Are we buy houses companies legit?

Most companies that advertise 'we buy houses' are legitimate businesses that really do buy homes for cash. Legitimate is not the same as a fair deal, though. The business model depends on buying below market value, some operators plan to sell your contract rather than buy your house, and a small number are outright scams aimed at homeowners under pressure. You can sort them out in an afternoon with four checks: who the company is, whether it can actually pay, what the contract lets it do, and how its offer compares to your home's market value.

Is a we-buy-houses company actually buying your house?

Not always. The phrase covers renovation investors, iBuyers, franchise networks of local investors, and wholesalers, and our comparison of the best companies that buy houses for cash walks through each type and the major national names. For vetting, the one to watch for is the wholesaler: an investor who puts your home under contract and then sells that contract to another investor for a fee, instead of buying the house.

Wholesaling is legal in many states, and some states now regulate it with disclosure or licensing rules. The risk for you is practical: if the wholesaler cannot find an investor to take over the contract, the deal may fall apart after your home has been off the market for weeks. That is why the checks below ask who will actually close.

How do you check that a cash buyer is legitimate?

Run every buyer through the same checks before you sign anything. None of them costs money, and together they screen out most problems.

1. Confirm the business exists. Look up the company in your secretary of state's business registry, or your state's equivalent, and check that the entity named on the contract is active and has been operating for a while.
2. Read the complaint history. Search the company name with the words complaints and reviews, check the Better Business Bureau, and look for patterns rather than a single angry review.
3. Ask for proof of funds. A recent bank statement or lender letter in the name of the entity that will sign the contract. A real cash buyer can produce one quickly.
4. Ask whether they will close themselves. Put the question plainly: will you buy this house, or might you assign the contract to someone else? Get the answer in writing.
5. Choose the closing company yourself, or verify theirs. Closing through an established, independent title company or real estate attorney puts a neutral party in charge of the money and the deed. Look up its contact details on your own rather than using the ones the buyer sends.
6. Pay nothing up front. Legitimate cash buyers never charge you to make an offer or to process your file.

One thing a license lookup will not settle: a company buying a home for its own account usually does not need a real estate license. If the person you are dealing with says they are a licensed agent, verify it through your state's public license lookup. For a direct buyer, the business registration, proof of funds, and complaint history tell you more.

What are the red flags of a we-buy-houses scam?

• Any fee before closing, whether it is called an application, processing, or foreclosure prevention fee.
• Pressure to sign today, or an offer that expires in a few hours.
• A request to sign over your deed outside a proper closing, or to sign documents at your kitchen table with no title company or attorney involved.
• Instructions to stop paying your mortgage, or to send your payments to them instead of your lender.
• A promise that you can stay in the home or buy it back later that is not written into the contract. Legitimate sell-and-stay programs exist, but the terms must be on paper and reviewed before you sign.
• Wiring instructions that arrive by email or text, or that change at the last minute. Call the title company at a number you found yourself before any money moves.

Homeowners who are behind on payments are frequent targets. Consumer guidance from the Federal Trade Commission on mortgage relief scams warns homeowners not to sign over their deed to anyone who promises to save the home, and not to send mortgage payments to anyone other than their mortgage company. If you are facing foreclosure, a HUD-approved housing counseling agency can review your options for free or at low cost.

What should you check in the purchase contract?

A cash contract is often short, which makes each clause matter more. Read these before you sign, and consider having a real estate attorney review the contract. This is general information, not legal advice.

• The buyer's name. It should match the entity on the proof of funds. Language like 'and/or assigns' after the name means the buyer can transfer the contract to someone else.
• Earnest money. How much, and who holds it. It should sit with the title company or attorney, not with the buyer.
• The inspection or due diligence period. How long it runs, and whether the buyer can walk away or renegotiate for any reason during it.
• What happens if the buyer does not close. Who keeps the earnest money, and when you are free to sell to someone else.
• Closing costs and the date. Who pays which costs, and whether the closing date is fixed or can be pushed back.
• What stays and what goes. Appliances, fixtures, and any belongings you plan to leave behind.

How do you spot a lowball cash offer?

Most investor offers are built the same way: start from what the home would sell for after repairs, then subtract the cost of the repairs, holding and resale costs, and a profit margin. So an offer well below market value can still be honest. It becomes a lowball when the gap is bigger than those costs can explain, or when the number drops after you are already committed.

1. Know your market value first. Get an online estimate for the range and a written comparative market analysis from a local agent, so the offer has something to be measured against.
2. Ask for the repair estimate line by line, and get a contractor quote on the largest items. A buyer who will not show its assumptions is asking you to trust a number you cannot check.
3. Get more than one offer. Two or three written offers show you the real range for your home in its current condition.
4. Compare net, not gross. Subtract fees, repair deductions, and closing costs from every offer before you compare them.
5. Watch for retrading. A high number that wins the contract and then falls after an inspection you were told was a formality is a tactic, not an accident. Ask up front, in writing, what could change the price.

That comparison is the whole idea behind how Home Value Pros works: you enter your address once and see cash offers from a licensed institutional buyer network next to your estimated market value. We do not buy houses ourselves, and the principle holds whichever buyer you choose: an offer only looks fair or unfair next to a real number.