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“We Buy Houses” Signs – Legitimate House Buyers or Scams?

Are those signs declaring we buy houses scams? Not always - but you should definitely be careful.

You’ve probably seen them somewhere. A sign by the road, an ad on a billboard, or even a postcard mailed to your house declares that they buy houses. They promise that they’ll take your house no matter its condition. And usually they throw in guarantees that they’ll pay cash and the process will be fast. If your house is a little run-down or you need a guaranteed sale fast, these offers sound great. But you’ve heard the saying about things that are too good to be true. Are these companies claiming “we buy houses” scams or otherwise a bad idea, or are they a legitimate option if you’re looking to sell?

Are “We Buy Houses” Companies Scams?

Let’s answer the big question right at the beginning: Are “we buy houses” companies and advertisements legitimate, or are they trying to hook you into a scam? Unfortunately, like many things in life, the answer is, “It depends.”

There are legitimate “we buy houses” companies out there. If you contact (or are contacted by) one of them and decide to sell your house to them, you will get a legitimate cash offer and the sale will proceed officially and legally. There are some downsides to this, which we’ll talk about in a minute. But it’s not a scam.

However, there are also scammers masquerading as “we buy houses” companies to trick you. They may be after your money, or they may be trying to steal your house itself. Regardless of what they want, if you get caught by a “we buy houses” scammer, you’ll have a lot more trouble than a sketchy home sale to deal with.

Legitimate We Buy Houses Companies

Legitimate companies making legitimate cash offers on houses in any condition do exist. They are basically companies that help investors flip houses. The investors use cash to buy houses that are in need of updates or repairs (“distressed” houses, in real estate terms), then invest more money to fix them up and sell them for a profit.

There are some real advantages to selling your house to a “we buy houses” company. In a traditional sale where the buyer is getting a mortgage, the closing process can take a month or more, but if the buyer is paying cash, it can close in as little as two weeks. This is really appealing to people facing foreclosure, who need the money right away, or who want a quick sale for other reasons. These companies also take houses in any condition without requiring the seller to fix anything first, which sounds great to people whose house needs some work and would be hard to sell on the regular housing market. And both of these factors make them appealing to people who have inherited a house that needs some work and don’t want the hassle.

But just because they’re legitimate doesn’t mean they’re a great choice for everyone. Investors are here to make a profit, not give you fair market value for your house. The biggest drawback to “we buy houses” companies is that they make low offers. Depending on the real estate market in your area, you may be able to get more with a regular sale, even if it needs some work. If your house is in pretty good condition, these companies are not a good choice. And even though it’s not a scam, some people may find these low offers feel like a rip-off.

“We Buy Houses” Scams

Like anything with a lot of money involved, scams abound in real estate. “We buy houses” scams are especially popular with scammers because they are easy to do and have a lot of potential for profit. It’s not difficult for a scammer to put up signs along a road. Even if they put in more effort to make it more legitimate, they can have a simple website up and business cards printed in an afternoon.

And the payouts can be really big for scammers. They can use common tricks, like phishing, money forwarding, and hidden fees to steal your money. In a transaction with tens or even hundreds of thousands of dollars on the line, many people think a few thousand in fees is reasonable. The scammers can make a big profit off a little work.

Because real estate is involved, though, they also have other options – like stealing your house. If they convince you to sign over your house to them before they officially buy it, they can kick you out, lease it out to other people, and start collecting rent from the new tenants. You’ll be left with no house, no cash from the sale, and a mortgage you still have to pay on a house you no longer own!

Warning Signs of “We Buy Houses” Scams

Like all scams, there are signs you can watch for that will tip you off that something isn’t right. If you spot any of these red flags in a person or company who is trying to buy your house, beware! It’s either a scam or an untrustworthy company, and either way you don’t want to get involved.

They’re Unprofessional

Don’t trust a “we buy houses” company with handwritten or cheap signs stuck in the grass by the side of the road. It’s easy for scammers to make those signs, and legitimate companies don’t need to advertise like that. Even if the sign is for a legitimate company, would you really trust that a business has enough cash to buy your house if they can’t even afford better advertising?

