviors as well as their answers. By being well-informed, you can maintain your financial security and save yourself time by ensuring that you’re working with a legitimate investor.
Do you have any proof that their company exists?
One surefire way to avoid falling victim to a cash for houses scam is to verify whether the buyer actually has a legitimate company. A simple Google search will likely tell you whether the company exists at all, whether the website looks professional, and whether the contact information for the company is correct.
Is the buyer foreign?
Unfortunately, a person claiming to be from another country is common when it comes to “we buy houses” scams. If a buyer exists outside of the US and they want to purchase the property without seeing it (or having a representative see it), this is a massive red flag.
While there are plenty of legitimate foreign buyers, it’s not out of the ordinary to have scam buyers claim that they’re from Canada, China, or somewhere in Europe.
Is the company a little too eager to buy your house?
It’s relatively easy to sniff out a “we buy houses” scam when the buyer acts far too eager to buy the property. If he or she does not ask any questions about the home, doesn’t want to see the home, but still insists that they want to purchase the property, you’ve likely got a scam on your hands.
Does the buyer seem to be taking a blind leap?
When a potential buyer does not request information about the property and does not seem to know very much about the area in which the home is listed, you may be dealing with a cash for houses scam. Any legitimate buyer does not want to risk losing a profit on a property that may be, for all they know, a lost cause.
Does the company keep you waiting?
Buying an investment property is not always a quick process, but if it seems that your potential buyer is wasting your time and making excuses about why they cannot provide you with proof of their financial stability, you may be dealing with a person who is trying to defraud you with a cash for homes scam. If an investor needs time to secure funds, it’s common to be honest and upfront about their situation from the beginning.
Do you understand how the cash for homes process works?
Legitimate investors will have engaged in several deals throughout the existence of their business, so they will know how the cash buying process works. If you’re communicating with an investor who has made an odd request or comment, be wary. If you’re relatively new to selling to real estate investors, it’s a good idea to ask a more experienced real estate seller about your concerns.
Does the money only flow from the buyer to the seller?
During a legitimate sale, money is supposed to flow from the buyer to the seller. Most, if not all, professional real estate investors will not require any fees on the seller’s part. If an investor tries to claim that they need you to pay fees for inspections, offers, closing, processing, or anything of the sort, you’ll want to find a better business to work with.
Though buyers who require fees are not always involved in cash home buying scams, the practice is not an indication that you’re getting the best deal available.
Does the contract give you protection?
Before you sign any sort of contract, take a long look at it. Ensure that there are not any loose terms or loopholes you can point out. A vague contract loaded with jargon is a reliable signal that you’re dealing with a fraud.
Is the buyer willing to put down a standard amount of earnest money?
If your potential buyer is not willing to deposit at least 1% of the property’s value in earnest money, you’re probably not dealing with a reputable buyer. Whether the buyer is trying to initiate a cash for houses scam or they’re just financially unreliable, it’s a good idea to avoid that specific company or individual.
Did you verify proof of funds?
Before getting into an agreement with an individual or business, it’s important to verify proof of their funds. Most of the time, this can be done with bank statements or professional letters, but these items can be falsified. To verify for sure, call the bank or business listed on the verification documents. Ensure that you’re calling a real business by double-checking online for the company’s existence.
Does the sales price seem realistic?
It’s not uncommon in a “we buy houses” scam to have a potential buyer be all too agreeable on the price of the home initially (until they get you into contract). If your home is priced on the low side, it’s likely that even legitimate buyers will agree to it. However, if your price is a little high and the buyer has no qualms about it, you may want to be on high alert.
Is the buyer unavailable?
Unless you’re being targeted in cash for house scams, your buyer will likely make himself or herself available. At the very least, a legitimate buyer will have one of their representatives get into contact with you. If you can’t speak with a person on the phone, in-person, or through an attorney, you’re likely dealing with someone who has something to hide.
Does he have only one point of contact?
A common feature in a “we buy houses” scam involves potential buyers who are difficult to contact. If your buyer provides you with only a single email address or phone number as a point of contact, beware. Reputable buyers will often have several ways to connect with sellers, including but not limited to business email addresses and phone numbers.
Do they keep coming up with changes to the agreement?
Should your buyer come up with any changes at all to your initial agreement with them, it’s crucial to read the new information in its entirety. Do not skim over allegedly “minor” changes and do not agree to anything that seems dubious. Most of the time, legitimate buyers will not change things around after the initial agreement unless something is wrong with the property.
Does the buyer have clear terms of fees?
In many professional home buying situations, there are no fees required from the seller. However, if any fees are needed, they should be noted right away by the buyer and should not be expected until the closing on the property.
Does the buyer seem overly eager to share financing information?
Buyers should be willing to share financial information as part of their proof of funds verification, but you may be getting baited for a cash for houses scam if the buyer is overly eager to share their financial information with you. If the initial contact you receive from the buyer comes with a screenshot of their bank statements, beware.
Did you seek out the experiences of past clientele?
Most legitimate investors have completed real estate deals before, and as such, there will be a trail of people who have worked with them in the past. Search online for third-party reviews and testimonials from people who have experience working with your potential buyer.
Does the buyer make an intentional mistake?
If your buyer has paid you a sum of money and almost immediately claims they’ve sent you too much, this is an intentional mistake. Very few people will ever accidentally send another person too much money. It’s a common tactic used in cash for houses scams in an effort to gain access to a seller’s bank account through partial refund requests.
Does the buyer/investor use sketchy advertising or high-pressure sales technique?
A successful business will not rely on taping hand-written signs to bulletin boards or telephone poles in your area. If you see sketchy-looking signs that simply say “we buy houses” and a phone number, it’s probably a bad idea to call them.
Is the buyer/investor professional?
Keep an eye out for behavior that’s too casual for a respectable business. For example, if the individual’s email address is not a business email or the way they answer the phone does not sound like the way any other legitimate business answers the phone, you may be dealing with someone who is trying to initiate a cash for houses scam.
Does the buyer have references?
People who are frequently involved in a “we buy houses” scam do not have a list of references they can provide, because they do not honestly work with anyone. If your buyer claims to be a professional investor, he or she should be able to provide you with a legitimate list of properties they’ve purchased in the past.
Does the investor have sufficient funds?
It’s not uncommon for a buyer to need a short span of time to gather funds for a deal, but if your buyer is constantly coming up with excuses as to why their funds are so low, it’s a warning sign. A reputable buyer will likely state that they need a specific length of time, but if that time keeps changing and the buyer cannot come up with funds, you’re probably dealing with a “buy your house” scam.
Do you have a bad feeling?
Your instinct is valuable when it comes to making smart financial decisions. Even if you have not noticed any red flags, something that feels wrong usually is. Trust the way that you feel about a potential deal to protect yourself from a “we buy houses for cash” scam.
Selling a home to a real estate investor can be an intimidating, yet rewarding decision. There are many reputable cash buyers in any given market, but it’s important to be sure that these are the people you’re working with. Keep an eye out for the behaviors mentioned above so that you can spare yourself the hassle and possible financial burden of getting involved in a “we buy homes” scam.
Be cautious, and if something a potential buyer suggests does not sound right, trust your instinct and consult a more seasoned professional for advice regarding how to proceed.
Staying informed and alert is the best possible way to avoid having to put up with a scammer.