In our interconnected world, there are, unfortunately, people out there that will try and prey upon vulnerable people. You hear stories on the news about scammers through email, telephone, or the mail who manage to win the trust of people who are hard on their luck and take advantage of them.
If you’re thinking about selling your home, you might be wondering about “we buy houses for cash” companies in this light. You’ve likely known some people that have had positive experiences with this type of company, while also hearing others claiming that these companies are a scam.
So, which is it? Is this type of company legit?
Let’s take a look at what you need to know to ensure that you make the right choice when it comes to selling your home.
We Buy Houses for Cash: How Does It Work?
You’ve likely seen advertisements or received flyers in the mail from companies that claim that “we buy houses for cash.” These companies are interested in purchasing homes as real estate investors. Typically, this means that they are looking to purchase properties that are in need of repairs so that they can fix them up and flip them for a profit.
The basic run-down on cash offers is as follows:
- A business or individual makes an all-cash offer on a home to the homeowner
- These buyers can close quickly on the home and purchase it as-is in return for a sales price that is typically less than it would sell for one the market
- The cash buyer often covers all or most of the closing costs
Cash deals can be much faster than selling your home on the open market. This is true for a number of reasons.
For one, cash buyers don’t have to get financing through a lender. This is one of the lengthiest part of real estate transactions, so closings can occur as quickly as two weeks after you accept an offer.
On top of that, there is usually a period of several months that home sellers ready their house for the market. During this time, they might do repairs, fix up their home, clean, declutter, and work to boost their curb appeal. This can be a costly and time-costly part of the process.
When you sell your house to cash buyers, they are usually buying your home as-is. This means that you don’t have to worry about any of this hassle. Many companies let you set your own closing date, too, meaning that you can move out of your home on your own schedule.
Another great aspect of selling your home to a cash buyer is that you don’t have to pay realtor fees. However, some home sellers decide that its worth it to them to have an agent. Check out the pros and cons of selling your home without a realtor here.
Are Cash Offers Legit or a Scam?
You might have heard some people say that “we buy houses for cash” companies are a “ripoff” or a “scam.”
First of all, it’s worth delving into the difference between those two terms.
A ripoff means one party in the transaction got a bad deal. This means that whether or not something was a ripoff depends on whether or not a person could have found a better option for their desired outcome. A scam, however, refers to legitimately illegal activity.
There are plenty of reputable, trustworthy we buy houses companies out there. However, there are also parties that will try and scam you. We will take a look at common real estate scams further down in the article.
Places That Buy Houses for Cash: Who Are They Good For?
For some people in certain properties, they might feel that it would be a ripoff to sell their home to a “we buy houses” company. If you live in a luxury home in a competitive market, for example, you might find that it’s much more advantageous to you to sell your home on the open market.
However, there are plenty of scenarios where selling a house to a cash buyer can be the most appealing choice to the home seller. This type of deal can be good for people who have distressed properties that need a lot of repairs in order to be saleable on the MLS. It can also be a reasonable option for sellers who have inherited a property that they don’t want to deal with or who are facing debt problems or foreclosure.
This can also be a reasonable option for someone who needs to move quickly for a new job or for an individual undergoing a life transition. No matter your circumstance, it’s worth weighing out your options to determine which works best for you and your needs.
(Are you wondering what the real estate closing process consists of? If so, check out this article.)
What You Need to Know About “We Buy Houses” Scams
Unfortunately, there are scams out there in spite of the fact that there are a lot of legitimate cash buyers, too. There are a number of common cash buying scams that you will want to know about as a home seller.
Wholesaling
Wholesaling isn’t actually illegal, but it can be a misleading practice that might not work out in your best interest. This is when someone puts your house under contract and then turns around to look for a buyer to sell the contract to. If the wholesaler doesn’t explain who the actual buyer is or includes a clause that lets them walk away if they don’t find a buyer, this can cause you quite a bit of trouble and stress.
