5 Effective Ways To Spot ‘We Buy Houses’ Scams (And How To Avoid It)
Originally posted on https://www.sellmyhouseonoahu.com/blog/we-buy-houses-scams/
You will often see ‘We Buy Houses‘ signs on telephone poles and medians throughout Oahu (and all the islands of Hawaii). ‘We Buy Houses’ is a frequently used marketing term that investors and home buying companies use to get you to call them. If you need to sell your house fast and you see a ‘We Buy Houses’ sign, ask yourself is this ‘We Buy Houses’ concept a scam?
Whether you need to sell your Hawaii house for cash fast to avoid foreclosure, maybe you’ve inherited some property that you can’t enjoy/don’t want to pay to maintain, or if you just want to avoid the lengthy and often stressful process of putting your home on the market; you’ve decided that you want to work with a company that pays cash for houses. Selling your home for cash helps you to avoid a real estate agent’s commission, speeds up the sale, and gets money in your pocket when you may need it the most.
But not all “we buy houses for cash” businesses are created equal, and unfortunately, there are scammers out there who are looking to take advantage of people who may be in a desperate situation.
We want to make certain that you don’t fall victim to one of their unethical and cruel schemes.
However, the truth is that some of these untrustworthy “sell my house fast for cash” businesses are quite good at what they do, and it can be easy for even experienced home sellers to be taken for a ride.
So, how can you tell when you’re dealing with a cash for houses scam, and when you’re working with a legitimate company? The best way to avoid this is to know exactly what common “we buy homes” scams look like. This post will tell you the top red flags to look out for. We’ll also let you know where you can find a reputable cash buyer for your home, no matter the condition it’s currently in and regardless of your current financial situation.
How to Recognize “We Buy Houses” Scams
Here’s the unfortunate reality: “We Buy Houses” scams are fairly common in Hawaii and throughout the rest of the United States.
There are countless heartbreaking stories in the news about people who have been exploited and, in many cases, financially ruined, by these predatory scammers.
We don’t want you to be one of them, but sometimes, it can be difficult to tell when you’re being taken for a ride. Many of these scammers are experts at gaining your trust, making promises that will solve all of your problems, and appearing legitimate.
Let’s discuss common scam tactics below.
They Make You Pay for Advice
The golden rule when it comes to selling your Hawaii house for cash?
Any advice should be free.
Disreputable “we buy houses for cash” businesses will often contact you out of the blue, claiming that they are willing to negotiate with your lender for you or even that they have “connections” that will help to stop the foreclosure process on your home. They may even say that they know of specific government-sponsored loan modification plans that they can help you apply for — all for a hefty fee, of course.
How do these people find you in the first place?
When your home goes into foreclosure, it’s entered into the public record and published in the newspaper. While the goal is to attract legitimate and interested buyers, these announcements also let scammers know that you’re in trouble — and likely vulnerable to their schemes.
They call you up, promising to fix everything in no time, as long as you’re willing to pay what they ask.
In addition to charging you for this “exclusive” advice that you could quite easily find on your own, these scammers may also charge a fee for giving your home a cash value estimate or evaluation.
It is not normal for a cash buyer to charge any evaluation fees, nor is it standard industry practice to charge for advice.
Here’s the thing: speaking with your lender about a loan modification or even looking into foreclosure relief options from the US Department of Housing and Urban Development is completely free.
Don’t get conned into paying someone to handle something you could quite easily fo on your own.
Look into things like the Making Home Affordable, (MHA program) the Principal Reduction Alternative, (PRA) or the Home Affordable Refinance Program (HAMP) instead.
Also, remember that you should never pay to receive a cash offer on your home. If any company tries to charge you for an estimate, it’s time to walk away.
The best thing for you to do is contact your mortgage lender directly if you’re in foreclosure to go over your options, or, if you simply want to sell your house for cash, reach out to trusted cash buyers on your own.
They Have Confusing Contracts
Disreputable cash for houses scammers and fake “we buy houses companies” often come into the picture offering a magical solution to all of your problems.
They claim to be incredibly well-connected and say that they can stop foreclosure or get your house off your hands in no time by arranging a meeting with a qualified buyer who is already interested in buying your home.
This “qualified buyer” is actually in on the scheme. They may provide you with falsified financial records to build trust, and will them give you some sort of a flimsy contract.
The buyer claims the contract states that you’ll be allowed to buy back your home from the new buyer in a couple of years, or that you’ll be given an incredible offer on your home as-is.
This scamming duo may even visit your home to prove their interest so that you completely avoid listing your home. You may make a verbal agreement before signing a bogus contract, or the “buyer” may even bring the contract to your home when they come to view it.
They claim that the contract has everything you’ve agreed to verbally written on it — so you don’t take the time to read it carefully or all the way through. They may have even shown you another contract earlier that did list everything you agreed upon.
However, the contract you actually end up signing is quite different.
You sign it without reviewing it again or at all, and you’ve actually signed away the deed to your home to the scammer.
The lesson here?
Always review contracts thoroughly before signing them, even if you’ve read them before. Insist that either an attorney or a third-party title company be present at your signing, as well.
They Provide Extensive Financial Information — and Demand Yours
Another common “we pay cash for houses” scam?
Trying to trick you into thinking that they’re a legitimate buyer by providing you with all kinds of financial information right out of the gate before you’ve even asked for it.
