Today we want to touch on a subject that is getting a lot of press today, the “we buy houses” companies. There are a lot of companies out there that buy houses, and in our experience some are good, and some are bad. But what we want to touch on in this article is what they do and the service that they provide, is it really ethical?
We Buy Houses Unethical?
In a previous article that we posted back in March “How To Avoid Getting Scammed When Selling To A We Buy Houses Company” we wrote a little bit about how to make sure you that if you are in a bad situation and need to sell a home quickly, that you find a reputable company.
So yes, we think there are companies out there that are legit when it comes to selling your home. There are home owners that are in a difficult situation and need to sell a home very quickly. For those people, these companies can be a true blessing.
One of the situations that we find they are most helpful is when someone is facing foreclosure, and the homeowner has equity in the home. If they were to let the bank foreclose on the property, the bank would then get all of that equity. However, if they are able to sell the property quickly to one of the we buy houses companies, often times they can walk away with some of that equity.
What To Look Out For When Choosing A We Buy Houses Company
What it comes down to is whether or not you are dealing with a legit company or not. Yes, there are companies out there that are just waiting to take advantage of some unsuspecting seller!
Here are a few scenarios that may present themselves from unscrupulous companies –
They ask for small upfront fees. Companies that purchase houses for cash don’t ask for any fees aside from the offer the give you.
If someone asks you for an up front fee to buy your house, either hang up the phone or if they are already at your home, tell them to leave or you are calling the police! In no way shape or form should you make a payment to anyone to buy your home!
2. Asking for contingencies in the contract for inspections, financing, or investor approval. This indicates that the buyer likely can’t close on the property themselves. A true cash investor will sign a contract as-is with no contingencies.
3. They tell you that they will send some contractors, inspectors, or appraisers to check your house. These people could be the real buyers, and the agent you thought was the buyer is trying to sell your house wholesale so they can get a commission fee.
This is a little iffy because sometimes if you property is really run down and not maintained, they may need to have some of their contractors come in. But for the most part, this is good advice. However some people are okay with someone wholesaling their property to another investor.
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.
There are situations where we have seen that this is an acceptable offer. The two ways are for elderly people that don’t want to get all of that money at once and have to pay taxes on it and prefer small monthly payments. The other is when the seller has no equity in the house and can’t sell the traditional route with an agent.
Here is a video that also explains a little –
So in my humble opinion, are “we buy houses” companies unethical? Some are, some aren’t. Everyone’s situation is different, there aren’t any cookie cutter situations and companies that fit for every person. Just be sure and do your research them like we mention in our previous article to determine if you are dealing with a good company or not.