When it comes to selling your house, most people are familiar with the concept of hiring a real estate agent to help you list it on the open market and selling to an individual or family buyer. What they may not be as familiar with is the process of selling your house to a real estate investor like Nexus Homebuyers. That knowledge gap can create plenty of space for scammers and fakes to thrive, conning good people out of their money and homes by preying on their situation.
The truth is that selling your house “as-is” to a cash buyer or real estate investor is a perfectly reasonable transaction, especially if you find yourself in a situation where you need to sell quickly or are dealing with damage or financial issues. However, it’s important to be very aware of what that process should look like so that you can identify the scams that attempt to take advantage of people like you.
How To Spot A “We Buy Houses” Scam
Can You Prove They Exist?
Let’s say you get a phone call from someone claiming to be a real estate investor who wants to pay cash for your home. Or perhaps you see one of those “We Buy Houses” signs on the highway and decided to give them a call. How do you know the person on the other end of the line is legit and that you’re dealing with a reputable company? The same way you would check on any business.
Start asking questions. What is the name of the company? What is their physical address? Could I come by for an appointment or visit? Who is the owner of the company? Is their a website? With every answer (or non-answer) you get, do your research. Don’t be afraid to push for answers and don’t be afraid to follow up. The more information you can verify, the more likely they are to be legit. And if they won’t give you answers to the questions you’re asking, ask yourself why that might be the case.
And make sure you call the Better Business Bureau at 202-393-8000 or check out the company at the BBB website. If they’re not listed or a member, that could be a red flag.
Are They Too Eager to Buy Your House?
A reputable real estate investor is always going to want to get all of the information needed as well as take a tour of the house before making you a fair offer. If someone really wants to but your house sight unseen, that could be a big red flag that something’s not quite right. Even if your house is derelict or is dealing with some major damage issues, a real estate investor is always going to want to see it for themselves 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 someone says they want to buy your house sight unseen, chances are they don’t actually want to buy your house. They just want to get some money from you.
They Keep You Waiting
As a sign of good faith, an investor might offer you a deposit in order to secure their relationship with you as the homebuyer. The investor is already likely to purchase it from you and just wants to ensure that someone else can’t swoop in before they close the deal. Another way that an investor might do this is to provide proof of funds. In doing so it’s a handshake agreement that you make that everyone is operating in good faith.
A scammer might be trying to string you along until they’re able to find someone else to invest in your house. So if they say they can’t close on your house right away but aren’t willing to put down any earnest money, it probably means they are simply trying to buy time until they can find someone else to pay for it. And if they can’t find someone, they’ll simply walk away, leaving you in the lurch when you could have already sold your home.
Basically, a reliable investor will be upfront with you about their intentions and will provide a financial guarantee of some kind if that is required or asked for. Otherwise, they clearly aren’t motivated the way they should be.
Understand How the Transaction Should Work
The most basic way to understand how a real estate investor purchase should work is that they are the ones paying you for your house. The money flows in your direction, not away from you. So if this purported buyer asks you to pay some kind of administration fee or processing fee upfront, that is a major red flag. Even if they are asking for something like $200 or $300, that’s still a chunk of money you shouldn’t lose out on if it turns out that after you pay they disappear.
A legitimate real estate investor or buyer will want to review all of the details surrounding your house and any outstanding concerns or issues involved. Then, they’ll meet with you and tour the property so that they can view it and take note of all the features. After that, they will make an offer to you in writing, all of which is at no cost to you. Even if you decide not to take the offer, you are not expected to pay any kind of fees.
If you accept their offer, you can negotiate with them over closing costs. You’ll also avoid many of the fees usually associated with home selling, including appraisals and inspections. Then when everything is read they will pay you in cash (or however you decide you would like the money) and close on your terms.
Check the Contract
Even if you move forward and everything looks good, you still need to make sure you go over the sale contract with a fine-tooth comb. That’s especially true if the investor is pressuring you to sign quickly. You take as much time as you need to sign over your house, a huge investment and important decision. You or your lawyer should be on the lookout for “out clauses” that would allow the investor to back out of the deal up until the final moments with no recourse.
Also, make sure you sign the deed to your house or any major contract at a title and escrow company office or at an attorney’s office. This ensures that the paperwork is handled properly and any liens or disclosures are dealt with properly.