How to Spot a We Buy Houses Scam in California
A cash offer deserves extra scrutiny when the buyer will not provide credible proof of funds, the contract hides assignment or cancellation rights, the deposit and inspection terms leave the buyer with little at risk, or the company pressures you to sign before independent review. None of those items alone proves fraud, but each is a reason to slow down and verify the deal.
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.
Since I’m telling you to check the other side, here’s how to check ours. We’ve been buying houses across Southern California since 2008, and Andrea and I have closed over 400 transactions in that time.
You can review our Google Business Profile, verify Andrea Van Soest’s California DRE license #01505854, and cross-reference the listed purchases against public records. A person buying property for their own account is not automatically required to hold a real estate license, so verify any specific licensed status the buyer claims rather than assuming every cash buyer should appear in the DRE database.
Everything I’m about to tell you to demand from a buyer, you should be able to confirm about us in a few minutes.
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.
Before signing, ask the buyer for current proof of funds and confirm that the account holder and available amount match the purchaser and price. Where possible, verify the document directly with the issuing institution using contact information you obtain independently. After escrow opens, confirm that the required deposit was received on time.
Escrow may not be open before the purchase agreement is signed, and an escrow holder may not be able to confirm an entire purchase balance at that stage. A letter or bank-statement screenshot should be treated as a starting document, not unquestioned proof.
The contract fine print
An assignable contract allows the named buyer to transfer contractual rights to another party when the agreement and law permit it. Assignment is used in legitimate transactions, but it changes who may ultimately perform and can affect closing certainty.
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.
Wholesalers commonly contract to buy and then assign the contract to an end buyer for a fee. That business model is not automatically a scam. The seller should know whether assignment is allowed, whether the original buyer remains liable, what contingencies permit cancellation, and whether the buyer has a credible path to close if no assignee appears.
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.
Equity-skimming setups
Equity skimming is where someone takes over your property, often the mortgage payments along with it, without ever paying off the loan or putting the deed in a position that protects you. The operator collects rent or resells the home while the original loan stays in your name, and the equity you built gets pulled out from under you. If a buyer wants to take the property “subject to” the existing loan without a clear payoff or a licensed escrow handling the transfer, slow down and get it reviewed before you sign.
Foreclosure-rescue offers
Foreclosure rescue scams target sellers who already have a Notice of Default recorded. The pitch is that they’ll save your home or buy you time, and the mechanics usually involve getting you to sign over the deed or pay upfront fees for help that never materializes. A legitimate buyer working against your foreclosure timeline goes through escrow and pays off the loan at closing, and never asks for money upfront to stop a sale.
A seller who checked
W Point Loma Blvd, San Diego
We were under contract to buy a condo on West Point Loma Boulevard in San Diego in late 2017.
After escrow opened, the sellers had an attorney review the contract and investigate our company.
The attorney asked about our purchase process, the escrow timeline, funding, and contract terms. That independent review is exactly what a seller should do when anything is unclear.
We talked through how we work and what the escrow timeline looked like, and he went off and did his own research on us.
After completing the review, the sellers chose to proceed. We bought the condo for $247,000 and closed on November 9, 2017.
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 use a neutral escrow holder on every purchase. In California, independent escrow companies are licensed by the Department of Financial Protection and Innovation. Other escrow providers may operate under exemptions and be regulated through a different licensing authority. Ask who regulates the escrow holder and verify that status independently.
If you want independent review before committing, ask a California real estate attorney how much time is needed and do not sign until your questions are answered.
Confirming the funds
Ask for proof of funds before signing and verify it directly where possible. Once escrow is open, confirm that the deposit arrived by the contract deadline. A deposit confirmation is not the same as proof of the full purchase balance, so keep those checks separate.
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 size of the deposit
The earnest money deposit matters, but there is no universal amount that proves a buyer is legitimate. Review the amount, due date, contingencies, refund rights, and when the deposit becomes nonrefundable. A small deposit paired with broad or open-ended cancellation rights leaves the buyer with less at risk, while a larger deposit can still be refundable under the contract.
The contract terms
In the contract, look at whether the inspection period has a defined end date, what lets the buyer cancel or change the price, and whether the buyer can assign the agreement. A defined period is easier to evaluate than an open-ended one. The appropriate length depends on the property and due diligence required.
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
Our contract states the purchase price and the conditions that apply. If a documented title or property fact appears after the walkthrough, we explain it and any proposed change in writing. The seller can review the contract, decline an amendment, and ask an attorney what cancellation rights apply.
Every deal runs through a licensed escrow company, the seller reviews everything before signing and we don’t ask for anything upfront.
Most legitimate buyers can explain the cash sale process from the first call through closing without dodging questions about funding or escrow.
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 a California real estate license through the California Department of Real Estate. For escrow, the California Department of Financial Protection and Innovation escrow guide explains that independent escrow companies are DFPI licensed, while some controlled escrows are exempt from DFPI licensing and may be regulated by another authority. Ask which regulator applies, then use that agency’s current license lookup.
A buyer who resists a neutral, qualified escrow holder or will not identify the applicable regulator deserves closer scrutiny. Confirm the escrow holder independently instead of relying only on contact information supplied by the buyer.
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.
Spotting a Scam “We Buy Homes” Company: Common Questions
How can I verify a cash buyer has the funds to close?
Ask for current proof of funds before signing and verify it with the issuing institution where possible, using contact information obtained independently. After escrow opens, confirm that the required deposit arrived. An escrow holder may not be able to verify the full purchase balance before the contract is signed.
What is an assignable contract and why does it matter?
An assignable contract lets the buyer transfer contractual rights when the agreement and law permit it. Assignment is not automatically improper, but the seller should know whether it is allowed, whether the original buyer remains responsible, and what happens if no assignee closes. Ask directly and have unclear language reviewed before signing.
Is a small or missing earnest money deposit a red flag?
It can be, but the deposit must be read with the rest of the contract. Review the amount, deadline, contingencies, refund rights, and when it becomes nonrefundable. No single percentage proves that a buyer will close, and even a large deposit may remain refundable.
If you’re still working through whether a cash sale fits your situation, compare the tradeoffs in when a cash sale makes sense and when it doesn’t before accepting an offer. 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.
