How to spot a cash home buyer scam
The warning signs are simple once you know them. Here's what a real buyer does, and what should make you walk away.
No obligation. No pressure. Takes about 2 minutes.
The short answer
A legitimate cash buyer doesn't charge you upfront fees, gives you time to read the contract, closes through a title company or closing attorney, and can show where the money comes from. Walk away from anyone who wants your deed before your mortgage is paid off, asks you to send your mortgage payments to them, or sends wiring instructions by email.
Step by step
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1
No upfront fees
The FTC's advice is not to pay a company until it delivers what it promised. Someone buying your house shouldn't need money from you to do it.
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2
Keep your deed until closing
The FTC warns that if you transfer your deed, you're not likely to get it back. The deed should change hands at closing, through a settlement agent, when your loan is paid off and you're paid.
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3
Time to read every page
Pressure to sign quickly, without a chance to read the papers, is a warning sign the FTC names. You can take any contract to an attorney or housing counselor first.
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4
Proof of funds and a real title company
Ask for proof of funds and the name of the title company or closing attorney. Look up their number yourself and call to confirm they're handling your sale.
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5
Check wiring instructions by phone
The CFPB warns that scammers copy closing emails and phone numbers. Don't follow wiring instructions from an email; confirm by phone with a contact you already have at the title company.
Sources: FTC: Mortgage relief scams ยท CFPB: Mortgage closing scams
This guide explains the general rules. It isn't legal advice. Your contract and situation may differ, so talk to a real estate attorney about your specific case.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
A buyer with nothing to hide can show you the cash offer next to what listing could net, and let you take your time deciding.
Frequently asked questions
How can I check that a cash buyer is real?
Look the company up in your state's business entity records (the Virginia SCC, Maryland SDAT or DC's Department of Licensing and Consumer Protection), ask for proof of funds, and confirm the title company or attorney handling the closing.
Is it a red flag if they want my deed right away?
Yes. The deed should transfer at closing, when your loan is paid off and you're paid. The FTC warns that once you sign it over, you're unlikely to get it back.
Where do I report a scam?
Report it to the FTC at ReportFraud.ftc.gov and to your state attorney general. If you wired money to a scammer, call your bank right away and ask for a wire recall, and file a complaint with the FBI at ic3.gov.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.