Email Phishing
Email phishing when it comes to selling your home refers to when someone sends you an email with the intention of stealing from you. These parties might make an all-cash offer in email and ask for more information, including things like where they should wire money to. Never give personal information to a company that is emailing you out of the blue in this way with a too-good-to-be-true offer.
Equity Skimming
This is a more elaborate type of scam.
A real estate investor buys a home from someone who is having financial trouble. They then promise to let the original owner buy the home back when they are in the position to do so. However, the investor actually takes out all of the equity of the home through refinancing.
Upfront Fees
You should never have to put down a deposit or pay fees when a cash buyer is making an offer on your home. It is a giant red flag if a cash buyer is asking you to pay upfront, so never ever pay money upfront. It is almost certain that the buyer will cancel the deal and keep your payment.
Foreclosure Relief
This is a scam where a “buyer” says that they will make a deal with the borrower’s lender when they are facing foreclosure. They claim they will pay for their mortgage and take “fees” from the borrower as a part of the deal. These people will disappear after collecting fees for a period of time.
How to Tell a Real Cash Buyer from a Scammer
When you are thinking about selling your home for cash, there are a number of things you’ll want to look out for. There definitely are people out there that will try and take advantage of others, so its important to understand which things are red flags.
For one, you’ll want to pay attention to the buyer’s interest in the home. Legitimate companies will make their business model and intentions quite clear. For example, it’s common for these companies to be looking for distressed properties that they can then invest in by fixing them up to then put them on the market and sell them.
These companies are clear about where they are coming from. On the other hand, opportunity investors might try to convince you that they are there just to help you in a pushy way. They might even pretend to be acting as foreclosure relief or some other government entity.
Also, it’s important to understand that there is never cash exchanged before the sale closes in traditional real estate transactions. You should never trust a buyer that asks for upfront fees. You also should be very wary if an independent buyer seems to eagerly share financial information or sends a check unprompted.
This financial information might be fake and trying to earn your trust through illegitimate documents. A check that someone sends you before the closing is likely bad, and they might say they accidentally paid too much and ask you to send them a “refund.” However, when you go to cash their check later on, it won’t clear.
You should also have one point of contact when selling your home to a cash buyer. They will provide you with one consistent person that you can contact through phone or email. You’ll also want to make sure that there is a reputable website with contact information for the company.
Also, buyers will usually want to physically visit a house in order to determine the final price. However, if a buyer wants to buy your home without ever physically seeing it, you’ll want to take a close look at your contract. It’s possible that the risk could fall back on you as the seller.
(If you’re selling your home, there are a number of real estate terms that you’re going to want to become familiar with. Check out our handy glossary here.)
We Buy Houses for Cash Reviews: What Home Sellers Say
It’s worth understanding that your particular situation will have a big impact on whether or not working with a we buy homes company is ideal for you. For this reason, you can often find that some of the biggest cash buying companies have mixed reviews online.
If you have more time than money and are interested in squeezing out every dime from your house in the form of profit, then selling on the open market might be right for you. However, for people who are looking to sell their house quickly and are willing to trade a bit of their potential profit for the speed of the transaction, it can be a great deal.
You can find people leaving both glowing, positive experiences of working with big we buy houses companies and some that are more negative. Oftentimes, the negative reviews are simply homeowners that complain about the amount they were offered for their home. When you decide to sell your house, it’s worth doing some research to determine how much you are willing to sell it for and look at a variety of options available to you.
We Buy Houses for Cash: Is It Time for You to Sell Your Home?
When you decide to sell your house for cash, you likely are hoping for a quick, clean, and professional transaction that leaves you with cash in your pocket. In order to ensure that you have a great experience selling your home rather than one that is ridden with stress, you will want to make sure you find a reputable company to work with.
At Smith Liquidations, we are not your typical “We Buy Houses for Cash” company. We are a family-owned and operated organization that is focused on providing real and tangible solutions to our clients.
Are you wondering how much we would pay for your house in cash? Get your free offer here today!