How To Avoid Getting Scammed When Selling Your House

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Previous Scams

We’ve all read the news articles.  

The retired Houston Texas teacher who lived in her house since 1977 until she was scammed out of it by a contractor she met at her church.

The 75 year old who thought she was signing paperwork for a foreclosure rescue program for Seniors when instead she was signing over her home.

Or the 68 year old Chesapeake Grandmother who was scammed out of her home of 30 years after making payments to who she thought was her lender. Instead she was making them to a group of scammers who have since been sentenced to prison. Still she lost her home and is now renting a room from a relative.

These are just a few of the thousands of horror stories that unfortunately take place every year. Some victims lose their life savings, some their homes and some lose both. 

Scammers vs. Newcomers

Then there are the many instances where a homeowner is selling to a buyer who’s not necessarily trying to run a scam, but he or she is new to the business and are therefore inexperienced and unknowledgeable.

While we support newcomers to the business and often take them under our wing, we do not think that new and inexperienced house buyers who know little about real estate and who lack the financial resources to buy a house, should work with sellers without being totally upfront about their shortcomings. In our view, a new and inexperienced house buyer might as well be a scam artist if he’s not honest about not possessing the resources needed to buy someone’s most prized possession, their home.

This certainly rings true in situations where the seller is in foreclosure. We have come across several cases where new house buyers have caused sellers to lose their homes and equity when there were plenty of other options available to avoid such a catastrophe. Options the new house buyer was totally unaware of.

Warning Signs of a Scammer

So what red flags can watch out for to ensure that you’re not victimized by a scammer or by a new and inexperienced house buyer when selling your home? 

We’ve taken our collective 60 years of experience to put together a list of red flags you should look for when determining whether or not to sell your house to someone:

  1. They try to discourage you from using an attorney.  We strongly encourage every layperson who is presented with a contract for any reason to have that contract reviewed by an attorney. Especially when it involves such a big ticket item like your home.  If a buyer tries to dissuade you from going to an attorney with the contract they presented to you, they likely have something to hide. Run far and fast from these scammers.

  2. They can’t show you ‘Proof of funds’: your first question for any buyer should be, “do you have the money to buy my house?”. In the real estate industry, we call evidence of a buyer’s ability to pay, “proof of funds” and it’s something experienced buyers should be able to produce to sellers upon request. If the buyer can’t show a bank statement or letter from a quick cash producing hard money lender proving that he or she has access to the promised funds, there is a high chance he or she can’t really afford to buy the house and will just waste your time.

  3. They lack experience – how long has the buyer been in the business of buying houses? Does your buyer have a track record of successfully closing on the purchase of houses? Can they show you “HUD statements” with their company name showing that they have purchased and sold properties in the past? If not then it’s very possible that your buyer has never successfully purchased a house before. This can be catastrophic especially if you’re in foreclosure with a tight deadline to meet.

  4. The BBB can’t vouch for them or says that there have been complaints reported to their organization. In our opinion, it’s a plus if a company has gone through the effort of running a professional business in such an exemplary manner that he/she sought and received membership and accreditation from the Better Business Bureau. On the contrary it’s a HUGE red flag if a company has several complaints with the BBB or any other reputable association.

  5. No testimonials from satisfied customers. It helps if there are real customers who can attest to a pleasurable experience with the buyer’s company. The absence of some should make you wonder if any exists.

  6. Complaints from DISsatisfied customers. We feel this is a no brainer. If there are numerous people complaining about the company, consider yourself forewarned.

  7. They ask for upfront fees. No buyer who buys houses should ask for any upfront or out of pocket money from you. The buyer should ultimately be the one giving YOU money.  And all of the upfront monies spent in these transactions should be done by the buyer.

  8. Their website fails to show the exact people who own and are in charge of the company. Or worse, there is no website at all. There is a trend by new or scamming house buyers to not divulge their name and identifying information on their website in case they make a mistake and you want to sue them. Some are buyers who have been in the business for a while and may have soiled their own name. Hence they don’t want you to know that it’s them running the company should you decide to do some research on them. Whatever the reason, you might want to stay away from buyers who don’t want to be held accountable. 

If the buyer you’re currently dealing with produces any of the listed red flags, consult your attorney immediately with your concerns. 

One of the free services we offer to sellers is a research report on the buyers they are thinking of or are currently dealing with. It’s a great service to use even if you’re not selling to us. If you’re selling your house, you should want to know if your “buyer”.is being sued for non-performance, has scammed others or if there are a bunch of complaints against him/her or their company.

Contact us to learn more so that you can sleep at night knowing that you are selling to the right company.

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