Signs Your Cash Buyer is a Scammer
Updated: May 18
Real estate is a lucrative industry that attracts not only legitimate cash house buyers, but also fraudsters looking to make a quick buck.
As a seller, it's important to be able to identify signs that your cash buyer is a scammer. In this blog post, we'll discuss some common signs of real estate scams and how to protect yourself as a seller.
Lack of Communication or Slow Response Time
One of the first red flags to watch out for is a cash buyer who doesn't communicate regularly or takes a long time to respond to your calls, texts, or emails.
This can indicate that the buyer is not serious about the transaction, or worse, is not a legitimate cash buyer at all.
Scammers often use communication delays as a tactic to create a sense of urgency and push the seller into making a quick decision without doing their due diligence.
Offers Too Good to Be True
Another warning sign of a scammer is an offer that seems too good to be true.
If the cash buyer offers a significantly higher amount than other offers on your property, it's likely that they're trying to lure you into a scam.
These buyers may also use one page contracts or contracts that are not on state promulgated forms which is a giant red flag.
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Inspection or Option Periods
Cash house buyers who request you give them an inspection or option period are usually scammers.
Legitimate cash house buyers don't need an option period to decide if they want to buy your house or not. They also don't need an inspection period. Read your contract carefully.
Both of these tactics are used to negotiate a lower price and scam you out of money.
Requests for Upfront Fees
A legitimate cash buyer will not ask for any upfront fees or payments.
If a buyer asks you to pay for any fees such as processing fees, application fees, or appraisal fees before closing the deal, it's a clear indication of a scam.
Scammers often use this tactic to take your money and disappear, leaving you with nothing in return.
Unwillingness to Provide Proof of Funds
A trusted cash house buyer will be more than happy to provide you with proof of funds to show that they have the financial capability to make the purchase.
If a buyer is unwilling to provide this information, it's a clear indication that they don't have the funds to purchase your property.
In some cases, scammers may even provide fake proof of funds, so it's important to verify the authenticity of any documents provided.
Inconsistent or Incomplete Information
If the cash buyer provides inconsistent or incomplete information, it's another sign of a potential scam.
Legitimate we buy houses companies will be transparent and provide you with all the necessary information you need to make an informed decision.
Scammers, on the other hand, may provide conflicting information or omit important details to avoid detection.
Refusal to Use a Title Company
A reputable cash buyer will always use a title company to ensure that the transaction is legally binding and all parties involved are protected.
If a buyer refuses to use a title company, it's a clear indication that they're not interested in a legitimate transaction.
Scammers often avoid title companies because they know that they'll be caught in the act.
Pushy or Aggressive Behavior
If a cash buyer is pushy or aggressive, it's a warning sign that they're trying to pressure you into making a quick decision.
Legitimate cash house buyers will respect your decision-making process and give you time to consider your options.
Scammers, on the other hand, will use aggressive tactics to push you into a scam.
Protecting Yourself as a Seller
Now that you know some common signs of real estate scams, it's important to take steps to protect yourself as a seller. Here are some tips to keep in mind:
Do Your Research
Before you enter into any agreement with a cash buyer, it's important to do your research.
Look up the buyer's name and company online to see if there are any red flags or negative reviews. Legitimate cash house buyers have excellent Google reviews.
You can also check with the Better Business Bureau to see if any complaints have been filed against them.
Cash buyer scammers like to use Gmail or other generic email addresses as they are easy to change. Legitimate cash house buyers use an email address that matches their website name.
Ask for References
Legitimate cash buyers will be happy to provide you with references from previous sellers they have worked with.
Don't hesitate to ask for references and reach out to those sellers to ask about their experience working with the cash buyer.
If the buyer refuses to provide references, it's a clear indication that they're not a legitimate buyer.
Get Everything in Writing
Make sure that all agreements are in writing, including the price, terms, and conditions of the sale.
This will protect you in case of any disputes or misunderstandings down the line.
Don't sign any contracts or agreements without thoroughly reviewing them and seeking legal advice if necessary.
Require a Large Earnest Money Deposit
Scammers do not like to put down large earnest money deposits with a title company because they have no intention of actually purchasing your house.
Make sure your contract requires the cash buyer to deposit a minimum of $5000 with the title company as a gesture of good faith that they intend to perform with their contractual obligations.
It is also a good idea to get the earnest money deposit receipt from the title company so you know the money has actually been put on deposit.
Use a Title Company
Always use a reputable title company to ensure that the transaction is legally binding and all parties involved are protected.
The title company will conduct a title search to ensure that there are no liens or other issues with the property, and will handle the transfer of funds and ownership. This can give you peace of mind and protect you from real estate scams.
Don't Rush the Sale
Scammers often use high-pressure tactics to push sellers into making quick decisions without doing their due diligence.
Don't let anyone pressure you into making a hasty decision. Take your time, do your research, and make sure that you're comfortable with the transaction before proceeding.
Real estate scams can be costly and devastating for sellers. By knowing the signs of real estate scams and taking steps to protect yourself, you can avoid falling victim to these scams. If you encounter a cash buyer who exhibits any of the warning signs we've discussed, don't hesitate to walk away from the deal. It's better to be safe than sorry, and there are plenty of legitimate cash buyers out there who will be happy to work with you.