How To Avoid “We Buy Houses For Cash” Scams
Selling a house, for many, is not an experience that they would like to go through again any time in hurry. From choosing an agent, to the horrendous waiting for potential buyers to show interest – selling a house is often a nightmare from start to finish.
Of course, anyone who works in the industry will undoubtedly be aware of the number of ‘dodgy’ companies who install themselves at every level of the house-selling process in an effort to make a quick buck at the expense of the vendor.
Sadly, this means that those who are inexperienced in the property market are occasionally caught up in such practices and end up losing money. Whether it’s an estate agent who oversells their abilities to sell homes, or one-stop shops who promise to carry out all property searches and paperwork for a ‘nominal fee’, only to produce substandard or unusable data – it’s always important to be on your guard.
The same is true for companies who are willing to buy houses for cash.
While many of these house-buying companies are completely legitimate and offer sellers a way to sell their home in an extraordinarily short space of space, there are a number of companies whose practices give the industry a bad name.
But how do you know who these people are? And how do you avoid ‘we buy house for cash’ scams?
- False Registration Details
Many of these scam companies provide information such as addresses, phone numbers and VAT registration numbers. But often they do so knowing that the majority of individuals will not check the authenticity of this information. So, try Googling any and all information related to the company, and if you hear alarm bells in your head, don’t trust them1.
- Upfront Fees
A trustworthy house-buying company will never ask for upfront fees. They may make claims such as claiming they need ‘processing fees’, or a deposit. Companies that work upon this basis often have no interest in buying the house, as they can simply make enough money from each ‘client’ by charging them fifty pounds here and there for services rendered2.
- Deed Transfer
You should never transfer a deed until all your mortgage has officially been removed from the property following a sale. Some house buying companies will claim that being provided with the deed can speed up the house buying process. Unfortunately, once that has happened you lose many of the rights you would normally have in such as situation, and limit your legal recourse1.
- Check Their Website
While many ‘dodgy’ companies will have a flashy website that seems professional, this website is designed to convince as many people as possible to get in touch. However, you can easily search how long their website has been online, how often it is updated etc. You should also be able to find a Company Registration Number clearly visible on their website3.
- They Can Provide No ‘Proof Of Cash Funds’
A company that buys houses must have a large amount of liquid money in the bank that they have access too, right? Never trust a company that refuses to disclose such information, as they are likely just hoping to fleece their customers4.
- Bad Valuations
The benefit of using a house-buying company to sell your home is that you will be provided with a quote that you can choose to accept or decline. Unfortunately, those who are inexperienced with house sales may not realise how badly the company have undervalued their home. A way to check this is to either employ a private surveyor to carry out a small valuation on the house, or to do a ‘comparable’ check yourself. Use property information websites to find similar houses that have sold recently with similar features to your own in the same area. If the quote provided is radically different from those figures, be cautious1.
- Lock-In Contracts
By signing a lock-in contract, you are stating that you will not withdraw from the sale, and if you do, you will be penalised with a fee. Any company that demands you sign a contract that mentions cancellation fees, withdrawal fees or option agreements should be ignored, as they are likely just hoping to make their profits off the fees they make, not by selling your house2.
- Ridiculous Claims
If it sounds too good to be true, it probably is. House-buying companies are an option for those who need to sell their house fast, and by contacting one, you must realise that the reason that they are able to buy your house fast is because they get it at a bargain price. If any company claims they can buy your home for 90-95% or market value, then they can’t be trusted5.
- Last Minute Price Drops
A company may provide you with a fantastic quote that is better than you expected and so you carry on with the paperwork – only at the last minute for the company to drop the price they are willing to pay. They will often claim that this is the result of challenging market conditions, but in reality, they are hoping that you are already too invested in the process, and will just carry on to complete a sale5.
- Trust Your Gut
It’s always important to trust your gut when venturing into unknown territory, and if a company worries you, but you can’t put a finger on ‘why’, it’s usually because something is wrong. If you are unsure, you can always ask for a professional’s opinion on the matter and proceed from there1.
Are you interested in selling your house for cash? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property before it’s too late.
1Anon. (2020). How to protect your property from fraud . Available: https://hoa.org.uk/advice/guides-for-homeowners/i-am-managing-2/protect-property-fraud/. Last accessed 25th February 2021.
2Brazg, G. (2015). Avoid ‘We Buy Any House’ Scams & Find Out Which Cash Home Buying Companies are Safe-to-Use. Available: https://www.theadvisory.co.uk/sell-house-fast/cash-home-buying/. Last accessed 25th February 2021.
3Anon. (2015). Are you breaking the law by not putting right details on website, letters & emails?. Available: https://bmmagazine.co.uk/guides/breaking-law-not-putting-right-details-website-letters-emails/. Last accessed 25th February 2021.
4Anon. (2020). Why you will be checked for money laundering when buying a property. Available: https://www.propertymark.co.uk/advice-and-guides/buying-a-home/estate-agent-checks.aspx. Last accessed 25th February 2021.
5Anon. (2021). Should I Use A ‘We Buy Any House’ Company, Are They A Scam?. Available: https://www.propertyinvestmentproject.co.uk/blog/we-buy-any-house-company/. Last accessed 25th February 2021.