How to Identify a We Buy Houses Scam
We’ve all been there:
You’re late for your kid’s event and you’re stuck behind what must be the longest red light in the entire Seattle area. Frustrated, you look around for a sign, any sign, that you’ll make it. Then, you see it. It’s not a sign of your fate, but rather, a large red piece of paper with “We buy houses in any condition!” written in puffy paint.
For many, these signs seem too good to be true. After all, who wants a boarded-up house that deserves be scorched (or perhaps already has been)? You may write it off as a scam right then and there and continue on your way – and you could be right about that. However, while puffy paint signs might not scream professionalism, not everyone who advertises “we buy houses” is a scam.
Whether you’re thinking about selling and considering your options or just curious about the legitimacy of these companies, here are a few ways you can identify a “we buy houses” scam and avoid being ripped off.
1. You don’t get an estimated offer forthright
At the beginning of the process, a legitimate real estate investor will do some preliminary research on your home to come up with an estimated offer up front. This way, you can decide whether you’d like to move forward with the process or find a new solution.
If you don’t get the estimated offer first, then it’s possible that your contact isn’t serious about purchasing your home, and you may end up in a scam. The investor will just need your address to start the process – from there, the in-person evaluation will solidify the estimate and an official all-cash offer will be written up.
2. There’s no in-person evaluation of your home
Once the initial offer has been made on your home, the next step is the evaluation. The evaluation will allow you to meet your contact face-to-face and have a conversation about your options. Additionally, the investment professional will use this opportunity to make any adjustments to the original offer based on the state of the home.
A scammer may or may not go through the trouble of an in-person meeting. Instead, they may ask you to sign a contract based on a phone conversation. If this happens, stop the process and do more research on the company before signing anything. To be sure you’re talking to the right people, ask them if you can call them back, and call the publicly available number on their website or business card. If you’re convinced it’s a “we buy houses” scam, keep reading.
3. They ask for fees up front
When a legitimate investor buys your home, you’re the one who gets money – not the other way around. To review the process, once you show interest in receiving an offer on your home, the professional will send you a preliminary offer on your home based on the information they have available. From there, they will perform an evaluation and make any necessary changes to the original offer. Once it’s been accepted on both ends, you will receive your check, close, and move on.
If you’re asked to pay application or credit processing fees, especially at the beginning of the process, then the likelihood is the recipient is going to take off with your money. In fact, if you’re signing anywhere on the front of a check, you may be getting scammed. Before sending off that check, keep reading to understand what to do when you encounter a scammer.
What To Do If You Encounter a We Buy Houses Scam
Before you give any personal information or money to anyone, ask yourself: is this likely to be a scam? These signs are one way to tell whether you’re about to be scammed, but the game is always changing and some scammers are getting good at hiding their techniques.
If you think someone is trying to take advantage of you, the best thing to do is hang up (if they’re on the phone) and report them immediately. You can report scammers to places like the Better Business Bureau (BBB) and the Federal Trade Commission (FTC).
How to Avoid Being Scammed
The first step is to make sure you do plenty of research on any future companies you decide to work with, should you decide to continue selling through an investor. There are many reputable investment companies who can help you out and truly will buy your home with all-cash and a flexible close.
Another thing to keep in mind is to always understand what you’re signing. Some scams may seem legitimate until after closing when you realize they’ve performed a contract “bait and switch”, or added changes to your contract in their favor, expecting you to skim and sign.
You’ll also want to make sure that you get all agreements in writing. These are much more viable in court than verbal agreements, where it’ll all come down to he-said-she-said.
Finally, if something just doesn’t feel right, just walk away. If a deal sounds too good to be true – say, for example, an offer that’s a hundred-thousand dollars than any other and more flexibility – then it very well may be.
When looking at more reputable companies, keep in mind the kind of people you’d like to work with. Although large companies have a strong brand presence, the smaller reputable local companies can be a better bet for both your money and your local community. Local real estate investment firms, such as Beachworks LLC, are much more likely to understand your neighborhood and the true value of your home based on its location, as well as the physical state of your home.
Get started with a local, family-owned company based right here in the greater Seattle area. Request an all-cash offer on your home today and skip the possibility of a “we buy houses” scam altogether.