For many people, their biggest asset is their home. So when you go to sell this important property, you’ll want to avoid falling victim to a real estate scam. Sadly, in 2020 alone, 13,600 victims reported real estate fraud, resulting in losses of more than $200 million, according to data from the Federal Bureau of Investigation’s Internet Crime Complaint Center. The hardest-hit age group was people over the age of 60. The best way to avoid house buying scams is by learning the warning signs; that way, you know what to look out for when buying or selling a house. Selling or buying a home can already be stressful enough; you don’t want to let your guard down just to be able to move quickly. Below, we’ll look at some of the common house buying scams in Nebraska so that you don’t fall into the trap yourself.
Cash Offer on House Scam
Have you seen those signs that say “We Buy Houses, Cash, Any Condition”? Usually, the signs are cheap and flimsy and are posted by amateur investors all over town. Although nothing is wrong with the sign itself, after all, it is a marketing tool- usually, you just wouldn’t call the number on a handwritten sign to purchase your house. This sign only shows how low the barrier of entry is when it comes to real estate investors claiming to offer cash for a place. Anyone can put up a sign and call themselves an investor, if they know anything about the real estate industry or not.
Another way you may fall victim to a cash offer scam is with postcards. Again getting an ad in the mail isn’t a bad thing; you just should be cautious calling anyone that sends you a cash offer for your house through the mail.
The big thing you want to look out for with a cash offer on a housing scam is if the only information you see is the claim “We Buy Houses for Cash” with only a phone number. No company name, no website information. Companies that buy houses in Nebraska with cash will have a website, reviews of actual clients, and ideally, a BBB business accreditation.
Working with a “We Buy Houses” company isn’t a bad thing; it’s just that the reputable ones won’t charge you any money up front to make you a cash offer. If the cash offer isn’t free or isn’t a no-obligation offer, then you may be dealing with a cash offer scam.
→ Find out The Best Time to Sell a House in Nebraska by clicking here.
We Pay Cash for Houses Scam
Another one to watch out for is the “We Pay Cash For Houses” scams. If they do indeed pay cash for houses, you should find out if they can prove that. Some people overlook that detail because the home buyer is offering to close fast and buy the house as-is. If you’re in a situation where you need to sell your house fast because you’re facing foreclosure or bankruptcy, you may look over that detail.
Something else to keep in mind, the keyword “we pay,” there shouldn’t be any “you pay” in the transaction process. This can be a big red flag if the home buyer starts asking for money upfront before even closing on the house. A reputable Nebraska home buyer shouldn’t charge you administration fees or processing fees. The money in the transaction should always flow in the buyer’s direction, not to the seller. This applies even if the investor asks for a small amount of money, such as $100 to $200, which is still completely unnecessary. There is no reason to risk losing even one dollar over a scam like this.
→ Getting Ready to Sell a House? Ask yourself these 5 questions before you do!
Wire Transfer Scam
One of the biggest house buying scams people fall victim to is the wire transfer scam. This scam can happen during a home buying or selling process and usually involves a third-party scammer. What happens is you get an email, phone call, or text message from someone claiming to be from the title or escrow company with instructions on how to wire your escrow funds. The scammer sets up fake websites that appear similar to the lender or title company you’re working with, making it seem like the real deal. Fraudsters use spoof tactics to make phone numbers, websites, and email addresses appear similar, but usually with one number or letter off- so you can easily miss the typo at first glance. What ends up happening is the funds are withdrawn from an offshore account somewhere else by a scammer.
To avoid this wire transfer scam, before you send any money to a third party, check the original documents you received from your lender and call the phone number provided to verify the wiring instructions you received. Never click on email or text links, or send money online without first confirming instructions with a live person on the phone from a number that you’ve called and verified.
Be cautious of any email or text messages requesting a change to wiring instructions you already received. Double-check the escrow account number before wiring money, and call your settlement agent to verify the transfer of funds immediately after you’ve wired the money.
