How to Spot a We Buy Houses Scam in California
Most of what I’ve seen go wrong in the cash buyer space traces back to two things: a buyer who can’t actually prove they have the funds to close, and contract language that lets them hand your deal off to someone else without saying so upfront.
The concern comes up regularly, and I don’t take it personally when people ask. A fair number of the calls I get are from people who already heard about this going sideways, sometimes a neighbor who spent months on a buyer who kept pushing the close date, or a family member who took a price so far below market it felt like someone was running a game on them.
We’re cash buyers ourselves, so everything I’m about to tell you applies to us too. The patterns that show up in problematic deals are consistent, and they’re not hard to spot before you’ve signed anything once you know what to look for.
Where things go wrong
The proof of funds problem
A buyer can send you a letter saying they have the money, and that doesn’t really tell you anything you can count on. A bank statement screenshot isn’t hard to fabricate either.
We do this on every deal and it’s pretty standard: the escrow or title company can confirm the buyer’s deposit cleared or that the funds are there to close. A buyer who pushes back on that, you sort of wonder what the whole thing is built on.
Most escrow companies can do a funds verification call if you ask for it before signing. A letter on bank letterhead that the buyer printed is a different thing, and most sellers don’t know to ask for the distinction.
The contract fine print
The assignable contract situation comes up more than people expect. The buyer in that case is just planning to hand the contract off to someone else, and that someone else might or might not have the money to close on it.
If someone’s planning to assign your contract and they haven’t said that upfront, that’s a pretty material thing to know before you sign anything. The sellers who end up in trouble are usually the ones already three months into what was supposed to be a 30-day escrow and nobody can really explain why it keeps getting pushed.
The language itself isn’t always obvious. It might read something like “Buyer reserves the right to assign this agreement at buyer’s discretion,” and it’s typically buried in a general terms paragraph near the end. If it’s in there and nobody mentioned it, bring it up before you sign anything.
The operation running that kind of contract is typically a wholesaler. They’re not buying the property themselves, they’re signing the contract and then selling that contract to a third-party investor for a fee, and the third party is the one who closes.
That third party has their own due diligence timeline and their own price requirements, and if the numbers don’t work for them the deal can fall apart with the seller having nothing to show for the time spent in escrow. I’ve talked to sellers who didn’t know they were dealing with a wholesaler until the close date moved for the second time.
The late renegotiation
I’ve seen this one play out more than a few times. Everything looks normal going in, and then somewhere around week two or three a new number shows up.
An inspection found something, or the repair estimates came back higher than expected, and now there’s a reason the original price doesn’t work anymore.
Whatever the stated reason ends up being, by that point the seller has already told people they’re moving and started thinking about what comes next. Walking away feels a lot harder than it did on day one, and a lot of sellers just absorb the lower number and close.
When there’s nothing to look up
Some of these operations have no website at all, or the site looks like it went live the week before they called you. There are no Google reviews, or there’s a cluster from a two-week window that don’t look like they came from real customers over time, nothing that traces back to real deals anywhere they claim to be working.
Enough legitimate operators have been running long enough that a quick search should turn something up. If it turns up nothing, you sort of wonder what you’re dealing with.
Beyond Google, searching the company name plus the city on BiggerPockets or Reddit sometimes turns up forum comments from people who dealt with them. Most operations that have been doing this legitimately for a few years show up somewhere outside their own website, whether that’s a forum mention or a name in a local news article.
A seller who checked
W Point Loma Blvd, San Diego
I was working on a deal on W Point Loma Blvd in San Diego in late 2017. Elderly sellers on a condo, thinking about moving to assisted living, and the daughter thought selling made sense.
We had a signed contract and escrow was open, and then I got a call from an attorney the daughter had hired to look specifically into us.
He told me the daughter wanted to make sure this wasn’t a scam. He’d been brought in to review the contract and look into the company, and I kind of appreciated that, I mean that’s exactly what someone should do if they’re not sure who they’re dealing with.
We talked through how we work and what the escrow timeline looked like, and he went off and did his own research on us.
He called back a few weeks later and said he hadn’t found anything that concerned him. The sellers were satisfied, and we closed that November at $247,000.
