When you’re selling your home fast, you don’t have time to mess around with scammers. Here’s how to know if you’re selling your house to a legitimate buyer.
Keyword(s): legitimate buyer
If you’re thinking about selling your home, you’ve probably heard horror stories about people losing their biggest investment and being scammed. Unfortunately, scam artists have become even smarter and have no hesitation in defrauding honest real estate professionals and sellers. In the search for a legitimate buyer, many people end up scammed by crooks.
Some of their strategies are obvious such as:
- Buyers asking for upfront payments like application fees. (Legal businesses in the real estate industry will take their payments at the end.)
- The company stalling you if you’re near foreclosure. (This is so you’re so desperate to sell that you’ll take even less.)
- A low Better Business Bureau rating
- Lots of bad reviews online
Some of these strategies are more subtle and can be difficult to spot. Most of these buyers will do their scamming from a distance so they’re not implicated in the fallout.
Searching for a Legitimate Buyer
Selling your home can be one of the most stressful experiences of your life. This is particularly true if you need to sell it quickly to free up cash or relocate. But when you’re desperate to sell is also when you’re most likely to be targeted. According to the IRS, 190 people were arrested for real estate scams in 2015. Here are some things to watch out for:
Check Scams
This is a particularly common scam to be aware of. The buyer will pay with a check, which the real estate agent or seller will accept and deposit. Then the buyer will change their mind and ask for a refund. The seller will then refund the full amount of the check. Later, the seller finds that the buyer’s check never cleared, and they’re out the entire amount. You should never refund cash for any check until it has cleared the bank.
No Property Views
This is a red flag. Most legitimate buyers are interested in seeing their future property at least once. Even when it’s an investment property that they have no intention of living in. If the buyer is happy to purchase it sight unseen, proceed cautiously and look for any other signs that they may be scamming you.
Online Communication
Sure, most people communicate via email, What’sApp and Facebook these days. But a legitimate buyer will also want to speak to the seller or real estate professional in person. Scammers will email real estate professionals, telling them that they want to buy a property. Often these emails will be poorly written and obviously fraudulent, but these fraudsters are working hard to seem legitimate. Sometimes they may look credible, presenting documents like proof of funds statements and passports. While they could very well be a legitimate buyer, be careful to wait until you have the money in your account before you provide any refunds.
International Buyers
This scam can go hand-in-hand with the online communication red flag above. Basically, a person from outside of the United States will contact you after seeing your house for sale online. They’ll tell you that they’re planning to move to the United States and are willing to pay you cash for your house. This all sounds a bit ridiculous (why would anyone fall for this?) but these people are professionals. The story is often so compelling that you’ll feel great about the fact that you’re helping someone with their move to the US while you’re selling your home. What they’re really looking for is for you to transfer them money. They’d also like for you to inadvertently provide them with access to your bank account so they can transfer it themselves before you notice what’s happening. Since they’re located outside of the United States, it can be almost impossible to get your money back.
Weird Payments
Businesses legally have to report any cash payments over $10,000 to the authorities. This is to crack down on illegal activities like money laundering and the sale of drugs. Any payments that are above this limit (or just seem suspicious) should immediately be reported as they could be fraudulent. If the money is from an illegal source, you could end up losing both your home and the payment.
No Negotiation
It’s very rare for a buyer to purchase a property without negotiating. Investors don’t often pay full price for their properties, and shrewd buyers will also negotiate on a number of different points, including move-in dates, price, and inclusions. If a buyer isn’t negotiating the purchase at all, this should be treated as suspicious behavior and you should be cautious.
Protecting Yourself from Scammers
If you need to sell your home fast, there are a few things you can do to protect yourself from scammers and make sure you’re selling to a legitimate buyer:
Deal with Professionals
These days, anyone can buy a domain and call themselves a “professional home buyer” but you should only deal with real professionals. That means only working with people who have been in the business for years, closing millions in real estate transactions. Since they’re concerned with the reputation of their business, they won’t risk cheating or scamming you.
Do your Homework
If you’ve noticed any of the red flags we discussed earlier, spend some time checking them out to see if they’re an actual legitimate buyer. Here are some ways you can do this:
- Check the Better Business Bureau
- Contact your District Attorney’s Consumer Fraud Unit
- Get in touch with the Real Estate Commission in your state
- Call or email your state Attorney General’s office
Know Before you Sign
Not asking questions because you’re worried that you may look stupid in front of a legitimate buyer is a mistake. And this kind of mistake could end up costing you thousands. If you don’t understand all the legalese in a contract you’re signing, get a third party’s opinion first. Your mortgage company or lawyer can help you if you need professional advice.
Get it in Writing
If you have a disagreement with the buyer about a verbal agreement, it will be a matter of “he said, she said”, and will often have to go to court. Only agree to terms that are in writing.
Be Ready to Walk
If it seems too good to be true, it probably is. There can be a lot of emotions wrapped up in the sale of your house, so you may want to ask for advice from someone who isn’t emotionally invested. If something seems weird, or you have a gut feeling that something about the contract or the buyer isn’t right, walk away. While this can be frustrating (particularly when you need to sell quickly) it’s often the best option. It’s not worth months or years of headaches or thousands of dollars just to sell sooner.
Signs a Cash Home Buyer is Legitimate
While you need to be careful and make sure you’re not scammed when you’re selling your house, you also don’t want to turn away a legitimate buyer. You’ve probably seen advertisements for cash home buyers and may be wondering if some of them are legitimate. These companies’ ads often declare that they’ll buy your house in any condition, and they’ll do it fast. If this seems like a red flag, keep in mind that while there are definitely some scammy cash home buyers out there, many are legitimate buyers. Many people need to sell their houses quickly for a variety of reasons, and these companies have found a gap in the market. This is a good option if you don’t have time to get your house ready for an open home or do the necessary repairs to sell it on a traditional listing. When you sell your house through one of these companies, you’ll receive much less money than you would if you were to fix your house up and list it the traditional way. Since the cash home buyers have to do the renovations themselves, you’ll be looking at less cash in your pocket in return for a super-quick sale. This is another way to spot whether the buyer is legitimate or not. A cash home buyer promising you 90-100% of the fair market value is unlikely to be legitimate, and this should be a red flag. Typically, you’ll be offered around 65% of the current market value, minus any repair costs. This means that a house that could be listed and sell for $200,000 would be bought by a cash home buyer for $100,000-$120,000. Be very wary of an investor who offers you a lease-option. This is when you give the deed to your home to the investor, and they agree to make your mortgage payments. While this is sometimes a legitimate practice, it’s also a common scam. The buyer will use the equity in your house to secure other lines of finance, and can also just resell the house without needing to pay the remaining mortgage. As you can see, there are a number of scams to look out for. However, there are also plenty of legitimate buyers that can help you sell your home quickly.
Get in touch today to learn more.