Are companies that say they will pay cash for your house a scam?
I want to sell my home quickly and have talked to a company who says they will buy your house in a week and pay cash for it. Is this legit? If so how do they make money? The house has gone up a lot in value but because I am willing to get rid of it quickly I don’t mind taking a cut in the profits if that is how these companies operate.
August 4th, 2008 at 3:34 am
That’s exactly how they operate. They buy low, very, very low and sell high quickly.
August 5th, 2008 at 11:33 am
Yes, you have no chance of backing down if you sign with them. My friend got into this mess and is now living in a trailer home; not a bad place except that she had a beautiful one before and it was basically pulled out from under her by threats after she signed. They will also not pay what you will want, guaranteed.
August 7th, 2008 at 3:50 pm
probably not - but make sure you get the cash before you move
August 8th, 2008 at 4:17 pm
For a transaction of this kind, I would have to have a cashier’s check, and then reaffirmed it by the bank, before I sign any deeds.
August 8th, 2008 at 7:31 pm
They probably are legit, but they generally don’t pay anywhere even CLOSE to market value. This might be attractive to someone looking to escape a foreclosure, but if you have the time, sell it yourself or through a Realtor.
August 9th, 2008 at 4:10 pm
they wont pay you what the house is worth, you will be screwed,they take advantage by offering what seems to be a lot of money but they in fact are screwing you out of whats really a fair amount for the house,and get this…they wont give it all at once…you better read real well …they will give you a fraction every so often just until they turn it over or resale it but that wont take long ..in the mean time you have to move…you dont have all yer money…they rent out the house….while so called TRYING to sell it…they remind you that they have you by the balls LOL! dont be sucked in
August 10th, 2008 at 10:38 pm
They may very well be legit, but it’s not just a cut in profits.
These guys are out looking to shave 25-40% off the market value of the property. Not just 5% or something.
Just go find an agent and list the property at a very attractive price. Offer to pay closing costs for the buyer.
August 11th, 2008 at 4:49 pm
Yes, you understand it, correctly!
These companies (and individuals), as a rule, are legitimate.
They offer to buy a house at a substantial discount, perhaps, 30% to 60%, depending on the location of the property, the market conditions, the condition of the property, etc.
Such investors desire to “flip” the property, i.e. to fix it up, if needed, and sell the property at a handsome profit. Once they do that, they simply do it again and again and again!
It’s quite lucrative for those involved in “flipping” property.
As an addendum, some may think that such investors are taking advantage of people, but, if you think about it, homeowners do not have to sell to such investors! For those who want to get out of a property, fast, as you said you do, the investors are providing you a great service. It is a “Win-Win” situation!
Oh, and the easy way to tell if they are legitimate is to take their legal U.S. tender (money) in exchange for your house!
Phil
August 12th, 2008 at 5:56 pm
Bufalvo,
Run, don’t walk, run away.
In the past year I have ran into many homeowners such as you in the same situation. These investors look interesting on the outside, but it is all the fine print that will get you in trouble. From your description above, you are a prime target for these investors, because you are very motivated to move and you have a good amount of equity in your home.
However, you are asking the wrong question. These habits are completely legit; an investor can come up to you and purchase your home based on any sale price and terms, as long as both parties are in agreement. You will not have to worry about them paying you, or giving you a bad check, or even paying you late (if you decide on a payment program), because they want to absolutely make sure that they are doing everything to the letter; because they know they are going to make a big profit on your home (maybe even bigger than you). If you want to mess with them, have them give you documents to look at (don’t sign them) and tell them that you want your attorney to look over them, and that you will call them in a week or so. (DON’T SIGN ANYTHING). Their only goal is t get you to sign right there, when you are at your weakest.
Ok, now that that is out of the way……What can you do? The answer is quite simple, prior to listing your home on the market or with a Realtor, go to your local bank, or call a big bank, and apply for a HELOC. This is a Home Equity Line of Credit. It does just that, gives you a line of credit on your house based on the amount of equity you have in it. Why? you ask. Well, the beauty of this HELOC is that, one, even though the interest might be a bit high, you only pay on what you borrow (similar to a credit card), two, its available at any time, so if you run into some financial problems, you can use it to make your mortgage payment, and lastly, if you only use it to make your mortgage payment, then you are using it to put equity back into the home, and therefore your return is far greater than what these investors will give you.
Bottom line, don’t panic if your home takes a while to sell, that is what these investors are looking for. Put yourself in a position to succeed and you will do just that.
Happy Hunting
August 14th, 2008 at 1:46 pm
Yes, they buy with cash, they are investors, and will flip your property to make a profit on the sale. They do this all the time, I work with high end realtors in the NYC area who do this. I find them houses that have a certain spread and they buy them, do any necessayr improvements then sell them. Not a bad business if you have the money behind you, just don’t let them take advantage of you. Good Luck!!