Most types of cash buyers have the same goal: to buy your house for cash. Unfortunately, there are scammers out there who want to cheat homeowners out of their hard-earned money.
If you want to sell your house for cash because it’s in poor condition, you are going through the foreclosure process, or you simply want to sell the property as soon as possible, working with a cash buyer is the best way to get an offer fast. At the same time, it’s important to keep an eye out for common cash home buyer scams so you don’t fall victim to extortion or get swindled.
Some common home-buying scams tend to follow the same format. You can typically tell if the person you’re dealing with is not trustworthy by looking out for general warning signs.
- 12 Red Flags & Warning Signs Your Cash Buyer Is a Scammer
- How Do House Buying Scams Work?
- Are Cash Offers for Homes Legit or Scams?
- How Do You Know If a Buyer Is Scamming You?
- How to Avoid "We Buy Houses" Scams & Ripoffs
12 Red Flags & Warning Signs Your Cash Buyer Is a Scammer
It’s better to be safe than sorry, so if you see any of these warning signs or red flags throughout the cash home buying process—especially if you encounter more than one—consider walking away from the offer.
Red Flag #1: They Provide Inconsistent or Unreliable Information
When you reach out to the cash buyer and ask questions, you should get consistent answers each time. If you speak to different people and their answers don’t line up, it’s a warning sign that they might be a scam.
Legitimate cash buying companies are transparent about their process and in their communication.
Red Flag #2: You Receive Unsolicited Offers
When someone offers to buy your home out of the blue, it’s not unreasonable to question their motives. You don’t have a “For Sale” sign in the yard. The house is not listed on the market. You weren’t even considering moving. So why is this person interested in your home?
Not all so-called "home buyers" are legitimate, so it’s understandable if you’re a bit taken aback by such a proposal.
If you receive unsolicited offers over the phone, in the mail, or via email to buy your house for cash before you’ve even started looking into local cash buyers, do some research. If a cash home-buying company is legit, then they will have a way for the seller to reach out to them as well—typically through their website or a phone number.
Red Flag #3: They Exhibit Unprofessional Behavior
Selling your home is a high-level real estate transaction, and everyone should exhibit professional behavior through the process. They should know state and federal laws, as well as use proper forms and state-regulated documentation. If they are screaming at you, use unprofessional language in emails, communicate poorly, or are non-responsive, it could be a sign that they are trying to scam you.
Reputable cash buyers are professional at all times and will promptly respond to your questions.
Red Flag #4: They Ask for Fees Upfront
One of the most common types of home-buying scams involves the alleged buyer asking for an administrative or processing fee upfront. You agree to pay the charge and send the money. Then, you wait for the next step in the sale. However, the next step never comes because the so-called buyer has made off with your money.
Red Flag #5: You Can’t Verify Proof of Funds
Cash buyers should be able to provide proof of funds before you sign on the dotted line. If you can’t verify their proof of funds, especially if they are unable to provide you with verification, be careful. It may be a scam.
Experienced cash buyers will provide proof of funds so you can ensure there’s no risk of the deal falling through.
Red Flag #6: They Use High-Pressure Sales Tactics
High-pressure sales tactics are a classic red flag for scams. If the buyer is constantly calling, texting, or emailing you, or if they are putting pressure on you to accept a deal immediately, it’s a bad sign. Reputable cash buyers will give you the time you need to consider their offer.
Red Flag #7: The Offer Is Too Good to Be True
If it sounds too good to be true, it’s probably too good to be true.
Be wary of offers that are significantly above your asking price. If you’re experiencing a seller’s market, you may be able to expect a higher offer, but if that high offer comes hand-in-hand with another one of the red flags on this list, take a step back and consider if it’s too good to be true.
Trustworthy cash buyers will make a fair offer—one that benefits both sides of the equation.
Red Flag #8: They Aren’t Transparent About the Cash Buying Process
Is the cash buyer upfront about the process? Are they trying to tack hidden fees onto the final contract? A lack of transparency about the selling process, fees, and offer is a major red flag.
Legitimate cash buyers will be transparent and upfront throughout the entire selling process.
Red Flag #9: They Don’t Have a Digital Footprint
Everyone has a digital footprint of some kind. Cash buying companies will likely have a website, and even individual cash buyers should have a social media profile or some kind of online presence. If you try to research the cash buyer and can’t find any information about them on the internet, it’s a warning sign that they could be a scammer.
