There are a few telltale signs that someone is not a legitimate cash buyer. If you’re selling your home, it’s important to be able to spot these red flags, in order to protect yourself from possible scams.
Table Of Contents
Types of Cash Buyers
Warning Signs in a Real Estate Transaction
• The buyer wants to buy your home sight unseen
• The price is too good to be true
• The buyer is not available to sign any paperwork
How to find a Reputable Cash Buyer
• Ask for Proof of Funds
• What is better business bureau?
Types of Cash Buyers For Houses
It’s important to know what the different types of cash buyers are there in order to protect yourself.
iBuyers are online companies that do cash buying or all-cash offers. They can be great for sellers because there are no agent fees, and the process is quick. However, they usually only buy homes in very specific areas.
Real Estate Investor
Real estate investors are individuals who purchase homes with the intention of reselling them at a higher price. These types of buyers may not have enough capital to be able to close on your home purchase on their own, so you’ll need to add one of these buyers as a co-signer on your loan.
Wholesalers purchase properties from investors and flip them, meaning they’ll make some type of renovation before selling it again for a profit. Wholesalers are a good option for sellers who need to sell quickly, as they usually close within a week.
There are two types of cash buyers: those who have the money to buy your home outright and those who will take out a loan to purchase it. The best way to protect yourself from scams is to ask for proof that the buyer has the funds available to purchase your home.
If your home needs renovations, you might consider selling it to a house flipper. These buyers will buy and fix up the property in order to resell it for a profit. Wholesalers usually don’t have time to renovate properties or wait for them to be completed, and that’s why they’re looking for homes in good condition.
Real Estate Agent
Selling your home through an agent is the safest way to go. The simplest way for a scammer to make money off of you would be by purchasing the property, putting it back on the market at a higher price, and reselling it. Most scams are done online, which means that they’re able to reach more people through sites like Craigslist.
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Real estate red flags
There are a few things that you can look for in order to spot fake house buyers.
The buyer doesn’t want to go through a real estate agent
If the buyer doesn’t want to use real estate agents, then there’s probably a reason for it. Most buyers will want to use an agent because they offer guidance and protection during the home buying process.
Use A Real Estate Agent!
The buyer wants to buy your home sight unseen
If the buyer is asking to purchase your home without seeing it in person, then that’s definitely a red flag. If the buyer wants to purchase a property sight unseen or appears to have no knowledge of the local community, it’s a good sign you may have been targeted for a real estate scam. It’s important for the house buyer to always see the property before buying it to judge whether the sales price you have is of fair price or not.
The buyer asks you to wire them money or pay via PayPal
As we mentioned earlier, if the potential buyer asks for payment through a wire transfer or sent via PayPal, then you should immediately decline the offer. There’s a big chance that it’s not a legitimate cash buyer. When selling your home, never accept an offer that asks you to wire someone money or pay via PayPal. If any cash buyers ask you for this type of payment method, then there’s a strong chance that they’re not legit.
The buyer wants you to use their financing company
If your home needs repairs and the cash buyer suggests using their financing company in order to get fixed up before closing on the sale, then this is another warning sign. The vast majority of sellers will just want to get rid of their homes as quickly as possible, and won’t have time to wait for renovations.
The price is too good to be true
Have an agent come out and appraise your home so that you can determine what its value is before selling it yourself. If the offer seems too good to be true, then it’s probably a scam.
Cash Buyers: Real vs. Fake
The buyer is not available to sign any paperwork
One of the biggest red flags in a transaction is if the buyer isn’t able to meet with you or sign any type of paperwork. Legitimate cash buyers will usually be more than happy to meet with agents and sellers, as this gives them peace of mind that they’re really receiving what was promised.
The buyer says that your real estate agent can’t contact them.
This should raise some serious concerns about whether or not the potential cash buyer is legit. If the seller has an agent, then they’ll want to speak with that person directly before making any decisions about their home sale. They won’t be receptive towards you contacting them through other means.
If somebody is asking for excessive amounts of personal information like financial information, contact information, banking information or they’re wanting you to do things outside of the norm, it’s likely that they’re not there to buy houses.
This could include something as simple as asking for your social security number before even meeting in person. Another thing to watch out for is buyers who want you to sign a contract without even seeing the property. This almost always spells trouble and is definitely a sign that you need to walk away.
How to find cash buyers
In the real estate industry, you have to deal with people from all walks of life. This isn’t necessarily a bad thing as some of those people are going to be a legitimate business and everyone is not a scammer. If you want to know how to find a Cash Buyer, do your own due diligence and also keep these tips in mind.
Ask for Proof of Funds (POOF)
Harsh truth time: not everyone who contacts you is actually looking to buy your property. People make offers on properties they’ll never buy every single day. Why does this happen? Because it’s an easy way to get free information about what homes are selling for in your area.
So how do you ask for POOF? You can say something like this: “We will need your proof of funds and share financial details prior to our entering into any contract and any down payment. We will need at least three months’ worth of financial statements from all accounts.”
Asking for Proof of Funds | Buyers’ Safety Series
In most cases, legit buyers will have no problem sending you the information and it’s a good sign. In fact, it’s better to risk losing potential buyers than getting caught up with fake buyers doing real estate scams.
Get Proof of Funds From Past Transactions
If somebody wants to buy a house from you and they’re not working with an agent, there’s a good chance that they had real estate transactions in the past. If that’s the case, then asking them to share past transaction information with you is one of the easy validation purposes.
If they have bought before, then there’s no reason why they wouldn’t be willing to send you multiple forms of documentation showing cash transactions for previous transactions. This really isn’t asking much at all in my opinion, it’s just asking in good faith. Here are some examples of what types of documents home sellers can ask for when somebody is buying a house without an agent:
· Sale agreement between buyer and seller
· Deed or bill-of-sale transferring ownership from one party to another
Even if your potential Cash Buyer has never bought a house before, it’s still possible that they’ve sold in the past that had monetary value. Things like car titles, collections, or expensive items can be used as proof of funds.
Get Proof of Funds From the Bank/Credit Union
Most lenders require borrowers to show at least three months’ worth of bank account records before they’re approved for a mortgage. If somebody is looking to buy your house using cash, it’s likely that they’ll need to get pre-approved for whatever their financial limit might be. So an easy way to tell if your Cash Buyer is legit is by asking them to send you verification from their bank stating exactly how much they are able to purchase.
What is better business bureau?
If you’re looking to do business with experienced professionals, one of the first things you should do is check their standing with the BBB. This will give you a good indication as to whether or not the company is legit and has had complaints filed against them in the past.
Cash buyers who are looking to legitimately purchase your property will have no problem sharing this information with you. In fact, they’ll likely be proud to show it off! So if somebody is hesitant or refuses to share this information with you, it’s probably best to move on.
At the end of the day, it’s important to remember that not everyone who contacts you about purchasing your house is a fake buyer. There are many legitimate businesses out there and Cash Buyers are no exception. However, with most things in life, if it seems too good to be true then there’s a good chance that it is. Keep this list handy and have it ready the next time somebody comes knocking on your door about selling your house fast for cash!
If you want to save time and energy with a cash buyer like ASAP Cash Offer, we recommend filling up our online form below or calling (805)427-8312. We buy houses in any condition (even ugly ones!) and pay cash (or get you all-cash offers) hassle-free and without high-pressure sales tactics.