Drive around for a few minutes in any city and you’ll probably see a sign posted to a utility pole that says something like “We buy ugly houses!” with no information other than a telephone number. For those who are selling their house and weighing options, it can be difficult to put your trust in these companies that you know nothing about. While there are definitely legitimate, reputable direct buyers out there, there’s also a chance that you will come across phony real estate investors that are on the prowl looking for their next victim to scam.
How to Spot a Scam
Luckily, there are often telltale signs that can help you distinguish fraudulent investors from the real deal. Here are several ways to spot a “we buy ugly houses” scam when selling your home directly.
- The buyer asks for money upfront, disguised as something like “processing fees”.
When you sell your house, you should be the one receiving money, not forking over cash yourself. If a buyer asks you for any money upfront for “administrative” or “processing fees”, chances are you are entering into a scam. The scammer will take the money you give up front and will likely never be heard from again. A legitimate company will not ask for anything; the only money exchanged will be the check in your hand after closing.
- They are eager to share financial details.
A scammer will be eager to win your trust by providing financial information that seems to prove that they have money in the bank. With technology like Photoshop, it’s easy to fake official-looking documents. A reputable buyer will not offer up these kinds of financial details, especially when they haven’t even met with the seller.
You may also find that a fraud will be ready to send money before necessary. This may seem like a good thing, but it is a major red flag. It’s an indicator of a popular scam tactic in which the funds don’t exist and the “buyer” will claim that they overpaid and request reimbursement. Fraud victims pay this reimbursement, only to discover that the original check that they received bounced.
- The buyer pressures you to close quickly.
Another sign to be on the lookout for is if the buyer is pushing you to make up your mind and close as quickly as possible. You should never feel pressured to enter into a deal that you aren’t 100% sure about. A reputable business will present you with a no-obligation offer that you are free to walk away from if you aren’t fully satisfied.
Keep in mind that there will be deadlines when you are dealing with a legitimate cash buyer. This is because when a buyer makes an offer, they set aside that amount of money for your property; because the market is constantly presenting new investment opportunities, they cannot put all of that money on hold indefinitely. However, the legitimate buyer will never be pushy or aggressive.
- They have a cookie-cutter story and a lot of excuses.
If you find that something about the communication between you and the buyer seems off, the person on the other end of the line may be a scammer. This is especially prevalent when working with people via email, where you can never be sure who exactly you’re dealing with. The correspondence might feel canned or impersonal, and the stories they tell you will seem unlikely and filled with ridiculous excuses as to why they can’t meet in person.
- The buyer is willing to purchase the house blindly.
Cash buyers purchase houses as-is, but that doesn’t mean that they don’t go into the deal without knowing what they are getting. It’s not a good sign if a buyer offers to buy a property sight unseen. In order to give you a fair and honest price, real estate investors need to know a little information about the property they are buying.
- The closing takes place at a seedy location.
If you discover that the closing is going to take place over a kitchen table, you might be dealing with a scammer. Most legitimate buyers will have you sign the deed over at a neutral third party location, such as a title company.
- You have a bad feeling.
Most of the time, your gut doesn’t lie. If a deal seems too good to be true or you just have a bad feeling about an investor, trust your instinct. If you sense something fishy or feel as though the buyer is unprofessional, don’t move forward with a deal. Scammers develop new ways to defraud people all the time, and the best way to guard yourself against these shady individuals is to use your common sense.
What to Look for in a Real Cash Buyer
So now that you know how to spot a phony direct buyer, you may be wondering what you should be looking for in a good, honest cash buyer. Selling your house is a big deal, so you want to be sure to do your research.
Don’t be afraid to dig deep and ask questions– this will help you weed out those hoping to make a quick buck. Honest and ethical professionals are committed to helping individuals, building business relationships, and improving the community as a whole. Ask open-ended questions about their business philosophies, how they help their clients, and the services they offer. Make calls and draw comparisons; search around for someone you can really trust.
Why Houndstooth Cash Buyers?
At Houndstooth Cash Buyers, you don’t have to worry about being scammed. You won’t be dealing with sketchy people from undisclosed locations– we are your local Austin home buyers committed to helping out members of our own community. You’ll find a team of dedicated professionals who will be understanding of your individual situation and will want to work to find solutions to your problems.
If you are looking to sell a house for cash in Austin, don’t hesitate to reach out to Houndstooth for more information today! We will be happy to answer any questions you may have about the home buying process and how we run our business.