You’ve Been There…
You pull up to a red light and glance to your right. Stapled to the telephone pole is a large sign: “We Buy Ugly Houses” with a phone number. A few miles later, you pull up to another red light and see a similar sign: “We Buy Houses for Cash” with a different phone number.
I know what you’re thinking! Scammers. People trying to make a quick buck off an innocent home owner.
WAIT! In my case, this is not true.
Sure, there are people out there that are scammers. They ARE trying to make a quick buck off an innocent homebuyer. I am not one of them. This article will show you how to spot a scam in the cash for homes market. In the meantime, I am reaching out to you with honesty and integrity.
Honesty and Integrity
Yes, I make money after I buy and fix up a property. But my goal has much motivation beyond profit.
I enjoy fixing up neighborhoods.
I enjoy helping people see relief from unfortunate situations. (Of course, if you’d like to read more about how and why I got started in the cash for homes industry, read on here).
I find it fun to see a diamond in the rough, a “fixer-upper”, a house that is run-down or practically in shambles, and taking that house and transforming it into someone’s dream house or a newlywed couple’s starter house. When you see that eyesore around the corner from your house; I see a house that with the right fixes include a family room that will host many a game nights, a backyard that will host countless summer BBQ’s, a dream kitchen waiting for the perfect meal. In other words, I see its potential.
Yes, like I previously said, I make money doing this. And, of course, there are countless people out there doing the same thing as me. But the process is legitimate. We are home investors willing to put up cash to purchase your house.
What sets me apart from others? I am invested in Long Island. Consequently, I truly want Long Island to shine. Each house I “flip” adds increased value. A new family buys a house. Property values rise. I provide jobs to workers. I provide a service. My service is to people who are in a challenging situation that they need to get out of, as painlessly as possible. People who sell their house to me may realize that they are not getting top dollar, in all honesty, and this is mostly because the house is typically not in tip-top shape. When people have houses that won’t sell easily on the market for various reasons, such as poor condition, they don’t expect to get top dollar, they just want a solution to the problem. Some conditions are worse than others.
But once renovated, the houses are able to sell on the market for a full retail price. And this is the second service I provide: I take my newly renovated, beautifully designed home and match it to the perfect couple, family, new buyer. And many times, the house isn’t at “top dollar” so the new buyer may get a break as well. Sure, I earn a profit….but the cycle is warming. The former buyer is relieved of a difficult situation and the new buyer receives a basically brand-new home they may not have otherwise been able to afford.
Don’t be Fooled!
And, regrettably and unfortunately, there are scammers, people who look to take advantage of those down on their luck or in awkward, usually temporary, financial situations. Or companies that are new to the real estate investing industry and may not have the experience and know-how to bring your cash purchase to successful closure.
With enticing HGTV shows, many “flippers” think they can make a quick buck by flipping a house here and there. But these HGTV shows do not show the blood, sweat and tears that are behind the scenes. There are plenty of factors that go into flipping a house and thus it is not always easy or successful for a “newbie” to come in and see the project to fruition. Sometimes the flippers do not have the financial backing to buy a property up front or follow through with unseen construction and design costs. There is far more to it than paint and granite counter-tops!
So, how do you discern the professionals from the scams? Or avoid a sticky situation with a new, inexperienced lone vestor? Here are ways to spot a scam in the cash for homes market; some ways to ensure the company you are about to deal with is legit:
Stay on Your Toes….How to Spot a Scam in the Cash for Homes Market:
- Proof of funds. You should receive a letter from their bank relaying they have sufficient funds to close. Or receive copies of their bank statements. A down payment at contract is a must. Another way to help tell if they’re legit is to ask them about past transactions and ask them for references (which you should then check).
- Another tip: Try to determine if the company making the offer actually plans on buying your property or whether they plan on assigning the contract. This is called wholesaling. Wholesalers can be identified in the purchase offer. For example, it may state “ABC and/or assigns.” Don’t get me wrong; there is nothing wrong with wholesalers at all but it could be another way for the deal to collapse. Just know that for the transaction to work, the wholesaler must find someone to assign your contract to. Also noteworthy, if somebody is a wholesaler they should state this rather than misrepresenting what they are. If the person they sell to cannot close, it ties up the seller further when they usually cannot afford another misstep.
- No fees. A seller should never pay anything to the investor. Legal fees, if any, should only be paid to a real estate attorney hired by the seller and not the investor. And the legal fee is paid at the end of the transaction not upfront. A legitimate investor will never ask you for money upfront. The investor is paying the investor, not the other way around. With Long Island Cash for Homes, there is no cost, no obligation and no commitment.
- Do your homework. Research the company. Make a phone call. Who is the investor? Evaluate their professional appearance, website, background and experience.
- An investor should come to your home to look for the home’s location, age, condition, size. Sometimes they will know immediately if it is right for them….or that is not right for either party. Long Island Cash for Homes will obtain this up front info. Then Chris will assess the property. He will ascertain the home’s condition and location, the market value and the amount of work (and money) he will need to put into the property. If everything lines up, he will make you an offer. Now, the ball is in your court. You can take the offer….or leave it. It is completely up to you. Some scammers may present you with an inflated offer. Their goal is to make you agree immediately and send you contracts. However once the contract is drawn, the price is different.
- Don’t rush. A red flag is when an investor claims they need you to sign today. You should take all the time you need.
Keep this in mind: My profit is not made off of the seller. My profit is part of my pride: the hard work, the thought and dedication, the creativity and beauty I put into the new home. My profit is made when I finish that hard work and sell the home to a new homeowner. When I buy your house, you should be the one to make money…not me!
I live on Long Island. I raise my family on Long Island. Additionally, I base my business on Long Island. Consequently, I have a vested interest in the beauty and value of Long Island. My reputation, which precedes me, is important to me. I have been investing in residential properties for over 15 years. I am willing to share testimonials from past transactions. I am passionate about what I do and genuinely care.