How to Spot “We Buy Houses” Scams

Protect Yourself From We Buy Houses Unethical Practices

Don't get caught in "we buy homes scams", be cautious of companies that claim to buy houses for cash. The popularity of cash for homes is rising and more and more people are selling their homes to companies buying fast and closing with cash. However, there has also been an increase in unethical practices. These companies look credible, they are convincing. They disguise themselves representing a company name, but they are not a true investment company.  The most common type of organization you will run across is known as a "wholesaler".  These companies want to get a contract signed to purchase your home, then they re-sell the contract to a cash buyer.  These wholesalers have no intention of buying your house and they generally don't have the capability of closing themselves.

Below, we discuss We Buy Houses unethical practices and other behavior and how to protect yourself from scams.

We Buy Houses – Unethical Behavior and Practices

1. Asking you to sign a purchase contract that is assignable.  Assignable contracts allow the "wholesaler" to sell the contract to another buyer.

 

2. Asking for contingencies in the contract for inspections, financing, or investor approval.  This indicates that the buyer likely can't close on the property themselves.  A true cash investor will sign a contract as-is with no contingencies.

 

3. They tell you that they will send some contractors, inspectors, or appraisers to check your house. These people could be the real buyers, and the agent you thought was the buyer is trying to sell your house wholesale so they can get a commission fee.

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 is a great place to start.  Research the company name and the person's name online.  Here are the things that you can do to protect yourself from these scams:

 

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

Check the reputation and credibility of the companies that purchase houses for cash. Are they accredited by 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/Search

and you can search them at Better Business Bureau here: https://www.bbb.org/en/us

 

2. Look at Their Website

Does their website promote their company name? Does the website show who the people are behind the business?  If they don’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, especially on their business websites. If they don’t promote their company name or their own identity on their own website, then there must be something not quite right about these companies.

 

3. Research the Owner/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 Questions, Ask about the terms

A true cash purchase should not have any contingencies in the contract.  It should not be contingent on inspection, appraisal, approval by investors, etc.  Also, 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.  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 terms that seem vague to you, ask the buyer or the agent to clarify everything and have a 3rd party review it. Don’t make assumptions.

 

5. Read the Contract

Do not sign a contract on the spot or under pressure.  These are legal documents and you should take at least a day or two to review them before signing.

 

6. Sell to Reputable Companies that Buy Houses for Cash

By thorough research, you will find the companies that are in good standing and conduct ethical business practices. Look for those companies, ask for the right price, and sell your house quickly, as-is and for cash.

 

Dale Helm
Dale Helm
12:55 08 Jan 18
I highly recommend the Home Guys if you are looking to sell your home. The process was very streamlined, transparent, and straight forward. I worked directly with James whom I found to be a very honest, caring, and ethical businessman.James truly cared about our needs and listened to our concerns. Because of James our dream of a new home became a reality. A huge selling point for us was the fact that this transaction could occur far faster than a normal one, without realtor fees, closing costs, or the typical red tape.We had never done this kind of thing (selling to a home improvement company) but now that we have - we are really glad we did. It was the right move for our situation. If you are considering selling your home to a home improvement company (flipper) I do not think you will find a better one than the Home Guys - I give them the highest of ratings.
Dana Rankin
Dana Rankin
22:22 23 Sep 18
Great team awesome company!
Julie Amber Gianera
Julie Amber Gianera
15:20 14 Jan 18
Easy, easy, easy! I highly recommend MN Home Guys and would absolutely use them again. It was about two weeks from first contact to close, and then closing only took 15 minutes. Great company, wonderful service.
Brian Tucker
Brian Tucker
20:30 09 Jan 18
Easy to work with, very reasonable offer for my property, easy closing. Great doing business with them!
Brent Brent
Brent Brent
09:25 10 Jun 17
I contacted to Minnesota Home Guys to purchase our first home and really can’t say enough about them. They are knowledgeable, approachable and very professional. Buying a home in this market is challenging, but working with Minnesota Home Guys made it as painless and straightforward as possible. I would highly recommend them.
Grant Jones
Grant Jones
10:11 03 Jun 17
One of the best and fast services provider. They provided me a fair price for my house. I am totally satisfied. Thank you!
Andy & Mandy Fobear
Andy & Mandy Fobear
17:28 29 Mar 19
They have been a great team with who we have done work. Very nice, honest and genuine. "Do things right" is what they have said AND done.
Katie Wilson
Katie Wilson
17:21 02 May 19
This company was great to work with, it was like going through a usually stressful experience with a friend in the know. They were helpful and courteous and most of all kind. They treat everyone with empathy in an industry where it's commonly lost. I'd recommend them to anyone!
Claire Almon
Claire Almon
17:03 06 May 19
I had a very time sensitive situation and I had never sold a house before. I didn’t know what I was doing AT ALL which made it incredibly stressful to navigate through the sale process especially with the added pressure of a deadline ...then I met James from Homeguys. He immediately calmed my fears, made everything seem so easy and manageable and even helped me look for a new place! I had receives several different offers from other home investor company’s but in the end, I am so glad I went with home guys. James (and his lovely, patient wife) put up with my endless, sometimes nonsense emails and questions so kindly and walked me through any and everything that i didn’t understand.. I am so grateful for their kindness and patience with me. In the end, Home guys made this whole experience so much easier than I thought it would be and it went just as quick if not quicker than I thought it would. I would recommend homeguys to any and everyone that will listen!
Jane Thomas
Jane Thomas
16:28 26 Aug 19
I am completely satisfied with the service from Mn Home Guys. Brad was so good to work with. He answered all my texts and emails very promptly. Closing was very easy. There was no double talk, high pressure, and I was able to think through what was best for me without any unwanted suggestions. I would definitely recommend Home Guys if you need to sell your home effortlessly. Huge thanks to Brad.
Steve Huso
Steve Huso
21:29 12 Aug 19
I was exceptionally impressed by the integrity and competence of Minnesota Home Guys. Their straightforward approach and honest evaluation of the facts was impressive and invaluable for my decision making process. They provided a skilled and through examination of my property to give a clear range of potential options, with additional information to evaluate each option. I worked with Brad Sauer and appreciated his expertise and communication skills. I especially appreciated the careful consideration of my needs and the absence of any sales pressure. I highly recommend Minnesota Home Guys.
Aaron hanson
Aaron hanson
15:39 29 Aug 19
Will not return my phone call. Purchased a home that they flipped and are regretting the purchase big time. Unfortunately they had the JV team doing the work inside. We are accepting the consequences and are doing the best we can to make it our dream house.
Christopher Peterson
Christopher Peterson
20:40 26 Sep 19
I was looking into having my place bought outright, but James suggested I sell the house outright to obtain more equity. We listed the house at $199,000 and sold it for $210,000! My realtor, Tim, was very knowledgeable and made the process as easy as could be. I am definitely going to hire Minnesota Home Guys for any other real estate needs in the future.
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