As with anything that involves money, especially this kind of money, it’s a good idea to watch out for anything that looks like a scam. There are many ways people will try to scam you out of getting the full amount that your house is worth, and there are many fake “companies” out there dedicated to taking advantage of cash offer sales. 

Let’s go over a few important red flags to watch out for. 

Watch Out for Low Ball Offers

A lowball offer is a big red flag, though it doesn’t necessarily mean that the buyer is trying to scam you. It’s not illegal and it’s not fraud, but it can be perceived as rude and opportunistic.

The buyer might just be ill-informed on how a cash offer sale works, but for the most part, if someone is offering you an amount that is significantly lower than your asking price with no clear reason, such as major repairs or extensive fees, there is a good chance they’re trying to take advantage of you.

They hope any lump sum of cash would be enough to get you to sell. It is imperative to be aware of this tactic, especially if your house has been on the market for a little while. They might try to use possible worries you might have about selling, and they’re betting that you accept their offer while suggesting their offer price may be the best they can achieve. 

If you have the time, hold out for the best possible offer. Make sure you get your money’s worth. Finding out that your old house sold later for twice what you got for it is not something anyone wants to see. 

The advantage of working with a realtor is that they can guide you through this journey.

Verify Buyers Identity or Company Is Legitimate

As with anything, always do your research when dealing with any buyer, whether it be an individual, an iBuyer, or We Buy Houses company. 

When dealing with a company, look for online reviews, client testimonials, and other similar indicators on websites that aren’t connected to the company’s website. Think Google or Yelp reviews. Another excellent way to filter out scammers is to search for the company name plus “scam”. If it is a scam, chances are you’ll find various testimonials and warnings regarding the company.

You can also contact the Better Business Bureau to double-check that they are, in fact, a legitimate registered business. The more you find, the better, usually. Scammers might have a website to make them look legit, but it’s common for the facade to be shallow. Dig for a while, so you’re on the right track.

Some scammers are reluctant to make personal connections, like in-person meetings, video calls, or phone calls. If they repeatedly turn down your requests to connect directly, proceed with caution. 

Pay attention to behavior during meetings and discussions. Keep in mind these people are often pros and difficult to spot. But your buyer could also seem stressed or jittery for reasons that have nothing to do with the property deal.

If they’re working with a realtor, you should always contact them if you’re feeling uneasy. No savvy realtor would want to represent a shady client for fear of shedding a bad light on their business.

Watch Out for “Bait and Switch” Offers

The definition of the bait and switch tactic usually applies to sellers. The buyer is drawn in by a good deal and at the last moment, after commitments have been made, the seller changes the rules and hikes the price or piles on fees. However, it’s a little different with cash offers. 

A cash offer bait and switch is when a buyer offers an all-cash deal, but then shortly after the seller accepts, the buyer decides that they want to finance instead. 

The reason this is bad is that you could potentially get swindled out of a substantial amount of money. If the cash offer was a little lower than the financed offer and you decided to go with the cash offer, you have just potentially lost the interest if the financed offer, which was going to pay more. 

Not only that, but the buyer suddenly deciding to switch from cash to financing tacks quite a lot of time onto your closing timeline, and it introduces fees for services that were not needed for the cash offer, such as appraisals.

Buyers will sometimes try to claim that this tactic is permitted under the GCAAR contract as “Alternative Financing” (referring to Amendment 12 of the contract), but it’s not. As the seller, you’re within your rights to reject the contract, but this kind of hassle could lose you other potential offers that were made in earnest.