Most cash home buyers are legitimate businesses. But because sellers are often under pressure, this industry attracts some bad actors too. Whether you work with us or someone else, here’s how to protect yourself.
How a legitimate cash sale works
It’s easier to spot a bad deal when you know what a normal one looks like. A legitimate cash sale follows the same basic steps:
- The offer. The buyer looks at the house and gives you a written offer. They should be able to show you how they got to the number: what the house is worth once it’s fixed up, what the repairs will cost, and what’s left. Here’s how cash home buyers calculate offers.
- The contract. You sign a purchase agreement that states the price, who pays closing costs, the closing date and any conditions. Read it before you sign and ask about anything you don’t understand.
- The title company or attorney. The contract goes to a licensed title company or real estate attorney. They confirm the title is clear, get the payoff from your lender and handle the money.
- Earnest money. The buyer usually puts down an earnest money deposit with the title company or attorney. It shows the buyer is committed to closing. Money moves from the buyer, never from you.
- Closing. You sign the deed at closing, the title company pays off your mortgage and any liens, and you receive the rest. Ownership changes hands at that moment, not before.
Our page on how our process works walks through these steps the way we handle them.
10 red flags
- They ask you for money. A real buyer never charges you application, processing or “consulting” fees to buy your house. Money should come to you at closing, not leave your pocket up front.
- They pressure you to sign today. A good offer will still be there tomorrow. High-pressure tactics are a warning sign.
- They won’t explain their offer. You should be able to get a clear breakdown of how they arrived at the price.
- They won’t use a title company or attorney. A legitimate sale closes through a licensed title company or real estate attorney who handles the money and the deed. If the buyer wants to do the paperwork themselves, or names a closing company you can’t look up, walk away.
- They want you to sign over the deed before closing. Never transfer ownership outside of a proper closing with a title company or attorney.
- They promise to “save your house” for a fee. Foreclosure rescue scams often take upfront fees or the deed and leave the homeowner worse off. The Federal Trade Commission’s guide to mortgage relief scams lists the common versions.
- Their proof of funds is vague. Ask for proof of funds, like a recent bank statement or a letter from their lender. A buyer who changes the subject, sends something you can’t verify, or says the money will be “lined up later” may not have it.
- The contract can be assigned and nobody told you. Some buyers sign a contract with you, then sell that contract to another investor for a fee. If the contract says “and/or assigns” after the buyer’s name, ask whether they plan to close themselves or pass the deal on, and what that means for your price and closing date.
- The contract lets them walk away for any reason, for a long time. Long inspection periods with easy exits can tie up your house while they shop it to other buyers.
- They cut the price at the last minute. Some buyers offer high, then renegotiate after you’ve stopped talking to anyone else.
Questions to ask any cash buyer
- How long have you been buying houses, and how many have you bought?
- How did you arrive at your offer?
- Can you show me proof of funds?
- Which title company or attorney will handle the closing, and can I call them?
- How much earnest money will you deposit, and who holds it?
- Will you close the purchase yourselves, or might you assign the contract?
- Who pays closing costs, and will anything be taken out of my proceeds besides my mortgage and liens?
- What could change the price between now and closing?
A buyer with nothing to hide will answer every one of these. Our FAQ answers them for BAM.
How to check out a cash buyer
- Look up their BBB profile. Read the complaints and how the company responded, not just the letter rating.
- Read their Google reviews. Look for reviews spread out over time that mention real details, and see how the company replies to unhappy customers.
- Check state records. Search the company name on your secretary of state’s business lookup to confirm it’s registered and see how long it has existed.
- Ask for proof of funds and confirm it comes from a real bank or lender.
- Call the title company yourself. Get the name from the buyer, look up the phone number on your own, and confirm they know about the deal.
- Have your own attorney review the contract if anything is unclear.
It also helps to know what a sale should cost you. Our guide to the hidden costs of selling a house lists the fees that can come up when you sell.
If you’re behind on payments or facing foreclosure
Homeowners in financial trouble are the most common targets, because foreclosure filings are public and scammers use them to find people. Before you pay anyone or sign anything, talk to your lender, a HUD-approved housing counselor (their help is free) or a real estate attorney. If selling turns out to be the right move, see your options if you’re behind on mortgage payments or facing foreclosure.
Our commitments
We’ve been buying houses since 2006 and have purchased 500+ homes over more than 20 years. We buy as-is. We never charge fees or commissions, and we pay all closing costs. You get a written offer within 24 hours with the math shown, and we close through a licensed title company or attorney in as little as 2–3 weeks, or on the date you choose. You can read our reviews (120+ five-star ratings) and check us out with the BBB before you ever talk to us, or call us at (312) 818-3954 with any question.
Frequently asked questions
Are “we buy houses” companies legit?
Most are real businesses that buy houses for cash, usually for less than full market value in exchange for speed, certainty and buying as-is. The industry also attracts some bad actors, so check any buyer’s reviews, business records, proof of funds and title company before you sign anything.
Should I ever pay a cash home buyer up front?
No. A legitimate buyer doesn’t charge you application, processing or consulting fees. If anyone puts money down before closing, it’s the buyer, as an earnest money deposit held by the title company or attorney.
Is it a scam if the buyer assigns my contract to someone else?
Not by itself, but it should never be a surprise, and some states regulate it. Ask before you sign whether the buyer will close the purchase themselves, and make sure your price and closing date stay the same either way.
When do I sign over the deed?
Only at closing, through a licensed title company or real estate attorney, at the same time you’re paid. Never sign a deed, quitclaim or power of attorney for your house before closing.
Where do I report a real estate scam?
You can report it to the Federal Trade Commission at ReportFraud.ftc.gov and to your state attorney general’s office.
