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Whenever large amounts of money are involved, scammers see an opportunity to get something for nothing. Homeowners selling property need to be aware of the potential dangers, including cash home buyer scams.
Though the details of each swindler’s tactics might be different, they all have one thing in common – they don’t have any interest in buying your property. They’re not really investors at all, and their sole purpose is to part you from your hard-earned money.
Fake investors put a lot of work into convincing homeowners that they aren’t thieves, but a savvy homeowner can figure out fairly quickly what’s up with these deals. Like most things in life, knowledge is power. These ten red flags to watch for when selling your house to a cash buyer will make sure that you don’t get scammed.
1 – Foreign buyers
Posing as a foreign investor or would-be immigrant who wants to come to America is a top home buying scam.
In this scenario, someone will reach out to you because they say they saw your property online and it’s perfect for them. They’ll offer to buy it for cash without ever stepping foot in the same country as your home is, much less ever touring your home.
This scam is more palatable today than it was even a few years ago before the pandemic. Buying a house sight unseen became commonplace during the pandemic, so it can seem legitimate that someone would go this route when such a huge amount of travel would be involved.
Don’t be fooled – this is almost always a cash home buying scam.
The way this goes from here is that the “buyer” will offer to send you a money order or a cashier’s check to cover attorney fees or closing costs. All along the way, the process will seem legitimate. The scammer will give you tons of legitimate sounding information, like addresses and phone numbers. Somewhere along the line, they’ll ask you to send them cash to cover some cost, and that’s what they’re really after.
Note that foreign scam cash buyers won’t be willing to talk to you on the phone. This is because they’re often even lying about the country that they’re speaking to you from, and the difference in their accent would give them up.
2 – Typo-ridden correspondence
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Sure, we all make grammatical mistakes in our emails and text messages. No one wants to be the grammar police all of the time, and normal folks are forgiving of an error here and there.
By and large, someone who has the kind of money that it would take to buy a home for cash is also someone who has earned that money by being able to communicate effectively with other people. If they can’t communicate well with you, how would they have been able to communicate with other people well enough to earn enough money to buy a home for cash?
Lack of coherent communication is a major red flag.
It’s not just about grammar, either. It’s also about how a person formats emails and texts. Do the pictures they send you have clear resolution? Do their emails have a salutation and a closing?
This is exacerbated with a foreign buyer. After all, someone from another country who speaks English as a second language would naturally have typos and misunderstandings about communicating in the US, right? This is a fair assumption and a generous way of thinking, but there are too many potential buyers and potential cash buyers out there to risk losing your money with a scammer.
3 – Overly detailed info
If someone offers you lots of incredibly detailed information, like bank statements, employment stubs, details from the deeds of other properties, or anything else that you wouldn’t share freely yourself, that’s a huge red flag.
Scammers use this tactic to try to convince you that they’re serious cash buyers. A genuine buyer would be extremely careful with that kind of sensitive information. If someone isn’t being cautious about sharing sensitive information, that’s probably because the information isn’t real.
Forging false information is par for the course for scam artists who are pretending that they’re a property buyer. Don’t be fooled into thinking you’ll be able to sell your house to someone who is giving off warning signs.
Investigate to make sure that any street number given on the information is an actual address that belongs to the person they are saying they are. A good rule you don’t know what to do is that you can always contact a real estate attorney to get a consultation. They’ll be able to help you find out if this person will actually be able to pay cash for your home.
4 – Rushing for a final sale
It’s one thing to cut out the middlemen in a transaction and to shorten the timeline of a real estate sale, but it’s entirely another to rush through a sale at lightning speed before anyone has a chance to read the paperwork.
Oftentimes a scammer will be ready to send you some money before they have even gotten all of the details of the home. Even the most risky honest cash buyers will do due diligence on a home before buying it, and that due diligence will involve being sure that there are no liens on the property and that the home has a good chance of being worth the price they’re paying for it.
5 – Offering a huge amount of money
The tradeoff of the speed and closing cost savings on a cash sale is that it’s necessarily at the lower end of market value.
Any honest cash buyer will offer you a respectable amount of money, and they won’t be bothered or pushy if you say that their price is too low. The lower cost allows them to recoup any potential problems they might encounter by forgoing the home inspection, etc.
