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How to spot "We Buy Houses" scams

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, it's when people are most vulnerable, that they tend to attract predators who have no problem profiting from their 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.

Bait and Switch Contracts

The contract "bait and switch" is a scheme that takes advantage of the trust between buyer and seller.

In one version, 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. Trusting seller that you are, you believe this contract to be the same offer you already agreed upon. Being the thorough person that you are, you skim over the contract just to be sure 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 losing a home sale or tangled in legal battles for months or even years to get out of the contract.

Equity skimming scams

One of the most common types of "we buy houses" scams allows the "buyer" of the home to make off with your hard earned equity.

It begins with you transferring your 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 from you or a 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. While he technically 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.

Protecting 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
recognized professionals

The best way to protect yourself from scams is to only work 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--
FIRST, BEFORE SIGNING

If you have concerns about the buyer, don't hesitate to check them out. In fact, you should always check out the buyer. Contact your state Attorney General's office, your state's Real Estate Commission, or your District Attorney's Consumer Fraud Unit. Check with the Better Business Bureau if they are an established business.

Always understand
what you're signing

Never be afraid to ask questions. Being afraid of looking stupid could end up costing you tens of thousands of dollars 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

Don't risk having a court decide your fate if a disagreement arises about a verbal agreement. In such cases, the issue becomes your word against theirs. Don't risk that. Insist all terms be in writing, and don't agree to anything that isn't written down.

Be willing to walk

If you have doubts about the buyer, the contract — or it just doesn't feel right — walk away. It's never worth the months (and maybe years) of future headaches to sell your house a few days sooner.