Are Cash-for-Houses Companies a Scam?

If you want to sell your house, you have three options: hire a realtor, list it for-sale-by-owner, or sell your home to a cash home buyer (also known as a cash-for-houses company.) But if you really need to sell your house fast, chances are the realtor and for-sale-by-owner options won’t work. Why? Because you simply can’t control how long the selling process will take with either of those options.

So what are you left with? The cash home buyer option. But is taking that route really a smart choice? Will you sell your house for what it’s actually worth? Are all those signs, flyers, and commercials you see just a giant scam? 

While there are certainly unscrupulous companies out there — as is the case in any industry — most cash-for-houses companies are genuinely looking to help homeowners in their time of need. Let’s take a look at what cash-for-houses companies actually do and how you can identify a reputable company to strike a mutually beneficial deal. 

What Do Cash-for-Houses Companies Do?

Cash home buyers do exactly what their name indicates: They buy houses for cold, hard cash. You give them a call when you’re interested in selling a property, and they come to the home and assess its value. 

They consider a number of factors when determining the fair market value of a home, including:

  • The current age and condition of the house 
  • Any necessary repairs or renovations (they buy houses in as-is condition, so necessary repairs factor into their offer)
  • The location, size, and layout of the house
  • The value of other homes in the neighborhood
  • The current local real estate market
  • Current economic conditions
  • Improvements you’ve made to the property

Many people mistakenly assume that all cash-for-houses companies are lowballers — that’s not true. Cash buyers valuate homes the same way an appraiser would, but unlike selling with a traditional realtor, these buyers don’t ask you to make any improvements to the property before you sell it. 

Rather, they buy houses exactly as they are — damage and all. That means that the fair market value of the house in as-is condition may very well be lower than what the fair market value of the house might be after a few updates and improvements are made.  

But repairs, updates, and improvements require time and money. When you don’t have a lot of time or capital to work with, pursuing those things may not be an option for you. Ultimately, if you need to sell your house fast, regardless of the reason, working with a cash home buyer can seriously benefit you. 

Finding a Legitimate Cash-for-Houses Company

How do you determine which cash buyers are legit and which might be master scammers in disguise? By asking the right questions. Do your research. Don’t hesitate to snoop the web, call around and ask questions, or even try to get in contact with the company’s previous clients. Here’s what you should look for:

  • The company has a real name. It shouldn’t be just some random guy posting signs around town. 
  • The company has an address. Not just a web address, a physical address too. 
  • The company has an owner. You should be able to get in contact with this owner directly. 
  • The company has a legitimate website. Look for a security certificate, useful and valuable content, contact information, and other trust signals.
  • The company has a good track record. If the buyer is legit, there should be testimonials online. These days, any legit business knows social proof is absolutely critical. It’s a good idea to look for a listing on the Better Business Bureau too. 

If you can’t find any of these things, be wary. If you call and don’t get straight answers to your questions, be skeptical. Any reputable cash-for-houses company should be more than willing to provide you with all the information you need to feel comfortable. 

Avoiding Potential Scammers

Aside from asking the right questions, you should also be looking out for any potential red flags that may indicate a cash-for-houses company is less than honest. Signs to watch for include:

  • Difficult communication. You should be able to get in contact with the buyer easily. Communication should be prompt. If your contact attempts go unanswered or unreturned, walk away. 
  • Site-unseen offers. Only in very rare situations will a legitimate cash home buyer make you an offer without first evaluating your property in person. Unless you have special circumstances, a blind offer is a telltale sign of a scam. 
  • High-pressure tactics. Reputable cash-for-houses companies will make you a no-obligation offer, which means you can just as easily decline as accept. They also won’t pressure you or try to rush the sale. While they’re looking to strike a mutually beneficial deal, they’re not desperate. If you feel pressured, be very wary. 
  • Asking for money. In this type of transaction, the money should come to you, not the other way around. If a buyer asks you to pay for something, chances are you’re dealing with a scammer. 
  • Lack of documentation. A legitimate cash buyer will be more than willing to demonstrate proof of funds, and you have every right to ask for it. Reputable buyers look to establish trust with their clients by being transparent. If a buyer tries to give you the runaround when you ask for documentation, they probably have something to hide. Walk away. 

Need to Sell Your Colorado Springs House?

If you’re looking to sell your Colorado Springs house fast, get in touch with our team at We Buy Houses Colorado Springs today. We buy houses in any condition and can close on your sale in as little as a week, depending on your needs. To find out what we can offer for your house, give a call today at (719) 602-8814 or contact us online for more information.