How to Spot ‘We Buy Houses’ Scams

There are many reasons why a homeowner may want to sell their home fast. It can be because of a job change, a move, debt problems, and divorce. Since they need it in a hurry, people who are in crisis are also more easily attracted to scammers who want to profit from the misfortunes of others. If you want to sell your home fast through the We Buy Houses firm, be aware of some scams you should avoid below. Also, read some cautions from Pluralist.com to help you learn how not to fall for their scams.

Equity Skimming

The most popular form of the “buy houses” scam allows the “buyer” to keep all or most of your equity. The process begins with the transfer of the deed to your home to the buyer. In this case, they may ask you to make payments to the buyer instead of the mortgage company. Another thing they ask you is to relocate to rent the home.

This transaction can be profitable for the buyer in many ways. They will receive a monthly payment, either from you or the tenant. Besides, they can also use your equity to take out home equity loans and other financing. Worse, they can also sell the home and not pay the outstanding mortgage.

Once they have used most of your equity, they stop paying the mortgage and get the house to foreclose. They still own the property, but they never took responsibility for it. This way, you end up with a home with no equity, in foreclosure, and a big black mark on your credit score.

Bait-and-Switch Contract

The “bait-and-switch contract” is a clever way to exploit the trust between seller and buyer. A variation of this scam involves the buyer visiting your home and making you a verbal offer. He then presents you with a written contract that he claims is a formalized and legal version of the oral agreement. You read it and sign it believing it is the same offer you have already accepted.

He may ask for minor changes to the contract between completion and signing. In this case, he stated that these insignificant changes do not intend to change the original agreement. After the closing or later, you discover that the initial offer is not the same as the one you have signed. Then, you lose your home or have to go through years or months of litigation to get out of the contract.

Liberal FSBO

It is a unique variation of the 419 scams or known as Nigerian Scams. After viewing your home on For Sale by Owner, a person from outside the U.S. contacts you to say they want to move to the U.S. and are willing to pay cash. The story is so compelling that you feel you can help them and even sell your home. Their ultimate goal is to get your money or access your bank account to transfer the money to themselves. Since they are not in the United States, it may be arduous to get your money back.…