Cash for Houses Scams: 5 We Buy Houses Ripoffs (& Finding Legit Offers)

There are many real estate investors out there who make fair cash offers for as-is houses. Unfortunately, there are also bad actors who leverage the financial misfortune of others into selfish gains via cash for houses scams.

Their efforts often focus on making extremely low offers to desperate homeowners without having the cash to even back them up. From here, they sell the contracts to other buyers – often for tens of thousands of dollars in profit. By knowing the kinds of scams that are out there, you’ll be far better positioned to protect yourself from them.

Disclaimer: The information provided in this article is for educational purposes only and should not be construed as legal advice. We are not experts in legal matters, and readers are encouraged to seek the proper professional legal counsel for specific guidance.

Are cash offers for houses legit?

Are cash home buyers legit?

They certainly can be, but there are also scammers in the mix who are invested in unfair and even illegal practices. Reputable real estate investors who pay cash for homes are legitimate businesses, and they have the trappings that come with that, including an office at a physical address and a professional website that outlines their process and relays valuable information.

Further, they don’t reach out with unsolicited offers, don’t make offers without doing the preliminary legwork, and have reviews that bolster their legitimacy. if the buyer you’re considering doesn’t fall into this category, keep searching.

5 cash for houses scams

Some of those We Pay Cash for Houses companies are legitimate, and others are running scams, and it’s important to know the difference. Fortunately, there are some clear signs to be on the lookout for when it comes to cash for home scams. 

The no cash scam

Some of the entities and individuals who claim to pay cash for houses actually have no cash at all, which complicates the matter considerably. 

How the no cash scam works

Too many of those signs out there telling you they’re prepared to make you a cash offer on your home have no cash to back them up. This begins at the top with seminars that profess to teach people how to purchase houses for cash.

From here, they sell attendees an expensive but ultimately worthless buying system and then provide them with a letter that promises them a lender if they find any takers.

This letter stands in for the pre-approval letter that a real estate agent would provide a buyer. Ultimately, however, the seminar company won’t be buying any houses unless the selling price is far below market value, which means they’re preying on desperate sellers out there – and are getting those who attend their seminars to do their dirty work. 

The wholesaling scam

The wholesaling scam is a continuation of the seminar tactics in which attendees are encouraged to lock multiple sellers into lowball contracts and then sell all those contracts to someone else.    

How the wholesaling scam works

In the wholesaling scam, seminar attendees – who spend a lot of money for the privilege – round up multiple homeowners who need to sell quickly using the trusty proof of funds letters they purchased at the seminar.

From here, the scammers have the sellers sign contracts that offer ridiculously low prices in order to sell quickly – then turn around and sell the contracts to third parties for much better prices.

This leaves the sellers in the unfortunate position of needing to close escrow with completely unknown entities. To make things that much worse, the markup the original buyers earn can be more than a traditional commission, which mean the sellers would have done better on the real estate market. 

Red flags to be on the lookout for when it comes to wholesaling include statements related to assigning the contract to someone else, such as the following:

  • And/or assigns after the name of the cash homebuyer
  • Contingent upon business partner’s approval, which typically means shopping your contract to other potential buyers who may be willing to pay much more

The no idea what repairs cost scam

Another warning sign to watch out for is a buyer who breezes through your home with no real inkling about what repairs need to be made and how much they are going to cost.

How the no idea what repairs cost scam works

You’ve got a home that you want to sell quickly, so you call the number on the we buy homes for cash postcard you received in the mail. This leads to a brief walk through in which the individual takes a quick look at the house, estimates the cost of repairs, and makes an offer based on repair costs that may be completely fabricated.

If the person sizing up your home is not an experienced professional inspector, there’s every possibility that they are completely off base. At this point – if your buyer, who likely has no cash, can’t sell your contract to a buyer who has cash but likely recognizes the error in terms of repair costs – you will almost certainly see some backpedaling that can include attempting to renegotiate the purchase price with you based on confusing contingency clauses or on the actual repair costs. 

The renegotiation scam

As the prior scam mentions, there are scams to watch out for that build off of not knowing the cost of repairs and move on from there with attempts to renegotiate contracts that’ve already been signed. 

How the renegotiation scam works

The renegotiation scam involves the house buying scammer failing to implement due diligence when it comes to pricing repairs or even to putting a value on the home, getting you to sign a contract based on their poorly calculated price, and then attempting to wiggle out of it.

