Here’s The Issue
If you’re like me (or any of the other half-a-million homeowners in San Antonio), you’re getting offers left and right from people asking to buy your home.
They’re coming from local investors, house flippers, national homebuyers, and realtors, and they’re coming from every direction: letters, flyers, e-mails, phone calls, and sometimes even a door knock. It can be difficult to know which of these offers are the real thing, and which are just a bait and switch.
For the people rolling around with the idea of selling their home, this can get frustrating. At best, accepting an offer from a fake buyer will waste your time and leave you with nothing to show for it except for some extra headache.
But for those who NEED to sell their home quick for any reason (immediate need to relocate, tax issues, pending foreclosure, etc.) not knowing the difference between the real and the fake can be dangerous…working with a fake buyer can cause you to miss important deadlines, and in some cases, even lose your home and all of your equity in a foreclosure.
We don’t want this for you, and we don’t want it for anyone else. We want to help you avoid the hassle.
So how do you avoid it?
Screen any offer that you’re considering by using the steps below to spot the fakes. Only deal with reputable investors.
How To Spot The Fakes
Look for these 7 giveaways on any cash-offer made on your home. If you’re approached by an investor who checks more than one of these giveaways, you may want to think twice about signing a contract with them.
#1 The buyer’s name on the contract says “And/or Assigns” after it
The Buyer’s name is usually listed in the first paragraph of any real estate contract. If the name has the words “and/or assigns” after it, this is a big indicator that the person you are signing the contract with may not be the actual buyer. They are likely going to attempt to assign or sell the contract to another person for a finder’s fee.
These fees are often $5,000 or even quite a bit more.
The “Buyer” you are working with probably doesn’t have the money to buy your house. If they don’t find somebody to buy the contract, they’ll ask for money off the price or back out of the contract, at the last minute, leaving you high and dry.
#2 Very low earnest money ($10 – $100)
When a real estate contract is signed in Texas, the Buyer makes an earnest money deposit with the title company.
This is the Seller’s security that the buyer is going to follow-through on the contract. If the Buyer defaults, the Seller typically gets to keep the earnest money.
Earnest money ensures that the Buyer has skin in the game from the start. In Texas, the industry standard for earnest money is least 1% of the purchase price.
It’s a serious red flag if a “cash buyer” offers you $10 – $100 earnest money. That’s all they’re risking to put your house under contract. That’s not a very big commitment.
These Buyers that offer little to no earnest money are the types that try to sell the contract, then leave you hanging if they can’t.
#3 Long option period for little money
This is almost a sure sign that you are dealing with a buyer who is not the end buyer. You should be getting $10 per day for every day they have an option.
Ex: if you agree on a 7 day option period, you should be getting $70 in option money. Option periods are usually no longer than 7-10 days.
Beware of a buyer who wants more than 10 days for an option period for very little money. They are using the option period to find a buyer – they’ll cancel the contract or ask for an extension on the option period if they haven’t sold the contract.
If you give somebody a long option period for little money, they will have extra leverage to come back and renegotiate the price.
A true investor knows the costs of repairs and doesn’t require more than a few days to figure out the cost of a project. Avoid giving any buyer an extension on their option period without good reason and without receiving more money.
#4 Repeated showings with multiple “contractors” or “partners”
It should definitely raise an eyebrow if the buyer you’re working with is bringing multiple “contractors” or “partners” through your house at different days and times.
These are likely buyers the person you are supposed to be selling your house to is trying to get to buy the contract.
If this is happening and your Buyer asks to extend the option period, it’s time to get out. That “Buyer” is just going to waste more of your time.
#5 Use of non-standard contracts
It’s usually best to avoid cash buyers that present you with a contract that is just a few pieces of paper they typed up on their computer.
The Texas Real Estate Commission has standard contract that can be printed from their website. These contracts were created by a group of 6 real estate brokers and 6 real estate attorneys to ensure the contracts have basic Buyer and Seller protections.
If you agree to a contract with a Buyer, know that they should provide you a copy of the contract after the title company has receipted it within 24-48 business hours.
#6 Unwilling to provide proof of funds
If somebody is making you a cash offer, ask them to show you proof of funds.
This is a bank statement or a letter from the bank that shows you that the Buyer actually has the cash to buy your house.
Make sure the bank is a local or national bank you have heard of. Don’t fall for the trick letter from some bank you’ve never heard of that says this buyer has a line of credit.
#7 Unwilling to provide references
You want to talk to people this Buyer has bought houses from before. Ask them how the transaction went.
Did they pay the price they offered or did they come back and renegotiate after an option period? Did they delay the closing or did they close on the date promised?
Use these 7 tips to filter out the fake buyers. You’ll save yourself time and immeasurable headaches. And if you want an offer you can count on… give us a call. Trust is the backbone of our business. Flat-out. We run our business on referrals from past clients. We’re able to do this for one reason alone: We treat people right, and we have the references to prove it. We’re BBB accredited with an A+ rating. We have the cash to buy your home, and we’ll buy it in any condition.
If you’d like a risk-free cash offer on your house, give us a call or text at 210-853-2446.
We’ll never ask you to make repairs. And we’ll never charge you any commissions or fees. Wondering how other people feel about us? Check out what our past clients have to say.