A legitimate company will have a website, and that website will look legitimate. (It won’t be full of grammar and spelling errors, be too vague, or be imitating a real site.) And anyone associated with that company will have an email address ending in @companyname.com. If they don’t have a website or their website looks questionable, if they use a free email service (like Gmail, Yahoo, or Hotmail), if you can’t find much about them online, or if they’re hard to contact in general, those are signs that they’re most likely a “we buy houses” scam.

They Move Really Fast (or Strangely Slow)

One of the big hallmarks of a scam is urgency. Scammers want you to act before you have a chance to think. So a fake “we buy houses” company may move really fast. They seem eager to buy right away. They are willing to make an offer before they’ve seen your house – and maybe even without asking questions about it.

A real investor would never buy a property sight unseen. A legitimate “we buy houses” company will send someone to take a look at it, and possibly hire a professional home inspector. They will definitely ask you a lot of questions about the house, its features, and its condition. Genuine companies want to know how much work your house needs before they make an offer. That way they can name a number that will make them a profit. Any “buyer” who wants to make an offer without first touring the house in person is a scammer.

But just because moving too fast is a bad sign doesn’t mean moving slow makes them legitimate. Real “we buy houses” companies aren’t in a hurry, but they don’t want the process to take forever, either. If the buyer seems interested but drags their heels and slows down the process, that’s also sign that something isn’t right. Even if they’re not a scammer, there’s a problem somewhere, and you don’t want to get involved.

They React Inappropriately

You ask to have a third party look over the contract documents, but the buyer does their best to convince you that you don’t need to do that, it’s best if you just sign right away. You told the prospective buyer that a Realtor said you could get a certain amount for the house, and they start screaming at you that you’ll never get that much. Congratulations – you’ve encountered a “we buy houses” scam.

Real “we buy houses” companies are professional and not emotionally invested. They buy dozens or hundreds of houses a year. They know if they don’t buy yours, there’s another one out there. But scammers are emotionally invested in making you do what they want, right away. They may use threats, like claiming you’ll be sued if you back out of the deal or that they’ll have the county evict you and your family. They may try to coerce you by talking about how much this money could do for your kids or how dangerous it is for your family to live in a house with so many issues. And they’ll definitely use high-pressure tactics and urgency to make you feel like you have to do what they’re telling and you have to do it right away.

No one from a legitimate “we buy houses” company should ever scream at you, threaten you, coerce you, pressure you, or try to discourage you from having someone else look over the contracts or documents they want you to sign. If the potential buyer behaves inappropriately or has extreme reactions to reasonable requests, walk away – it’s a scam.

They Want You to Pay Fees

Unnecessary fees are a common trick “we buy houses” scams use to get your money. The most common version happens at the very beginning. You contact a company that’s actually a front for scammers, or they contact you. However the conversation happens, they want to buy your house for cash. You’re interested. So they explain the process – how the offer will be prepared, what inspections will have to happen, and what paperwork is involved. To get started, you just have to pay a small administrative fee, anywhere from a few hundred to a few thousand dollars. Once you pay, the “buyer” disappears with your money.

Another version scammers use is more involved. They get all the way through the whole “buying” process and get you to sign a contract. But the contract is full of hidden fees, and they need you to pay them right away.

Whatever the story, the scammers claim that there’s some sort of fee involved and you have to pay it for the sale to happen. In a way, they’re right – there are fees the seller has to pay to sell a house. But none of those fees should be due before closing. If they want you to pay in advance, be suspicious. If something seems off, consulting with a real estate lawyer is a good option.

They Paid You Too Much

This is another money trick scammers use to steal from you. The buyer is interested, the sale process goes well, and they’ve sent you a check – but bad news, the check is for several thousand dollars more than they offered to pay. That’s okay, they say, there’s an easy fix. Just deposit the check in your account and then wire the overpayment back to them. If you’re familiar with how the overpayment scam works, it’s exactly the same here. Eventually the bank will realize that the check is bad. You’ll be out several thousand dollars, and your house still isn’t sold.

If the buyer for your house sends you a check for too much money, you’re dealing with a scammer. No legitimate investor would ever make a mistake like that. The scammer may try to convince you that just sending them the extra is the best way to fix it, but don’t listen to them. Instead, write “VOID” on the check, send it back to them, and insist on a check for the correct amount. Chances are they’ll just disappear and you’ll have saved yourself from getting scammed.

