How to Spot “We Buy Houses” Scams

Protect Yourself From We Buy Houses Unethical Practices

Be cautious of companies or individuals that claim to buy houses for cash. The popularity of selling a home for cash is rising and more people are selling their house to companies buying homes fast for cash. However, unethical practices are also on the rise. They look credible. They are convincing. They disguise themselves representing a company name, but they are not real; anyone can be their victim.

Protect Yourself from We Buy Houses Scams

The best thing that you can do to protect yourself from these We Buy Houses scams is to do research. The internet provides 24 hour a day information, so browse and research when you have the chance. Here are the things that you can do to protect yourself from these scams:

1. Check the Reputation of the Company – Better Business Bureau (BBB) and Secretary of State

Check the reputation and credibility of the companies that purchase houses for cash. Are they registered with the Better Business Bureau? Do these companies have past issues and complaints? How are their customer reviews? Are they in good standing with the Minnesota Secretary of State?  You can look them up at MN Secretary of State website here: https://mblsportal.sos.state.mn.us/Business/Searchand you can search them at Better Business Bureau here: https://www.bbb.org/en/usAlso you can check their Google Business reviews by searching them on Google Maps.

2. Look at Their Website

Does their website promote their company name? Does the website show who the people are behind the business?  If the website doesn’t show who the owners are, ask yourself why that would be?  Most local small businesses want to promote their brand and relationships in the community.  Businesses should promote their brand or company name as much as they can, and whenever they get the chance to. If they don’t promote their company name or their own identity on their own website, you might want to think twice about working with them.

3. Research the Owners

If you can find the name of the owners, search for them in Google and check what and who they are affiliated with, or if there are some issues or complaints that are associated with their name. This is one way to ensure that you don’t sell your house to scammers.

4. Ask about the Terms

A true cash purchase, should NOT have any contingencies in the contract and should be an “as-is” sale.  It should not be contingent on inspection, appraisal, financing, approval by investors, etc.5. Get Earnest Money/Down Payment:  You should get a down payment or earnest money to secure any agreement.  In Minnesota, a purchase agreement is not valid unless earnest money has been exchanged.  This is usually held at a title company in escrow and will be released to the seller if the buyer backs out of the contract. If the contract is contingent on inspection, financing, investor approval, etc, then the earnest money can be released back to the buyer, this is why it’s important that the contract does not have contingencies in it.6. NOT ASSIGNABLE: Make sure the contract states that it is “NOT ASSIGNABLE”.  Contracts in Minnesota can be sold and assigned to another buyer unless you write this on the contract.  Your terms and agreements must be clear to both parties. If there are ideas that seem to be vague for you, ask the buyer or the agent to clarify everything. Don’t assume. Ask a question and be aware of what you have learned.

5. Read the Contract

There are some investors that will pressure you to sign the contract on the spot.  Do not fall for this.  Selling real estate is a big decision and you should always take your time to consider the decision before signing an agreement.The contract should be easy to understand and straightforward.  Ethical companies tend to use short, 1-3 page contracts that are easily understood.  Before selling your property fast to a company or individual that purchases houses for cash, read the contract so that you won’t miss any agreements that you have made with the buyer.

Sell to Reputable Companies that Buy Houses for Cash

By thorough research, you will see who the companies are that conduct ethical buying practices. Look for them, ask for the right pricing, and sell your house quickly and for cash.

Jaden