Are 'We Buy Houses' Companies Legit? How to Check Before You Sell
By Lavell Jackson, Licensed Kentucky Broker (KY License #274290)
The short answer
Most 'we buy houses' companies are real businesses, but the industry isn't tightly regulated, so check before you sign. A legitimate buyer doesn't ask for upfront fees, can show proof of funds, explains the offer, and gives you time to read the contract. Here are the questions to ask any buyer, including me.
This is general information, not legal, tax, or financial advice. Talk to an attorney or tax professional about your situation.
Key facts
- You should never pay a fee to get an offer or to sell your house.
- Ask to see proof of funds and a written explanation of the offer.
- Read the contract for assignment language before you sign.
Are they asking me for money upfront?
What to look for
A legitimate buyer pays you. Any application fee, processing fee, or deposit from you is a red flag.
My answer
I never charge a fee to get an offer or to sell to me.
Can they show proof of funds?
What to look for
A real buyer can show a recent bank statement or a letter from a financial institution or title company. Vague answers are a warning sign.
My answer
On request, I can share proof of funds.
Who are they, and are they licensed?
What to look for
Look for a real name, a local address, a phone number you can call, and reviews you can check. If they say they're a licensed agent, you can look up the license.
My answer
I'm Lavell Jackson, a licensed Kentucky broker, KY License #274290, with an office at 830 S. 2nd St, Louisville. You can look me up with the Kentucky Real Estate Commission.
Want to talk it through? Call or text Lavell
How did they come up with the offer?
What to look for
A fair offer starts with what the house would be worth repaired, then subtracts repair costs, holding and closing costs, and the buyer's margin. You should be able to check it against recent sales.
My answer
I explain how I got to my number, and you're welcome to check it.
What does the contract say about assigning it to someone else?
What to look for
Language like 'and/or assigns' can mean the buyer plans to sell the contract to someone else instead of buying the house. That's not always wrong, but you should know before you sign.
My answer
I buy for myself and do not assign contracts.
Can I take time to read the contract and have an attorney look at it?
What to look for
Pressure tactics, like an offer that expires in hours, are a red flag.
My answer
Yes. Take the time you need and have your own attorney review anything before you sign.
What happens if the buyer backs out?
What to look for
Read who can cancel, when, and what happens to any deposit. An easy exit for the buyer can keep your house off the market for weeks.
My answer
My terms are in writing and I'll walk you through them before you sign.
Who handles the closing?
What to look for
Closing should go through a title company or attorney, and every cost should appear on a settlement statement.
My answer
Closing is handled with a title company and a Kentucky attorney, and you'll see every cost in writing before you agree.
Other red flags
- Unsolicited offers with no explanation
- Asking you to sign your deed over as security for a loan
- Refusing to put anything in writing
- A buyer who won't say who they are
How I can help
If you're comparing buyers, send me the offer you got and I'll tell you what I see.
Sources
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