How to Spot a House Buying Scam
All home buyers aren’t bad there are a lot of legitimate home buying companies out there that have helped plenty of homeowners successfully sell their homes. However, you should still be on the lookout for a scam. Below are a few other ways to spot a house buying scam, whether with a buyer or an investor.
Spotting a Buyer Scam
If a cash offer sounds too good to be true, it could be. Fortunately, there are some warning signs to watch out for.
The Buyer is Foreign
This is not to say all foreign home buyers are not genuine buyers. Some may claim they are moving to the U.S. and found your house and want to offer you cash- sight unseen. The fact that this buyer is a foreigner- and wants to purchase your house sight unseen- is a red flag. Why? Because most people want to see a home (or at least have a realtor see it) before buying or at least be kind of familiar with the area. What you may not catch right away is that the con-artist doesn’t even ask questions about the house.
Canada and China are usually the popular choices in this scam for some strange reason, but the scammer could say they’re from another country besides those. By claiming to be in another country their foreign checks often take longer to clear, before you catch on to their scam. Another indication this isn’t legit, emails are usually riddled with typos.
The Buyer isn’t Reachable
Using the time difference as an excuse, the buyer can’t make any in-person phone calls to speak to you or the attorney. Instead, the cash buyer asks you to contact the attorney on your behalf. If you were to talk to this person, you would probably find out that they don’t sound foreign like they claimed, and they are likely afraid of being traced.
The Buyer Provides Too Much Information
If the buyer shares detailed financial information before they are even asked, that’s a red flag. Especially if it’s over email, this is another way you can spot a cash buyer scam. The buyer will often attach financial records or bank statements to the email. Also, their initial email will contain a lot of contact data about themselves which makes them appear legit. But all that info is just fake information to gain your trust.
The Buyer is Overall Eager
Another way to spot a house buying scam, the buyer is super eager to send money. And they will even bring up the subject of how to pay before you do. This could be a down payment, earnest money, or even the total price of the house.
The Buyer Makes an Error
Huge red flag alert!! If the scammer sends money and the amount was too much, or they come up with some explanation why they need you to refund a portion of the funds immediately after depositing the check. The con-artist will then ask you to send the overpayment back through a wire transfer. Once the check the scammer sent finally clears, it will come back as a forgery while you’re left responsible for the funds you wired over.
Spotting an Investor Scam
Investors can also be scams by overpromising and under-delivering. Below are few ways to spot a house buying scam with an investor.
- Sketchy Advertising
Avoid calling the “ We Buy Houses” signs posted illegally on telephone poles. The type of investor you want to work with has a website, positive reviews, is BBB accredited, and has legit photos of the investor you’ll be working with on their website.
A legit investor will answer the phone professionally, have a professional business email address, and not pressure you to sign a contract. They will answer any of your questions and will not be offended if you’d prefer to run the contract by an attorney or third party.
- No References or Reviews
If an investor is serious about helping clients, they’ll have positive reviews and testimonials with actual homeowners they’ve been able to help. If not, that’s usually not a good sign.
Things To Do When You Think You’re Being Scammed
If you have the gut feeling that something doesn’t feel right, trust that feeling. If something doesn’t seem right, don’t open any email links or respond to any messages. But if you’re wondering what to do when you think you’re being scammed, report the activity to your local police department. To report fraud, identity theft, or financial scams, visit the FTC’s complaint website.
Legitimate cash home buyers in Lincoln like Element Homebuyers will want to review your property’s details and the entire transaction. They’ll also want to either get more information or take a tour of the home. Furthermore, they’ll want to talk or meet with you to discuss the details. And they’ll give you the option to decide where and when to meet. After that, they will make you a cash offer in writing, and you should be under no financial obligation to the investor if you decide to say no.
If you accept their offer for your Lincoln home, you can negotiate with them over any closing costs. But there shouldn’t be any realtor commissions, service fees, or repairs required. Finally, the investor will pay you the agreed-upon amount in cash (or however you prefer to be paid) and close the sale on your terms—even closing in a matter of days if you prefer. Along the way, you should be able to ask questions and get answers before even talking about money because a true home investor like Element Homebuyers is happy to answer your questions, free of charge.