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How to Spot a "Buy my house" Scam
Do you know how to spot a we buy houses scam? Or a fake real estate buyer? Most people’s first contact with home investors comes from the cheap, flimsy signs amateur investors leave all over town that say, “We buy houses fast!” or “We buy houses, cash, any condition.”
There’s nothing wrong with the signs themselves, of course.
Marketing is marketing, whether it looks professional or not (though we still wouldn’t call cheap, flimsy, handwritten signs a good sign).
Mostly, these signs demonstrate the low barrier to entry that exists when it comes to real estate investors. Literally anyone can put up one of those signs and call themselves an investor, whether they know a darn thing about the real estate industry or not.
Of course, newbies aren’t the biggest worry you’ve got to face…
We Buy Houses Scams
If you’re considering selling your house to an investor, you need to be aware of we buy houses scams. Fake house buyers, real estate investment schemes, fraud—and how to spot the difference between a scam and a legitimate home buyer that gets you the help you need. As legitimate investors, we’ll do everything we can to help you spot these scams before you get into trouble.
Tip #1: Understand the flow of money in a legitimate real estate transaction.
The first step in understanding we buy houses scams is understanding the flow of money in real estate.
Money does not flow from you to the buyer…
Money flows from the buyer to you.
Often, scammers will ask for hefty “processing” or “administrative” fees. You pay them, and then they ride off into the sunset.
Sure, the fees won’t be anywhere near the value of the home, but can you really afford to lose anywhere from $200 to $1000 to someone unscrupulous? Besides, these scammers can often get thousands of desperate sellers to pay up in a short period of time. Then they change their number, disappear, and are on to the next set of marks.
A legitimate real estate investor will write you an offer. This will be free. You will then have the option of accepting the offer.
Then you’re going to get cash.
You may have to pay some or all of that cash to the bank if you owe money on the home, but you’re not paying to sell the house—after all, that’s an advantage to selling your home to an investor, rather than through traditional listing.
Tip #2: Earnest money is part of the process.
“Investors” who don’t want to put up any earnest money are often acting as “bird dogs.” They’ve taken one of those get rich quick “real estate investing” seminars and are actually trying to sell deals to other investors, who may or may not bite. All they’re doing is locking up your home under contract on the very small chance that their contact will bite on the deal.
We have no problem putting down earnest money. By the time we’ve done that, we’ve decided we’re happy to buy your home. It’s not extra money we’re paying. It’s just an advance on money we were going to pay anyway.
We’re also happy to provide proof of funds. “Bird dogs” usually don’t have any money of their own. They’re banking on the investor putting up the money and then paying them a finder’s fee for sourcing the deal.
If we don’t want the house, we’ll say so and move on.
Tip #3: The “We Buy Houses” scam buyer is too eager to buy the house sight unseen.
Usually this is the start of a foreign wire fraud scam. This Time Magazine article does a good job of explaining what those scams look like.
Nobody in their right mind is willing to buy a home sight unseen (except a fake real estate buyer…)
Big State Home Buyers buys run-down houses sometimes, but we at least go and look at the homes before we make an offer. If the house is going to need $50,000 of rehab we’d like to know that before deciding what kind of offer we’re going to make to you, for example.
“Sight unseen” means “I really have no intention of buying this house. I’m just here to take you for a ride.”
Tip #4: You’ve got a bad feeling.
New scams come out all the time, and the rings true for a fake real estate buyer. We couldn’t possibly warn you about all of them, simply because criminals are constantly looking for new ways to con people.
However, there’s one tool you can always use to determine whether something is wrong: your gut. If something seems off, it probably is.
If you see unprofessional behavior in the “We Buy Houses” scam company, don’t like what’s being said about the company online, can’t find any information at all about the company or just feel like something’s strange about the proposed deal, don’t move forward.
You also should know that you have every right to receive and entertain multiple offers. Look at how they treat you in addition to the bottom line number they are offering to you.
Avoid a Fake Real Estate Buyer
Keep these tips in mind to avoid a fake real estate buyer.
Remember, a true home investor should help you make the best of a bad situation. Ultimately, you ought to feel good about the transaction and walk away better off than you were before. A true home investor is also happy to answer all of your questions before talking about money at all.
At Big State Home Buyers we are a professional investment team that’s been around for a long time. We’re happy to answer any and all of your questions, and we do so free of charge. Call us today.