You say you’ve been out of work for months, can’t make your mortgage payment, and these people are claiming they’ll pay cash for your house and get you out from under? BILLSHARK wants to caution you to proceed slowly, and not before doing a lot of research.Cash for Your House? Be Careful
As we’ve said many times, scam artists prey on people at their most vulnerable moments, and given the state of the economy (according to the National Bureau of Economic Research, the U.S. officially entered a recession in February—before the coronavirus shutdowns), many people are hurting right now and are thus susceptible to these phony lifelines.
Telephone pole pirates
You’ve no doubt seen the signs tacked to telephone poles around town: “We’ll pay cash for your house,” or “Stop foreclosure! Let us buy your house for cash,” with a phone number. These are giant red flags that you’re about to get ripped off.
Pennsylvania’s attorney general, Josh Shapiro, recently issued a warning against just such predators.
“Signs offering to buy homes for cash are multiplying weekly on busy street corners, but these kinds of transactions are often scams that leave homeowners in even worse financial shape than they were before,” he said in a statement.
Shapiro warned that these scams come after two types of people: those desperate for cash and those facing foreclosure.
In the first instance, they’ll often make an offer for the home that is much less than it’s actually worth.
In the second, they’ll take the deed without paying off the mortgage, leaving the homeowner still on the hook for monthly mortgage payments and still facing foreclosure.
Experts say there are legitimate fast-buy companies out there, but they’re few and far between. To sort out the difference between them and the scammers, here are some things you should beware of:
- Don’t trust a telephone offer. If they haven’t seen your house in person, they have no way of knowing how much it’s worth.
- If the company says your home is worth either a great deal more or a great deal less than you think it is, they’re trying to either dazzle you with an unrealistically high figure or depress you into thinking you have no alternatives. Especially if they come in with a very high value, they’re likely to drop the amount just before closing citing “market changes” or higher repair costs or something similar.
- Watch out for hidden fees. You shouldn’t have to pay a dime before the house is sold, whether for “surveys” or “appraisals” or whatever else they come up with. And read every word of the contract to search for other similar hidden fees.
- Finally, as always, ignore people who come after you, whether through a phone call, text, or email. If they’re seeking you out, they’re not legit, and you could be risking more than your money: They could end up stealing your identity, emptying your bank account, and taking your house on top of all that.
How to avoid these scams
If you’re in trouble with your mortgage and possibly facing foreclosure, first talk with a licensed real estate agent in your area. It won’t cost you anything to talk with one, and they can walk you through all your alternatives, including possibly a forbearance on your mortgage (see our recent blog, “In Trouble with Your Mortgage? Read This,” for all the options available to you).
And if you decide selling is your only recourse, they can find out what other similar nearby homes have sold for recently so you can get a good idea of what your home is worth, as well as advise you on your best course of action.
If you decide you do want to do business with one of these fast-buy companies, be sure to check them out thoroughly, especially with the Better Business Bureau, your state’s attorney general’s office, and/or your state’s real estate commission. Read the contract carefully to be sure you won’t still be responsible for the mortgage after the sale. And look out for the red flags we’ve pointed out above.
Keep in mind that even the legitimate fast-buy companies are in business to make a hefty profit. Real estate experts say you’ll probably receive between 60-80 percent of the home’s fair market value by going the quick-cash route. Taking such a loss might be worth it to you if you have no other options, but a Realtor can often get you a better price.
And if you think you’ve been a victim of one of these scams, contact your state’s attorney general’s office to file a complaint. Don’t let embarrassment prevent you from helping to shut these people down, because you’ll be helping others avoid the same fate.
Remember, BILLSHARK can find you extra cash from hidden savings on your bills. Just let us review them for free; if we don’t save you money, you don’t pay.