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'We Buy
Houses' Scams — How to Spot Them and How to
Avoid Them
By Duane
LeGate
There are many reasons why a home owner would
want to sell a house fast. Job change,
relocation, debt problems, divorce and
inheritance are just a few. Unfortunately, people
in need also tend to attract predators who have
no problem profiting from someone else's
misfortune.
If you're looking to sell a house fast, here
are a few scams to be on the lookout for and how
to avoid becoming a victim yourself.
Equity Skimming
One of the most common types of "we buy
houses" scams allows the "buyer"
of the home to make off with most or all of your
equity. It begins with you transferring your
home's deed to the "buyer." The buyer
may then have you make payments to him instead of
the mortgage company, or he may have you move out
so he can begin renting out the house.
There are several ways the buyer can then
profit from this transaction. First, he receives
some sort of payment every month — whether
from you or from the renter. Second, he can use
the equity in your home to secure home equity
loans or other lines of financing. Third, he can
simply resell the house without satisfying the
outstanding mortgage.
Ultimately, once most of his profit is
exhausted, he simply stops making payments on the
mortgage and allows the home to go into
foreclosure, because while he holds the deed to
the home, he never assumed liability for the
mortgage. As a result, you are left with a
foreclosed home, no remaining equity and a
significant black spot on your credit history.
Contract Bait and Switch
The contract "bait and switch" is a
clever scheme that takes advantage of the trust
between buyer and seller.
In one version of this scam, the home buyer
inspects your house and makes a verbal offer that
you accept. A few days later, he presents you
with a written contract that he presents as
"just a formal, legal version" of your
verbal agreement. Because you believe it to be
the same offer you had already agreed to, you
simply skim it and sign on the dotted line.
In the time between signing and closing, he
may also deliver one or more "minor
changes" to the contract. He presents these
as simply "a few tweaks" and nothing
that really affects the original agreement.
At some point, though, possibly at the closing
or even later, you discover that the last
contract you signed actually bears little
resemblance to the initial offer, and you are
either stuck with a losing home sale or tangled
in legal battles for months or even years to get
out of the contract.
Liberian FSBO
This scam is an interesting twist on the Nigerian Scam or 419 Scam. In it, a person
outside the U.S. contacts you after seeing your
house on a For Sale By Owner site, telling you
that he is looking to move to the U.S. soon and
can pay cash for your home. His story is
compelling to the point that you actually feel
good about helping him out — not to mention
being able to sell your home.
Ultimately, though, his only goal is to get
you to transfer him money and/or to get access to
your bank account so that he can transfer the
funds himself before you realize what has
happened. And because he is outside the U.S.,
recovering your money can be next to impossible.
How to Protect Yourself from Scams
If you need to sell a house fast, here are a
few rules for protecting yourself from falling
prey to a scam like these.
Only Work with Professionals
The best way to protect yourself from scams is
to work only with professionals who have an
established history of home buying. These days,
anyone can order a book from an infomercial and
become a "professional home buyer," but
real professionals have been in business for many
years and have closed millions of dollars in real
estate transactions. Their primary concern is the
health of their business, and they will not risk
that by cheating you or otherwise treating you
unfairly.
Check Out the Buyer
If you have any concerns about the buyer,
don't hesitate to check them out. Contact your
state Attorney General's office, your state's
Real Estate Commission, or your District
Attorney's Consumer Fraud Unit. If they are an
established business, also check out the Better
Business Bureau. Always Understand What You're
Signing
Not asking questions because you are afraid of
looking stupid could end up costing you tens of
thousands of dollars or more if you end up in a
deal that wasn't what you thought it was. A
lawyer or even your mortgage company can help you
if you want professional advice from a third
party. Never, ever sign a contract that you don't
understand.
Get All Agreements in Writing
If a disagreement arises about a verbal
agreement, the issue becomes your word against
theirs and often must go to a court of law to be
settled. Don't risk that. Insist that all terms
be in writing, and don't agree to anything that
isn't. Be Willing to Walk Away
If you have any doubts about the buyer or the
contract — or if it just doesn't feel right
— just walk away. It's never worth the
months (and maybe years) of future headaches to
sell your house a few days sooner.
Conclusion
If something sounds too good to be true, it
usually is. So don't get so emotionally tied up
in the sale of your home that you abandon caution
and logic. Your home is both a major financial
obligation and a major asset. Falling prey to a
scam like these will have major repercussions
many, many years down the road — and maybe
for the rest of your life.
Duane LeGate is president of House Buyer Network,
America's fastest-growing home buying service.
Since 2002, the company's nationwide network of
professional home buyers has helped more than
45,000 families and individuals who needed to
sell a property fast – processing more than
$7.5 billion in property during that time.
Article Source: http://EzineArticles.com/
www.betterthanokay.com
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