Should you sell your house for cash? Are you worried that it’s a trap you might regret for many years to come? It seems like there has been an explosion of “we buy houses” businesses, and with so many companies advertising fast solutions for selling your home for cash, it’s hard to tell fact from fiction, who’s legitimate, and who’s a fraudster. This article will teach you how to spot qualified, legitimate cash home buyers from the scammers as well as explain the pros and cons of selling your home for cash.
What’s in it for you
1. The 5 red flags of a cash home buying scammer
2. Pros and cons of selling your home for cash
3. Frequently asked questions and answers
Whether you’re thinking of selling your property for cash or listing it, keep an eye out for these red flags of cash home buying scams. Knowing how to spot these home buying fraudsters will keep you in a position of strength and ensure your time and money is not wasted.
1. The cash home buyer cannot provide proof of funds
If someone offers to pay you cash for your house, common sense dictates that they should have at least that amount of cash in their bank account. Before signing a contract to sell your home, always ask the buyer for proof of funds. Don’t worry about hurting their feelings. This is a major financial decision, and you need to protect your interests. A legitimate cash buyer won’t hesitate to prove they have the money to buy your house. A cash home buying scammer will express reluctance to show you their bank account, and they will find an excuse to not provide this information.
Pro Tip: Always ask for proof of funds, and do not accept a letter of credit from a lender. You need to see a recent bank statement with the buyer’s name on it.
2. Long option and contract periods
In general, option and contract periods with cash buyers should be significantly shorter than with conventional buyers. This begs the question “how long should the option and contract periods be for a cash home buyer?” Because no banks are involved, cash buyers can work fast. A typical option period should be no longer than 5 days, and the total contract period should be no longer than 21 days. Question and beware of an investor who requests periods lasting longer than these standards, because this is a red flag of a cash home buying scammer.
Pro Tip: Unless the buyer has a great reason for needing a longer option and/or contract period, counter it down to a shorter timeframe.
3. Property going unseen
A potential red flag for a cash home buying scammer is when a buyer doesn’t need to see the home before purchase. Because we live in a modern digital age, this doesn’t necessarily mean the buyer is a fraud, but it can be a good up-front indication for a cash home buying red flag.
Pro Tip: Call us old fashioned but we like to connect faces to business! Always do detailed research on the investor and find references for past customers to avoid potential red flags of a cash home buying scammer.
4. No proven history of buying houses
Any legitimate business who buys homes for cash will have an established history of buying houses, so what can you do to verify this? First, you can ask for a list of the 5 most recent houses that they have purchased. When you receive the list, check the deed history on your county’s central appraisal district website. Second, ask them which title company they typically use to close transactions. If the sell your home for cash buyer provides you this information, call up the title company and ask if they’ve heard of this company and individual. If the home buyer fails to provide this information, or if they do but you discover the information to be misleading, then that is a major red flag of a cash home buyer scam.
Pro Tip: If you have any suspicion, confirm if the company buying your home for cash has been active in your area or neighborhood and see if they have any listings on the MLS.
5. Poor Communication
It’s a fact in the real estate industry - some investors are good at communicating and some aren’t. If a cash home buyer doesn’t return your calls within 24-hours, their communication skills may cause problems throughout the transaction. Sometimes a seller accepts an offer, and the cash investor goes dark. This wastes your valuable time in the process.
Pro Tip: Before accepting an offer, confirm what forms of communication a cash home buyer has. A sketchy looking website, or no website at all, can be a giant red flag for a cash for homes scam.
When deciding if you should sell your home for cash, no one wants to be swindled, and it’s okay to take your time and shop around. There are plenty of we buy houses companies who buy homes for cash that will provide you with a great experience and legitimate offers.
We recommended that you do your due diligence on any cash buyer before signing a contract to sell your house for cash. Check their BBB (Better Business Bureau) and Google ratings for positive (and negative) reviews, ask for proof of funds, avoid long option periods, and trust your gut! After all, you’re deciding to sell your home, and, to protect yourself, you should be on high alert for any of the above 5 red flags of cash home buying scams.
1. What are pros of selling your home for cash?
There are very appealing advantages for selling to cash home buyers, for instance:
a. Fast home offer and quick home sale is the big promise made by sell your home for cash companies. If a reputable company has the funds for making a purchase, they’re able to close within a few days, provided the property’s title is clean.
b. No repairs or home staging which cost money and takes a lot of time when trying to sell your home. A cash offer on your home prevents homeowners from investing unnecessary time and money just for the sake of selling.
c. Selling in difficult circumstances like homes with foundation problems, tax delinquencies, or complications with the title. Selling a home for cash gives property owners a stress-free home selling solution.
2. What are cons of selling your home for cash?
Before saying ‘yes’, there are some potential cons to sell your home for cash:
a. Lower purchase offers, because cash buyers are willing to buy homes quickly, “as is” to make a profit, their offers will typically be below market unless you contact Good Vibes Homebuyers who provides options to sell your home for more than even market value.
b. You don’t get competing bidders unless you invest the time necessary to search and contact legitimate cash home buying investors.
3. Is selling a home for cash a good idea?
If speed, convenience, and certainty are top priorities, then a cash home sale might be the right move for you. Still on the fence? If you’re looking to test the waters, don’t be afraid to get in contact with a reputable cash buyer such as Good Vibes Homebuyers to start a conversation. You can count on us to put Good Vibes Only out into the world.
Cash options for selling your home are available to you from investors who show none of the cash home buyer red flags discussed herein. Good Vibes Homebuyers are a great resource not only to get started with selling your home, but to get a glimpse into how an ethical and professional home buyer company should be modeled. Contact us today to learn how we can help you achieve your home selling goals.
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