We Buy Houses Scams

How many times have you been at a stop light and seen the small curbside signs that read… “We buy houses and pay cash” or “We buy ugly houses”?

Is this a legitimate industry or just another scam?

There are genuine companies out there, however, you must protect yourself from those who are just trying to take advantage of your situation.


Should consumers be cautious of companies that offer to buy your house? Absolutely!

Dishonest people prey on vulnerability. Consumers should always be cautious of business transactions, especially on one of this magnitude!

What does that mean? The Internet is filled with personal accounts of people that have been taken advantage of and who feel like they have been scammed. You need to be armed with enough knowledge so that you can recognize a scammer and their tactics.


Scam artist typically go after people who will have trouble selling their homes in a traditional manner, for instance, with a Realtor®. If you feel like you have very little options and you answer yes to either of the questions below, you probably are at risk and vulnerable .

Do you have to sell quickly?

The most common reasons that owners need to sell fast is that they have a foreclosure or bankruptcy looming in their future. Most owners try to work out payments with the lender, but those who can’t are left feeling like they have very few options.

Does your home need repairs?

Cracked foundations, rotten wood, and water damage make selling your home to another family very difficult. Typically you will have to seek out an investor to purchase the home who has the right knowledge and is willing to spend the money to fix these issues

If you have enough time to list or market your property and your house maintenance is up-to-date, then you should feel confident that you will be approached by another loving family instead of a scrupulous con artist .


Although there are multiple strategies used by these unethical groups, here are the ones typically used.

They told me on the phone it was an all cash offer

These guys will tell you whatever you want to hear in order to get a foot in the door. However, once they are in the door, they will undoubtedly try and persuade you to sell your house to them with owner-financing. They will try to have you deed the property to them while leaving the mortgage in your name.

Solution: There are times when owner financing makes sense. However, if they told you they would have a cash offer, then make them sign the contract showing all cash and have them provide a bank statement showing proof of funds.

They have the perfect solution for me… for a small upfront fee

After you are done explaining your situation to them on the phone, they let you know that they have the perfect solution for you and it will solve all your problems. All they require is a small upfront fee and they will give you the solution you have been looking for all along.

Solution: The Federal Trade Commission (FTC), the nation’s consumer protection agency, has a Rule in place to protect homeowners called the Mortgage Assistance Relief Services (MARS) Rule. MARS makes it illegal for companies to collect any fees until a homeowner has actually received an offer of relief from his or her lender and accepted it.

That means even if you agree to have a company help you, you don’t have to pay until it gets you the result you want. If you’re struggling to make mortgage payments or facing foreclosure, the FTC wants you to know how to recognize a mortgage assistance relief scam and exercise your rights under the new Rule.

And even if the foreclosure process has already begun, the FTC and its law enforcement partners want you to know that legitimate options are available to help save your home.

They need to send a few people over to look at the house.

After signing the contract they are planning on sending several people over to the house to view it. Translation: They are sending actual real investors to your house. Then they are planning on selling the contract to them for a wholesale fee.

Solution: If it is a wholesaler you are dealing with then you can expect that they are trying to get your property under contract with as little money and risk as possible. If they want an option period for more than 7 days, make sure you charge them a fee that they will not be ready to walk away from.

Also, you do not have to give them permission to have several people walk through your home. Typically, the only people that should walk through are a home inspector and any contractors they are using to get bids for repairs.


If you need to sell quickly for any reason and are going to consider a company that offers quick relief make sure you do your homework!

There are legitimate companies out there. Research them!

The internet offers a 24 hour resource to look into the partner you’re going to chose to do business with on one of the most important financial decisions you’ll ever make.

  • Check to see if they are registered with the Better Business Bureau or have any complaints.
  • Check out their website. Is their name on it? Why would they be scared to put their name on their website.
  • Google the owner to see if they are or have ever been associated with any questionable situations.
  • Ask questions, and most importantly
  • Read your contract and make sure you understand it.

Remember you shouldn’t have to pay any upfront fees and if they are offering to buy your home they should be paying you.


Obviously, even an legitimate ethical ‘We buy houses’ company is not going to pay full price for a house. They are in the business to make a profit just like everyone else. Now that said …keep in mind that a negotiation is only successful if both parties feel that they got a fair deal.

If you need to sell your home, possibly needing repairs, and reasonably quick, you will have to accept a lower price than you would typically list it with an agent. With the lower price you are offering, these companies are willing to accept the risk of paying cash to buy the house as is, no repairs, and provide quick relief to you.

When these companies make you an offer they use a formula that helps them to come up with the price. They consider the value of your home, the potential value once any repairs are made and the cost to make the home ready.

When you list your home with an agent or even a for sale by owner you incur costs than can include minor or major repairs, marketing fees, you pay commissions and you are in a waiting game not knowing when or if it will sell.

So what does that mean for you? If you are not restricted by a timeline it may be best to invest the time and money to “prepare” your home for viewing and list it on the market. If you are on a short timeline for any reason there are legitimate companies out there that can help. Just make sure you check them out.  If you are looking to sell your house, check us out, we are professional home buyers and we buy houses around Austin TX!  Please Contact us.

Hornet Capital Blog

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