How to Protect Yourself from “We Buy Houses” Scams

The best way to protect yourself from “we buy houses” scams is to not work with those companies at all. When you want to sell your house, hire a Realtor and go through the traditional selling process. (As a bonus, a good Realtor will be able to guide you through the process and spot common tricks and scams.) But the traditional real estate process isn’t always an option, for many reasons. If you really want or need to work with “we buy houses” companies, use these tips to keep yourself safe.

Talk to a Realtor

Even if you don’t use a Realtor to sell your house, their advice can tell you what reasonable market price is for your house. Then when these companies submit their offers, you have a better idea of how low it is. A Realtor can also offer other advice or services that may be helpful. If it’s the condition of your house keeping you from selling the traditional way, many Realtors will do “as-is” sales that don’t require to you make many, if any, repairs first. They may also know legitimate investors who might be interested in buying your house without going through a company.

Finally, some Realtors may be willing to represent you as the seller while you’re selling to one of these companies. They will take a small percentage of the sale price as a fee, but it could be worthwhile to have an expert on your side who will make sure the sale goes smoothly, all the paperwork is legal, and you don’t end up signing away your house to a scammer.

Do Your Research

If you’re considering contacting a “we buy houses” company, or if one reaches out to you and says they’re interested, do a little research first. Does the company actually exist? Business cards and websites are easy to create, so look beyond that. If you’re speaking to a person, ask them to verify the company’s name, phone number, and address. That information, especially the address, are difficult to fake on Google. Also ask them for references, and then contact those references. A legitimate company will have references ready, and they won’t seem sketchy or questionable.

You can also look them up on the Better Business Bureau’s website. A real business will show up there, and you can see what kind of things people have complained about previously. You can also check reviews on other sites, like Google or Yelp, and see if anyone else has said they’re a scam. Finally, you can also Google the company’s name and the word “scam” and see if anything comes up. If they’ve been reported as a “we buy houses” scam before, it will probably show up there.

In general, the more information that you can find about them online, the more likely they are to be legitimate. If they have very little information, don’t show up on sites like the Better Business Bureau or Google, or have a lot of bad reviews, avoid them. They’re either a scam or a bad business, and either way you don’t want to work with them.

Never Sign or Pay Before Closing

You probably remember closing from when you bought your house. You and the buyer sit down with one or more real estate professionals and go through the official process to transfer the money from the buyer to you and the deed, title, and house from you to the buyer. You’ll pay fees and transfer the property at closing, and not before.

Scammers often want you to do these things before the official closing. As we talked about previously, they may try to get you to pay fees in advance so they can steal the money. But if they convince you to sign over the deed or title beforehand, they get ownership of your house. Often they have good reasons for doing so, like claiming it will speed up the closing process. Or they may claim that they’ll rent the house back to you. But if you sign it over beforehand, the scammers could take your house, never give you anything for it, and leave you still responsible for paying the mortgage.

Don’t sign anything until you have the cash in your hand or your bank confirms it’s been deposited into your account. Even better, don’t sign anything until you’ve talked to a real estate attorney. In addition, having an attorney review the deal can make sure you won’t be stuck with any liability in the future.

Keep Your Eyes Open

The prospect of selling your house with minimal effort can be appealing. And the idea of getting tens of thousands of dollars in cash can make many people see dollar signs. But keep your eyes open. Don’t let your excitement for the deal get ahead of your common sense – that’s what the scammers want. The less you’re paying attention, the more likely you are to miss warning signs.

Especially be aware of any sense of rushing, hurrying, or pressure. Even a legitimate deal will have deadlines, but those deadlines won’t be short notice. A good rule of thumb is that if you feel pressured, rushed, or hurried to sign anything, don’t do it.

Selling a house is not a once-in-a-lifetime thing. Even if the deal sounds great, it’s not the only deal out there. If this buyer isn’t the right one, there will be another one out there. It’s better to pass up a deal that seems just a little bit suspicious than to lose a lot of money, or your entire house, to a “we buy houses” scam.

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