Selling your home for cash might sound like a great idea – especially in today’s market! However while there are some reputable investors out there willing to pay a fair price, some are little more than scam artists waiting to dazzle you with their savvy words and shady business practices. While some strategies are fairly obvious, even to the most novice home seller, others are more subtle as they disguise themselves like legitimate business practices.
The best way to avoid being scammed when selling your home for cash is to learn what these tactics are and how to spot them. This will let you know how to tell the difference between an honest investor who wants to offer you cash for your home. Here are some of the most important things to look out for when selling your home for cash to make sure you don’t get taken for a ride instead.
4 Tips for Spotting a Scam
Although it is impossible to know all the tactics that could be part of a potential scam involving the sale of your home, time has shown that some techniques are more popular than others. Here are five of the biggest tip-offs along with some more information about each one.
• CHECKS – The most common form of fraud involves the buyer paying by check. However before the check has a chance to clear the bank, the buyer asks for a refund – in cash! It is only after granting some form of cash refund that the person who received the check, typically either the real estate representative or the seller directly, learns that it did not clear the bank. Now the homeowner is out the value of the home plus the amount of the refund!
• NO PREVIEW – If the buyer claims that they do not need to preview the property before buying, that is not always a sign of a scam. However it is a red flag to watch for other potential indicators, especially the ones listed here. Proceed with caution and make sure you alert your real estate professional, if you are using one, to this fact.
• POOR COMMUNICATION – Scammers are quick to take advantage of email as a form of communication. While an email does not necessarily point to a scam, ones that only ask about certain properties, are riddled with poor spelling and grammar, and offer no offline way to communicate are red flags that trouble might be afoot. Do not be afraid to ask for legal documents, such as proof of funds, to avoid a scam in this situation.
• SHADY PAYMENT – Any form of suspicious payment must be reported to the authorities. By law, any cash payment over $10,000 must be reported to the authorities as well. That is because the money might have ties to some form of illegal activity, like money laundering. If this is the case and the authorities seize the money after you have accepted it for the sale of your home, then you could be out both your home and the payment for it.
In addition to the above tips for selling your home for cash, there are other common sense actions you can take to avoid being scammed. Verify the authenticity of the check before handing over the keys to the home. If the buyer insists on a hasty deal that involves cash, offers multiple separate purchase contracts, or the bank information on the check is invalid, then order a full stop and take time to research the buyer and his credentials a little more.
Other Red Flags to Consider When Selling Your Home for Cash
Other red flags to consider when selling your home for cash are high-dollar amounts, buyers who have no interest in haggling over the price, larger than normal escrow deposits, electronic signatures on checks, and foreign buyers who are in a rush to seal the deal, or cancel it once all the paperwork is signed and money exchanges hands.
Finally never give your bank’s wiring information that allows them to access your account, even for a deposit. No matter how well you think you can do on your own, don’t be afraid to ask for help from a real estate agent – even when using a “For Sale by Owner” method. You never know when a little foresight and wariness during the buying process may save you time and money in the long run.