Most sellers don’t get around to that kind of research until something already feels a little off, which by that point usually means they’re already a few weeks into escrow.
Checking someone out before you sign
That attorney pulled up the company and looked at how long it had been operating, checking whether the Google reviews looked like real customers spread over time or a suspicious cluster. He also checked whether the contract language gave us an easy out or allowed for assignment without disclosing it.
He talked to us directly and asked some questions about how we work, then sat with the answers for a bit. He called back and said he hadn’t found anything that looked like a concern, and everything he could find pointed to us having been doing this for a while.
The attorney review
We work through a licensed escrow company on every deal, and the money doesn’t move until both sides have signed off on what was agreed. I’ve seen buyers who want to use some kind of in-house closing process instead of working through a licensed escrow, and I’m not sure what the seller is supposed to get out of that.
If you want someone to review the contract before you commit to anything, an attorney can usually turn that around in a day or two on a residential deal.
Confirming the funds
You can also ask the buyer to have the escrow company confirm the funds are there before you sign, an actual confirmation that the deposit cleared rather than a buyer letter, and see what the response is when you ask for it.
Asking the buyer for a net sheet before you sign is one of the better early signals of how they operate. A net sheet lays out what you’ll walk away with once the offer price and any seller-carried costs come out, and a buyer who has closed a reasonable number of deals should be able to put one together without much lead time.
A buyer who responds to that request with a vague number or says they’ll work it out at the escrow office is a different situation from one who sends you a specific breakdown the same day. I’ve had sellers tell me afterward that the speed and specificity of that response was the clearest signal they got about whether the buyer was capitalized to close.
The contract terms
In the contract, I’d look at two things: whether the inspection period has a defined end date, and whether there’s language allowing the buyer to assign your contract. Most legitimate deals I’ve seen run the inspection period 7 to 14 days with a specific end date.
A buyer with an open-ended inspection period can hold your property while they go find another buyer. If the contract allows assignment and the buyer hasn’t said so upfront, ask about it directly before you sign.
Reading the review history
Reviews spread across two or three years with varied response times and different writing styles tend to look like real customers. A cluster of five-star reviews from the same two-week window with similar phrasing is easy to spot when you sort by date.
Where we fit in this
How we operate
The offer we make is the number we close at. If something changes between the offer and closing, it’s something that came up in the title report or the property condition after we priced it.
Every deal runs through a licensed escrow company, the seller reviews everything before signing and we don’t ask for anything upfront.
The full cash sale process from first call through closing is there if you want to see each step before reaching out.
Our background
I spent seven years as a certified residential appraiser, starting in 2003, and that background shapes how I approach pricing. I think about value pretty differently than somebody who just ran an ad and picked a number they figured would get a contract signed.
We’ve been operating since 2008 across Southern California and the business runs on referrals and repeat work. That doesn’t really hold up if you’re the kind of operation that strings sellers along or moves the number around at the last minute.
How to verify us
I’d check the same way that attorney did on the Point Loma deal. Looking us up online is easy enough, and the reviews should tell you whether customers are spread over time or show up in a cluster from one period.
You can verify whether a company holds a California real estate license through the California Department of Real Estate license lookup. California requires escrow companies to hold a license through the Department of Financial Protection and Innovation, and the DFPI escrow licensee search lets you confirm a company is currently active before you sign anything. That check runs separately from the DRE search on the buyer, and running both gives you a cleaner picture of the transaction.
A buyer who pushes for an in-house closing instead of a licensed escrow is a different situation from one who works through a neutral third party. I’ve seen that pattern in deals where the buyer resisted any third-party confirmation of the funds, and the sellers in those situations were generally in a worse position than they understood going in.
Real estate transactions are a common target for wire fraud, and the FTC guidance on wire transfers covers what to watch for before you send any funds.
If you’re still working through whether a cash sale makes sense for your situation, there’s a fuller breakdown of when it makes sense and when it doesn’t. Reach us at (951) 331-3844 or put in a request through the site if you want to talk through any of it.
Doug Van Soest co-founded SoCal Home Buyers in 2008 after seven years as a certified residential appraiser, starting in 2003. He and Andrea have closed over 400 transactions across Southern California.