This generally works something like this:

  • The cash buying company entices you to sell your house fast.
  • They do a quick walk through without thoroughly analyzing the home’s condition.
  • They make a quick offer that fails to include the price of costly repairs that are needed and push you to sign the contract.
  • You sign the contract, and they attempt to find another buyer in order to turn a quick profit.
  • No real buyer is forthcoming because the cost of repairs is so large.
  • The original buyer – who doesn’t have the resources to purchase your home – attempts to renegotiate your contract with you, which they will then shop to a third-party buyer. 

Renegotiation scams often begin with requesting a time extension in order to close the deal, which may evolve into a request for a price reduction. Ultimately, the buyer may simply cancel the contract altogether – based on one vague contingency clause or another. This leaves you starting back at square one when you were motivated to sell your house quickly in the first place.

The we have no history scam

Legitimate cash buyers have an online presence, a website, and a history of buying houses from satisfied sellers. 

How the we have no history scam works

If the individual or entity that is prepared to buy your house for cash is a legitimate real estate investor, they will have customer reviews that you can access online. If this isn’t the case, there’s a problem. When a buyer comes along and makes a fast cash offer on your home as-is but doesn’t have a website, can’t be found online, and has no reviews of any kind, it’s time to hit pause. 

Other signs of a we buy houses ripoff

The fact is that there are fake cash buyers out there, and although you may be very interested in selling your house fast for cash, it’s important to be aware of we buy houses for cash scams. To help you avoid being taken in by a scammer, we offer common signs to watch out for.

The buyer doesn’t have much to offer online

If you find a buyer who is ready to make an offer on your home for cash upfront and they don’t have a website – or don’t have much to offer on their website – you stop and think.

Legitimate companies that buy houses for cash have significant resources and put a lot of effort into the process, which includes educating potential sellers through informative online content, and those companies that don’t are far more likely to be scamming. 

At SoCal Home Buyers, we pay cash for houses in California, and we’re committed to making fair, transparent offers to sellers who understand the process and have the information they need to make financially sound decisions for themselves. In the process, we offer an array of content in clear, well-written articles that leave sellers well informed.

The offer is unsolicited

Reputable real estate investors are unlikely to reach out to you regarding selling your home for cash if you haven’t given them any indication that you’re in the market to sell my house fast. If the offer is unsolicited, proceed with caution.  

They use high-pressure tactics

If the person or company that you’re working with to sell your house as-is for cash is using high-pressure tactics, it’s time to ask yourself why. The right buyer for you will allow you the time you need to carefully consider the offer, and if they fail to do so, you should keep looking. 

The process is complicated

The beauty of selling your house to a cash buyer is that the process is straightforward, streamlined, and speedy – with no complicated steps that leave you confused. If the potential cash buyer you’re considering is less than transparent, taking a step back is well advised. 

They don’t have a physical location

Professional real estate investors are in the business of paying cash for homes, and they have offices where they get their work done. They don’t dabble in the business – they get down to business. If you’re working with a buyer who doesn’t have a physical address, you may end up being scammed.  

The information they offer is inconsistent or even untrue

If the buyer you’re working with tells you one thing one day and something else the next, if their employees can’t keep their stories straight, or if you’re pretty sure the information they provide you isn’t correct, it’s a good idea to move on. 

They ask for personal information  

This is an easy one. If the buyer you’ve found is asking for personal information such as your social security number, bank account information, or any other sensitive financial information, it’s time to find a new buyer.

Our key takeaways on we buy houses scams

Working with a reputable real estate investor is paramount, and at SoCal Home Buyers, we have the resources to buy your home for cash just the way it is. We also have the experience and market insight to make fair offers that we stand behind. Finally, we’ve simplified the process to just a few straightforward steps that inspire confidence and, if you accept our offer, get you your cash quickly.

FAQs on cash for homes scams

Are home buying companies legitimate?

Many home buying companies are legitimate, but some aren’t. Warning signs to watch for include not having a physical address, making speedy offers that don’t take repairs into account, using contract language related to assigning ownership or to overly broad contingencies and attempting to renegotiate the contract after it’s signed.

Someone wants to buy my house with cash without inspecting it thoroughly, should I be concerned?

Reputable real estate investors make legitimate cash offers that you have no reason to be concerned about. If someone makes a cash offer without bothering to carefully assess the state of your home, however, they are likely involved in wholesaling, and finding another buyer is advised.

Are cash for house scams prevalent in California?

Yes, cash for house scams are prevalent in California, which has a bustling real estate market that can serve as an effective cover for scams. On the plus side, California also has legitimate real estate investors like SoCal Home Buyers who are well prepared to pay cash for your home. 

Where are cash home buyer scams most common?

Cash home buying scams can happen anywhere. The higher the population, the more likely scamming becomes, which makes Southern California a prime target. Look for a reputable home buyer with a strong online presence, positive reviews, and a physical address at the bottom of their site that you can visit.

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