Red Flag #10: They Ask for an Overpayment Refund
Later in the selling process, a huge red flag is if the buyer sends you money by check but asks for a refund, either in part or in whole, because they claim they accidentally overpaid you. This tactic is common in many different kinds of scams, including in real estate transactions.
Let’s say you agreed to sell your home for $70,000, but when you receive the check, it says $75,000 instead. The so-called buyer apologizes for the mistake and asks you to wire the difference back to them. When you do, you’ve just lost $5,000, and the house remains in your possession.
If you get a request for a refund, be cautious. Wait until you can confirm with your bank that the original check didn’t bounce—which may take a couple of weeks to verify.
Red Flag #11: They Won’t (or Can’t) Provide References
References are an important way to verify the trustworthiness of a cash buyer. If the cash buyer refuses to provide references or claims they can’t share any with you, it’s a red flag. If their references are sketchy and can’t be verified, you need to rethink doing business with this person. They could be trying to sell your contact at a mark-up instead of trying to make a legitimate offer.
If someone is legitimately interested in buying your home, you should be able to retrieve information about them. Reputable cash buyers will not only provide you with resources but will also often offer them before you can even ask.
Red Flag #12: They Want You to Wire Them Money (for Any Reason)
Some home buying scams involve tricking homeowners into wiring the buyer funds for a variety of reasons. If they want you to wire them money, it’s a sign that you might be interacting with a scammer.
Legitimate cash buyers will not ask you to wire them funds for any reason.
How Do House Buying Scams Work?
House buying scams typically operate by exploiting homeowners looking to sell quickly. Scammers may use various tactics such as offering above-market prices, insisting on fast transactions without proper documentation or inspections, or pressuring sellers to sign over their property rights. These scams often involve hidden fees, forged documents, or fake cash offers, leaving sellers at risk of losing their property or facing financial losses. Additionally, scammers may impersonate legitimate companies or individuals, making it challenging for sellers to discern the fraud until it's too late.
Are Cash Offers for Homes Legit or Scams?
Not all cash home buyers are scammers. There are many legitimate companies that will purchase homes from cash and provide you with a great experience.
Take a look at the graphic below for help determining if a cash offer for your home is legitimate.
How Do You Know If a Buyer Is Scamming You?
Is the Cash Home Buyer Making the Offer Local?
There are a few ways to tell if a home buyer is local to the area or if they are an out-of-town investor looking to flip a contract.
Check their phone number. Is the area code local to your region? If not, it's probably a good idea to move on.
Do they have a Google Business Profile? When you search for them, do they have a business? What about a Facebook page? Do they have any reviews? If they do not have any reviews, they may not be local.
* Beware of profiles with reviews that do not include names. These can also be a sign of someone who is not legitimate. *
Has the Cash Home Buyer Done Any Past Projects?
This is often the biggest characteristic that sets legitimate cash home buyers apart from wholesalers or scammers. Even a small mom and pop investor will have some past projects they have worked on. Wholesalers will not have any past projects because they are only selling your contract.
At New Again Houses®, for example, we buy houses for cash and work hard to fully remodel as many of them as we can. We never sell your contract, even if we are unable to remodel your home. It is our goal to improve neighborhoods and communities by making each house we purchase even better than it was before, and we have a full portfolio of past projects to prove it!
How to Avoid “We Buy Houses” Scams & Ripoffs
The best way to avoid home buying scams while still selling your house fast for cash is to work with a reputable, local cash buyer. There are many established, trusted companies like ours that have a history of making legitimate cash offers on homes, and working with one of these reliable and experienced cash buyers will ensure you avoid common home buying scams.
Using a trustworthy cash buying company like New Again Houses comes with a lot of benefits:
- Fast and easy closing process
- Guaranteed timing
- No appraisals
- Sell your house in any condition
- No cleaning, staging, repairing, or upgrading required
- Fewer contingencies
- Less stress
- Save money on repairs
Find a cash buyer in your area to get an offer on your house.
Avoid Cash for Houses Scams & Sell Your Home to the Trustworthy Cash Buyers at New Again Houses
At New Again Houses, we buy, fully remodel, and sell homes to new families to enjoy for years to come. Unlike other cash buyers, we will never sell your contract or your information—so you can trust us to restore your old home and give it the love it needs.
We’ve been in the business of helping local homeowners sell their homes since 2008. Based in Bristol, TN, and serving homeowners nationwide, the New Again Houses team would love the opportunity to invest in the community by making your older home new again.
Together, we transform not only houses but also the lives of our clients.
Are you ready to sell your house, get a cash offer, and close in a matter of days? Contact us today to get started.