A con artist doesn’t have any real money to offer you, so they don’t mind offering a whole lot of imaginary cash for your home.
If a purported cash buyer offers you over market value for a home when there’s no reason for them to do so, the odds are that you’ve found someone who’s doing a cash home buying scam.
They might offer you an alarmingly large amount of earnest money, a massive down payment, or they might even offer to wire you the full price of the house. None of these are normal in a real estate transaction, and the scammer will always come up with an excuse about why the promised money isn’t appearing or how you have to front some cash to them to push the transaction through.
If a purported real estate investor offers to buy your house as is for a sales price that sounds too high, odds are they aren’t legitimate buyers.
6 – The buyer can’t give you references
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An interested cash buyer who is not a buy houses scam artist will offer you references to back up their record. Real estate is all about building trust, and a reputable real estate agent or cash offer investor will have plenty of people who have had a good experience with them in the past.
Cash home buyers are most often legitimate, and homeowners sell to them all the time.
There’s a heavy amount of competition in the world of cash home buyers, because it’s a good business model that works around hard money lenders. People who buy houses for a living have to necessarily build a real estate network to keep referrals coming in and to get them the right seller for a cash offer.
Buy houses nationwide companies will have even more references. Make sure that whoever you talk to is a real person with real connections before there is any money exchanged
7 – You can’t find them online
Everyone has an online presence these days. This is a great time to do a little google search forensics to find out what the history of this potential home buyer is.
Companies that buy a home as is and deal in cash offers will have a robust online presence. Before you exchange money, make sure you’ve done your homework.
Legitimate cash buyers will have a LinkedIn page. Buy houses scam artists will be invisible online.
A reputable buy houses company will have a website, social media accounts, phone numbers, and addresses. You can and should search for the owners before you accept any earnest money or agree to a contract price.
8 – The cash investor doesn’t have cash
This one might seem obvious, but people who deal in buy houses scams are slick. They’ll present fake bank statement documents and promise to send a check. You might start to count on that money from a cash offer to cover your mortgage payments.
In reality, these con artists don’t have the money to pay a fair price or the sales price. One of the big warning signs you should watch out for is if a person who says they buy houses for a living can’t give you a “proof of funds” document that has a physical address and bank information on it.
The good news on this one is that you don’t have to pay anything to investigate whether a bank document is fraudulent. A quick search of the bank will tell you if it’s a real place or not.
If you call the bank listed on a proof of funds document and tell them that you think you might sell your house to this buyer, they’ll be able to tell you if that person has a bank account. The bank is interested in finding potential clues, too.
9 – Sketchy advertising
Cash scams don’t care about being legitimate, they only care about getting victims into their line of fire.
Legitimate off market buyers look for homeowners through legitimate means.
Buy house scams are often seen on phone poles, and this is a huge red flag. Off market buyers work hard to find potential sellers by digging through public information and doing outreach online through advertising and social media.
These costs are part of the market risk fees that real estate investors know are part of the business.
It’s not legal to just put signs up on telephone poles in most places. Real estate professionals know that good advertising costs money. Perpetrators of buy houses scams are willing to break the law to get some free advertising.
Any time the advertising is free, the potential buyer should be treated as buy houses scams.
10 – Costly mistakes in the process
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Sure, we all make mistakes now and then. It can hit hard when you have to approach someone to tell them that you’ve screwed something up that you promised to do.
Not everyone is being honest about “honest mistakes”.
This is the point where a fake cash buyer will actually get their hands on your hard earned cash. This is the point of no return.
They’ll come up with some reason why you need to send a large sum of money back to them after you’ve gotten a check from them. That check will be returned for forgery, and you’ll have to pay for it yourself. Once you wire them some cash to cover the lower price that they owe you, that wired money is gone for good.
Sell your house the right way
There are plenty of ways of selling your house fast for a good purchase price without falling prey to house scams.
It can be confusing with an honest real estate agent or an above board cash buyer, what with earnest money, a title company, hidden fees, financial information, and all of the bank account information that gets caught up in the whole selling process. There’s naturally a lot of trust baked into the buying process.
Keep in mind that scammers will always start out with reasonable requests, then escalate to something that you know isn’t right. Do google search, talk to a personal connection, or even check with a financial advisor if you are unsure about the buying process. It’s not worth it to get scammed.