'We Buy Houses' Scams and How To Avoid Them

October 18th, 2023  / Author: Zachariah Peterson
Home Sales

In general terms, there are two main ways people sell their property – by fixing it up and preparing it for sale before putting their house on the market or looking to sell as-is to cash buyers. Both ways have their advantages and disadvantages and what’s best for you will depend on your specific situation, but if you decide to go down the latter route, you should know how to avoid the ‘we buy houses’ ripoffs and scams.

And we’re not saying that you shouldn’t look to sell to cash buyers. Preparing a house for sale takes time and money, and then more time until the right buyer comes along. That extra time and money may not be something you have the luxury of spending.

However, what we are saying is that you should be mindful of who you are selling to and know how to spot some red flags. In this article, we’ll explain how the ‘we buy houses’ scams operate so that you can know what to look out for. After all, negotiating a good deal is only worth it if the buyer follows through.

'We Buy Houses' Ripoffs vs. Scams

Just a small digression before we begin - a 'we buy houses' ripoff is not the same as an outright scam. A ripoff would be, for example, if a bad-actor real estate investor goaded you into selling your house for much less than its current real estate market value. While unethical, that real estate investor likely couldn't face any legal consequences.

A scam could be an outright illegal activity. Let's say a person poses as a real estate agent and offers to buy your home, only to steal your personal bank details later. Or asks you to send money upfront to cover the closing costs or something of that nature, only to disappear once you send the money. These would be clearly illegal activities.

However, the purpose of this article is to teach you how to spot red flags when dealing with supposed cash buyers, so 'we buy houses' ripoffs and scams can be the same thing in this context. After all, you don't wish to get either scammed or fleeced and the same precautionary measures apply to both.

With that out of the way, let's discuss how you can avoid cash-for-homes scams and ripoffs.

‘We Buy Houses' Scams Red Flags

Not all scams work the same and some are easier to spot than others – by now, you probably know that if a Nigerian prince or someone along those lines offers to buy your house, you should stay well clear of them. While it may sound funny and more of a joke than anything else, these situations do happen.

You can easily see through these types of naïve scams, so we won’t go into them. However, most scammers apply more sophisticated methods and that’s what we’ll focus on. You can find a detailed explanation of some other real estate scams here. Here, let's go over how you can check if offers are legit and how to spot red flags.

Do a Background Check on the Company

The first thing you should do is verify that the company offering to buy your house exists. That doesn’t mean only checking if they have a website or some promotional materials. Faking websites or business cards is easy enough.

Instead, see if they provide a phone number and a physical address. Call the number to see if it works. Do a Google search of the address they provide. If the information you get is fake or you can’t find any info about them at all, it’s highly likely you are dealing with scammers. A working number and a real address are much more difficult to fake than a website or business card.

Then, see if you can find some reviews of the business. Some companies don’t publicize their customer reviews, so not finding any reviews doesn’t necessarily mean you are dealing with scammers. However, the existence of auto/bot-created reviews is a red flag.

These are easy to spot – they are all positive, all sound similar, use the same sentence constructions, mention the same things, etc. Real people will have different experiences and express themselves differently.

So, you are not exactly looking for good reviews and comments, but diverse experiences. Even a lot of bad comments are a good indicator that the business is not a ‘we buy houses’ scam – you probably still wouldn’t want to do business with them if the overall experiences are negative, but at least you know they are not outright scammers.

Are They Trying to Rush You?

Another warning sign is if the prospective buyer is trying to rush you. Most real buyers (excluding some online buyers) will take the time to inspect your home in person. Even online buyers will ask in-depth questions regarding the state of your property and probably ask for some pictures or videos.

While the benefit of selling your home to a cash buyer is that you get to close quickly, it still can’t be done in a day or two. A cash buyer will need some time to take care of the paperwork and inspect your house in order to make a fair offer.

If anything seems even slightly off, ask for proof of funds. Asking for proof of funds is always a good move, but especially so if there is even a hint that they are trying to scam you. A legitimate cash buyer will have no issue providing it to you. It may make the selling process a few days longer, but that’s a small price to pay. If they refuse, it’s best you just walk away.

Don’t Sign Over the Deed Before You Have the Money

When you are selling your house, the process is straightforward – you accept an offer, they give you your money, you sign over the deed. In that exact order. If they are asking you to sign over the deed to your home before you get your money, it’s almost 100% sure you are dealing with a ‘we buy houses’ scam.

There could be exceptional situations where that process is not followed, but they are few and far between. In such cases, unless you are absolutely, positively, 100% certain that you are not dealing with scammers should you even consider signing over the deed before you get the money. But even then, we would always advise against it.

How to Avoid Scams

Are They Asking For Money Upfront?

As a rule of thumb, the money should flow from the direction of your potential buyer into your pockets. You should not be paying them any fees or commissions upfront. Depending on the buyer, you may need to pay some fees – such as closing costs, realtor commissions, and maybe some service charges – but this should only be done once the deal goes through.

So, if they want you to pay for anything upfront, it’s another red flag that you are dealing with scammers. They may have no intention of buying your property but are trying to get you to sign a contract out of which they can back out at any point and will likely do so once they have charged you for their services upfront, without ever buying your house.

Understanding the Process Helps You Avoid Scams

Once you know what red flags to look out for, knowing how the process should work can help you avoid scammers. As each buyer is different there will be some deviations, but all legitimate house-buying companies follow the same pattern.

First, they will ask you detailed questions about the property and most will send someone over to assess the house in person. They will study the local housing market and based on that and the condition of the home tell you their purchase price. The offer should be close to what similar houses in a comparable condition to yours in your locality sold for recently.

Up to this point, you should not have been asked to pay for anything. Once they make you an offer, you should have time to read over the contract carefully before you sign – in other words, legitimate buyers won’t rush potential sellers.

Because they are offering to buy your house for cash, the closing process shouldn’t last long if you accept their offer. They don’t need to approve the financing with a lender and should be able to provide you with proof of funds, if you ask for it. Once again, not all buyers are the same and small deviations are acceptable, but this is the general pattern most legitimate buyers will follow.

Sell Your Home to a Company with a Proven Track Record

There’s no foolproof way to know if you are dealing with scammers or bad actors, but by knowing what the red flags are and what the process should normally look like, you can be reasonably certain that nobody can take advantage of you.>

But instead of looking to avoid ‘we buy houses’ scams, you can save yourself the trouble and look to sell to a company with a proven track record. SleeveUp Homes buys and restores houses in Southern California.

You don’t need to make any repairs or do any other preparations to get the home ready to sell. Contact us to get a cash offer and we will create a closing schedule that fits your timeline. Because we are not realtors or wholesalers but do all of the repairs ourselves, we can offer you top dollar for your home, regardless of the condition it is in.

If you’re ready to sell your home for a fair price without the hassle, contact us today to get an offer.



If you want to sell fast and are worried about how long the traditional process takes, and the commission and fees involved, consider working with SleeveUp Homes.