These scammers claim to be “investors,” and they’re all too eager to share their bank statements, pre-approval letters, account numbers, and more. This is especially common if the cash buyer is from another state or even a foreigner, and if they do most of their communication via email.
All of these allegedly “credible” documents and statements they want to provide you with are fake.
Of course, the scammer will need all your bank information and financial records, too — and since they showed you theirs, you’ll be much more likely to do the same.
You should not hand over any financial records without a third-party title company or a lawyer. When you’re selling your house for cash, you should be receiving money, not giving it away.
Plus, you absolutely don’t want your financial information to fall into the hands of someone who could quite easily steal money from your accounts.
The Renter/Buyback Scam
Disreputable cash for houses companies will also try to pull off the more complicated buyback or leaseback scam.
Someone posing as a real estate investor makes an offer to buy your home — and will allow you to keep living in it while paying them rent. Many people are so desperate to be able to continue to live in the homes they love that they agree to this scam right away.
But this so-called investor isn’t actually interested in helping you. Instead, their goal is to buy your home right out from under you.
Usually, the lease you are given will be for about a year, and they’ll be sure to give you a great deal. In some cases, this “investor” will even offer to let you “buy back” your home from them after a few years of paying rent.
And because that rent is so cheap? The scammer can get away with paying you far less money for your home than it’s actually worth.
This is likely the most common “Sell My House Fast for Cash” scam because the homeowner never has to move out and because the deal seems so wonderful.
But it’s not. Here’s what happens after that one-year lease is up.
First of all, the new owner of your home while significantly raise the rent you have to pay, so that you have no choice but to walk away. Or, they could force you to buy back your own home at a much higher price than the current market value.
In many cases, this means that you’ll be forced to let this scammer keep the home you love because you can’t afford to buy it back from them.
The Short Sale Scam
One final tactic that’s popular among scammers is the short sale trick.
Essentially, this is a sale where the bank allows you to sell your home for less than the mortgage loan balance that you owe. Lenders are especially likely to approve a short sale if your home is at risk of foreclosure.
However, con artists will also push you to make a short sale so that you can keep your home. But what they actually try to do is make the short sale process last for as long as possible. This way, you won’t actually have time to sell your home before it goes into foreclosure — and they can buy it for much less than it’s worth.
These predatory buyers can even try to convince you to commit loan fraud by making an “off the settlement” payment to them to move the deal along.
You should always disclose any payments made to a buyer.
How to Avoid “We Buy Houses” Scams
There are several things that you can do to ensure that you’re working with a reputable cash buyer.
First of all, do your research. Ask to speak with past references over the phone, do a DCCA business search, read website testimonials, and even read reviews on third-party sites.
Remember that you should never sign away the deed of your home to another person without an attorney or a third-party title company present — and always speak with your mortgage lender before you sell your home to a cash buyer.
Make sure you understand how these cash buyers determine the value of your home and know that most reputable cash buyers will handle your closing costs. Stay away from companies that want to charge you a fee to work with them, as well.
It may sound a bit silly, but remember the old adage: “If something seems too good to be true, then it probably is.” When in doubt, we urge you to trust your gut.
What to Ask a Cash Buyer Company
We understand that learning about these horrific “We Buy Houses” scams has you nervous about working with a cash buyer company.
The good news is that there are reputable, trustworthy, and experienced cash buyers out there that want to help find a solution that everyone can benefit from.
You just need to know the right questions to ask.
Let’s go over those important questions now.
“How Do You Determine My Home’s Value?”
First, ask the company how they figure out how much your home is worth.
Reputable companies will use their own databases and public records to determine your home’s value based on current market conditions, the history or property values in your area, and more.
If the company tries to lowball the estimate at the last minute after you’ve been promised a higher price, walk away.
Also, make sure that the company is also willing to buy your home “as-is” — you don’t want to have to sink cash you really don’t have into paying for renovations on your home.
You should expect to receive an offer within 24 hours of your inquiry, and may even be able to close within 7 days.
“Do I Have to Pay Any Fees?”
Legitimate cash for houses companies won’t charge you any fees or commissions to work with them.
They’ll also handle your closing costs, and, in some cases, assist with any liens on your home. You should not have to pay them a commission or a fee to receive a no-obligation estimate.
“Can You Connect Me with References?”
You should always speak with past references and read online testimonials before you commit to working with a cash buyer company.
This is the best way to determine if what the company is advertising is what you’ll actually get when you do business with them.
Also, ask if the company is a member of any professional organizations like the Chamber of Commerce, the Better Business Bureau, and other real estate guilds or organizations.
These memberships let you know that they’re an experienced and legitimate business — and that they know what it takes to get you a fair offer.
Are You Ready to Work with a Reputable Cash Buyer?
Now that you know more about the most common “we buy houses for cash” scams, you feel much more prepared to find a reliable and experienced cash buyer for your Oahu, Hawaii home.
At Crowne Properties, we will buy your home in any condition, and we’ll give you a fair and honest cash offer for your home.
We can offer you a free, no-obligation offer in as little as 48 hours, will take care of your closing costs, and don’t charge you fees to work with us. We’re also members of the Hawaii Chamber of Commerce, have a five-star rating on Google, and are A-rated by the Better Business Bureau.
Best of all, we make the process of selling your home for cash as easy as possible.
We have your best interests at heart, so click here to start filling out our online form and begin the process of getting a fair cash offer on your home.