Your gut tells you something isn’t right when you get a random call from a company claiming to be a real cash buyer, or maybe you see signs plastered along the road that say “we buy houses fast.” They make it seem too easy and feel more like scams than legitimate offers.
When it’s time to sell your home, there are many reasons to be cautious about accepting an offer for your largest investment. Unfortunately last year, there were more than 11,000 victims of real estate or rental fraud, which caused $149 million in losses, according to the FBI’s Internet Crime Report.
However, credible cash buyers do exist. They provide a convenient way to sell a home fast, as they prevent variables from lenders that can slow or even cancel the sale from the buyer’s end.
First, it helps to know the types of real cash buyers that can offer a fair price. Whether selling to an independent buyer or an instant offer company, we’ll explore 5 ways to make sure the offer is from a real buyer and not a scammer.
Types of Real Cash Buyers
Instant Offer Companies
Known as iBuyers, instant offer companies are tech-based home investors that buy and sell houses online, primarily to streamline the process, both for themselves and their customers.
As a fairly new entrant into the market, real estate investors have grown quickly in specific markets across the country within the past five years. Instant offer companies use data to buy and sell houses, often charging slightly higher fees than realtors, but offering fair market value to buy homes as-is. They then do minor updates to make houses move-in ready to resell.
House Flippers
House flippers buy houses as-is for a cheaper price with the goal to renovate and resell them for profit. They offer a fair but lower price for the seller, as they take on the risks involved with a home that needs major repairs before being resold. Flippers can be viable buyers in specific situations but might not be as common for a seller to work with.
Independent Buyer
An independent buyer can purchase a house with cash for a large variety of reasons. They could have saved or inherited cash to pay for their next home with the goal of staying out of debt or could be an investor who buys houses to turn them into rental properties they’ll manage. The increased unknowns involved with selling to an independent cash buyer can be a risk. With the tips below, a seller can determine if the buyer provides a legitimate offer for their situation.
5 Ways to Tell a Real Cash Buyer from a Scammer
1. The Buyer’s Interest in the Home
Knowing a cash buyer’s purpose for wanting to purchase a home can determine whether they’ll make a legitimate offer.
A company such as an iBuyer provides clear information about their business model and how an offer on a home fits into their plan to update and resell the house through their online platform.
Opportunity investors, however, are scammers that focus messaging on saving a seller from hardship, but they don’t make it clear how the buyer benefits from the purchase. This could even involve a scammer claiming to be a government entity, offering foreclosure relief.
2. Timing for Cash Transactions
In traditional real estate transactions, no cash is exchanged before the sale closes. This is true for legitimate cash buyers as well. A buyer asking the seller to pay fees upfront should not be trusted.
If an independent buyer provides financial information unprompted, this documentation could be fake and could be part of their efforts to earn trust and push a contract along. A scammer might pay a seller with a check unprompted, but they’ll say they paid too much and ask for a refund, however, their check never clears.
3. One Point of Contact
A reputable cash buyer provides reliable ways to communicate with them directly, often a phone number and email address for one consistent person. A company offering cash for houses should also have a reputable website, which lists the information that can lead a seller to their primary contact.
If there is any doubt about communication that has come through, such as a suspicious email, a seller should speak with their contact through a phone number they’ve used before to make sure the email is legitimate. The contact should never pressure the seller or have a problem providing an explanation for any changes or requests made of the seller.
4. Clear Terms for Fees
Fees from a buyer’s end should always be made clear from the beginning, when an offer is made on the house. These fees are paid by the seller once the offer is fully agreed upon by both sides at closing. A buyer asking for fees to be paid sooner is not participating in a legitimate agreement with the seller.
5. See the House Before Finalizing Offer
In most cases, a buyer will need to physically visit a house to assess its value and adjust their initial offer. This is necessary to determine the final price. Real cash buyers build this into their process for buying real estate and make this clear to the seller from the beginning.
If a buyer takes a risk by not seeing a home before purchasing it, a seller should carefully read the contract to make sure the risk does not fall back on the seller.
Sellers Can Find Real Cash Buyers for Their Homes
Knowing real cash buyers exist and the 5 ways they do legitimate business, a seller can assess if a potential buyer is right for their specific situation. This helps sellers confidently accept cash offers for their houses with all the benefits of a faster home sale and none of the fears.
Recommended Reading
https://www.forbes.com/sites/alyyale/2019/05/07/buying-or-selling-a-house-heres-how-to-avoid-fraud-scams/#5a98e6dd10a7
https://www.inman.com/2015/07/09/5-ways-to-tell-your-cash-buyer-might-be-a-phony/