We Buy Houses Scams ? How to Spot Them and How to Avoid Them

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.

---

On the Crossing of Continents

Cyprus is situated in the north-east Mediterranean on the crossing... Read More

Real Estate Investing In Bulgaria

As Bulgaria readies for joining the European Economic Community in... Read More

Should You Allow Buyer To Rent During Closing?

It's not uncommon for an investor to sell a house... Read More

Checklist for Buying a Home

I had a client who called saying that his bath... Read More

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things FirstConsidering investing in property? What... Read More

Real Estate Investing By The Numbers

Just like most things real estate investing can be broken... Read More

Best Time to Buy? Best Time to Sell?

When is the best time to buy? When is the... Read More

How Does Interest Rates Affect New Home Sales and Wheres The Best Place To Build?

These real questions on new home starts and interest rates... Read More

Buying and Selling Distressed Houses for Maximum Profit (Update)

If you want to become a real estate investor, find... Read More

Property Investing - Am I Buying for Profit or Prestige?

All of us have emotional preconceptions and assumptions. They are... Read More

Prepare Your Rental Property for Occupancy

Among your many responsibilities as a landlord, the law provides... Read More

Buying Country Acreage and Rural Properties, To Buy or Not To Buy

Almost anyone can become a rural property owner; if you... Read More

An Investors 1st and Most Important Lesson

Are you ready for the lesson that will put you... Read More

Top 7 Reasons Why FSBOs Fail To Sell Their Home On Their Own!

In the United States, less than 10% of all For... Read More

Fixing Houses for Resale: Three Beginning Steps to Increase Profits and Have Fun

Real estate investors specializing in fixers make higher profits when... Read More

Real Estate Growth: How Long Will It Last?

There has been speculation in the media recently about the... Read More

Selling Your Home Quickly, Even if You Have No Money For Repairs

Do you need to sell your home quickly? If so,... Read More

Chapter One FSBO the Russ Miles thriller/mystery novel

Chapter OneShe reached the phone on its second ring. "This... Read More

Coming to Las Vegas ? the Las Vegas Real Estate Boom

Nobody seems to be 'Leaving Las Vegas' anymore ? in... Read More

Advantages to Buying or Owning a Condominium

Condos have become an increasingly attractive home ownership option for... Read More

Property Investing Secrets 5

Property Investing Secrets:How To Work With Agents And Get What... Read More

Property Investment Strategy: Securing Properties with Little or No Deposit

Property Investing often requires creative strategies to make it successful.... Read More

Real Estate Investing - House Problems

Houses can have lots of problemsReal estate investing requires expertise... Read More

Questions Investors Should Ask When Buying and Selling Investment Property

If you're a real estate investor, here are several questions... Read More

Investing In Commercial Property

Investing in commercial property is well beyond the financial means... Read More

How You Will NOT Make Money in Real Estate

We all have seen some book called "How I Turned... Read More

Buy to Let Property Investment

In recent years buy to let has been a popular... Read More

Lake Property in Danbury

A lakeside vacation or second home can be a quiet... Read More

Selling Your House Fast!

The physical senses of buyers respond to a home's design,... Read More

How Professional Property Investors Interpret and Use Capital Growth Statistics

Understanding and using yearly price growth statistics in an area... Read More

Buying Property in Spain

You have made the decision to move to Spain and... Read More

Understanding the Escrow (Closing) Process

1. What is an escrow?Escrow is defined as a process... Read More

Buying Your First Investment Property

"Begin With The End In Mind"I first heard the phrase... Read More