Home Buying Scams

If you are planning to sell your house it is important that you deal with a reputable, licensed, home buyer.

The home buying industry is plagued with so-called real estate investors that search out distressed home sellers and try to take advantage of them. It is typical for these new investors to have recently attended a seminar where they are taught to make low-ball offers to homeowners that need to sell. These fake investors give the home buying business a bad name; but how does a homeowner recognize an unscrupulous home buyer? We have listed the most common home buying scams, allowing you to easily spot them.

Bandit Signs

Everyone has seen these signs, usually yellow and sometimes handwritten that say “We Buy Houses Cash, Any Condition” or “We Buy Houses Cash.” These signs demonstrate the low barrier of entry; where any person with $50 can put on the facade of being a real estate investor. The homeowner has no idea who they are calling and if the person posing as an experienced home buyer is legitimate. In most Florida cities, bandit signs are illegal; which speaks to the legitimacy of their marketing and their company as a whole.

Cold Calling/Texting

Cold calling/texting is the new fade within the home buying industry. Boiler rooms of unexperienced sales people posing as real estate investors, call unsuspecting homeowners who try and convince them to sell. Everyone (homeowners or not) should be suspicious of anyone cold calling them but, these scammers are usually breaking the law in Florida by engaging in this activity (The Florida Telemarketing Act requires telemarketing businesses and their salespeople to be licensed by FDACS. It also requires these businesses to post some form of security (a surety bond, certificate of deposit, or a letter of credit) of no less than $50,000). These fly by night operations are unlicensed and are notorious for calling people on the Federal and Florida Do Not Call Lists. Not a company you want to trust your home to.

Unlicensed Real Estate Activities

In Florida, it is unlawful to engage in the following real estate related activities for compensation without possessing a real estate broker’s license or sales associate license.

• Advertising or marketing another person’s timeshare or property for compensation.

• Auctioning or attempting to auction another person’s property for compensation.

• Buying or attempting to buy real estate on behalf of another person for compensation.

• Listing another person’s timeshare or property for compensation.

• Operating as a real estate broker or sales associate without a license.

• Renting, leasing, or attempting to rent or lease real estate on behalf of another person for compensation.

Is the home buyer you are speaking to licensed? If they are unlicensed and not buying your property themselves; they are committing a third-degree felony.

Earnest Money Deposit

A Purchase and Sale Agreement is a contract for the sale of real estate.  In order for there to be a valid contract, Florida law requires that there be an offer made, an acceptance and consideration for the contract (the deposit). Is the home buyer you are speaking to offering to make a deposit? Is it only $50 or $100? A property buyer expresses their seriousness to purchase a property with the deposit they offer. Weekend seminars and online courses teach new investors to put down as little as possible when making offers; it minimizes their risk if they cannot close. It is important that you request a sizeable down payment when accepting a purchase contract; it motivates the real estate investor to perform.

All Cash Offer; Sight Unseen

“Virtual” home buyers are becoming more and more prevalent today. These unlicensed buyers speak to homeowners and try to estimate the repairs required on their home over the phone and then email out an electronic purchase contract for the seller to sign. This seems very easy and streamline but there is no legitimate home buyer that is able to accurately estimate home repairs over the phone. The end result is a signed purchase contract with several loopholes, allowing the buyer to backout once they perform the physical inspection (sight unseen buyers normally close on only 20%-25% of properties they get under contract). The end result to the seller is they wait months and their property never sells or the buyer wants to completely renegotiate the purchase price and contract. Either way, the buyer has taken full advantage of the seller.

The best way to protect yourself and your home when selling for cash is to work with a legitimate, licensed, real estate professional. A genuine real estate investor may not make the highest offer, but it will be a fair offer, that will close.