“We Buy Houses” Scams | How To Avoid Getting Fooled

When it’s time for you to sell your house, you’re probably very familiar with the idea of hiring a real estate agent to list it on the open market and sell the home to a buyer. However, you might be surprised to know that’s not the only way to sell a house. A real estate investor, or direct buyer, is a person or company, like Cream City Home Buyers, that buys real estate for cash with the intention of “flipping” it or creating revenue from it afterward. It’s a perfectly legitimate way of purchasing real estate but the lack of knowledge that exists around investors can often open the door for scammers to thrive, conning hard-working people out of their money and houses. 

Selling your house as-is to a cash buyer can be a great way to sell if you find yourself in a situation where time is of the essence, like relocation or divorce. It can also come in very handy if your house is dealing with something like mold damage, water damage, termites, or hoarders. And if there are financial issues, like foreclosure or tax liens, a direct buyer can take those problems off your hands easily. That said, it’s important to be aware of what that process should look like so that you can identify the scammers who want to use the situation against you. Here’s how you avoid “We Buy Houses” scams.

Questions On How To Avoid We Buy Houses Scams

Can You Prove We Buy Houses Scams Exist?

You get a phone call out of nowhere from a person claiming to be a real estate investor. They say they want to buy your house for cash and they want to do it ASAP. How do you know that person is legitimate? The same question might come up if you see a “We Buy Houses” sign on the highway and are considering giving them a call. How can you be sure you’re dealing with a reputable investor? 

The answer to those questions is…the same way you would check on any business. 

Start by asking questions. What is the company name? What is their actual address? Are you able to come by for an appointment or visit? Who is the owner of the company? Is there a website you can look at? 

With every answer (or non-answer) you get, follow up and confirm. Don’t be afraid to push for more information if you don’t get what you needed. The more information you can find and verify, the more likely they are to be legit. And if they won’t give you answers to the simple questions you’re asking, there’s probably a pretty good and obvious reason for that. 

A good resource to check a company’s legitimacy is the Better Business Bureau. You can call them at 202-393-8000 or look up the investor on the BBB website. If the company is not listed anywhere, that could be a red flag. 

Is This Investor “Too Eager” to Buy Your House? 

A reputable real estate investor wants to get all of the information they need in order to make a fair offer. They are going to want to tour your house, see photos, and get as much info as they can get. Remember, they’re making an investment, so it’s important to them that they have everything they need. What’s unlikely is that they will want to make you an offer and close the deal without even visiting the property or learning any information about it. 

Even if your house has major damage issues or is in disrepair, a real estate investor is always going to want to understand what they’ll need to do in order to turn a profit after buying it. They may need to put thousands of dollars into rehabbing the property and that’s a big investment for someone to consider.

If they try to get to sign anything fast before you’ve had a chance to think about the terms or before you have a moment to collect your thoughts, you’ve got a good reason to be concerned. 

They Keep You Waiting

A real estate investor might offer you a deposit as a sign of good faith. The investor is likely to purchase the house from you and they simply want to ensure that there is some kind of agreement in place between the two sides before another investor comes in and takes the deal from them. An investor might also provide you with proof of funds, a way of making you feel better about their ability to pay you as they’ve said. This basically creates trust and a bond between the buyer and seller about the nature of the transaction. 

Meanwhile, a scammer would likely attempt to string you along without providing you with any documentation to back up their claims. It’s entirely possible that an investor needs time to secure funding, but if they’re not being upfront with you, there might be a reason for that. You don’t want to be strung along for a long time, missing out on better opportunities, only to find out there’s no deal. 

Ultimately, a reliable cash buyer will be upfront about their capabilities and situation. They’ll provide a financial guarantee of some kind or they’ll provide documentation that backs up their intentions. If they are incapable of doing so, there could be a good reason for that. Girl Understanding How To Avoid We Buy Houses Scams

Understand How the Transaction Should Work

Perhaps the best way to spot a “We Buy Houses” scam is to understand how the transaction is supposed to work. The most important detail is that the money in the transaction always flows in the direction of the seller and never away from the seller. If any buyer ever asks you to pay some kind of “admin fee” or processing fee, that is a massive red flag and you should never do it. Even if they’re asking for a small amount, like $100 or $200, that is still unnecessary and not something you’d want to lose out on if they decide to disappear after you’ve paid it. 

A legitimate real estate investor will review the details surrounding the house and transaction. Then they’ll want to take a tour of the property and meet with you to discuss the details. After that, they will make you an offer in writing. If you decide not to proceed, you are under no financial obligation to the investor. 

If you accept their offer, you can negotiate with them over any closing costs. They may end up covering them for you. You’ll also avoid many of the fees usually associated with selling your house, including appraisals and inspections. Finally, the investor will pay you the agreed-upon amount in cash (or however you decide you would like the money) and close on your terms. They can close in a matter of days if you prefer. 

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