Are 'We Buy Houses' Companies a Ripoff?

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By Katy Byrom Updated February 14, 2025
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Edited by Andrew Whytock

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No matter where you live, you’ve probably seen neon signs tacked on telephone poles that claim, "We buy houses for cash!" And while the promise of a quick cash home sale may be tempting, it's smart to wonder whether these offers are legit.

Depending on your circumstances, selling to a company like We Buy Ugly Houses or WeBuyHouses.com could be a relatively hassle-free way to offload a distressed or unwanted property — especially if you need to get rid of it fast.

But if you want to get the maximum value for your home, you're not going to get it from a 'we buy houses' company. Most of these companies pay far less than what your home could potentially be worth — 70% of a home's after repair value (the estimated value after fixing it up), minus expenses, is normal.

If you’re considering an offer from a 'we buy houses' company, but want to make sure you’re getting a fair deal, you have a few different options:

  • Start with reputable cash buyers in your area. Our team has put in hundreds of hours of research to find the top cash buyers in all 50 states — ranging from well-known iBuyers to free services like Clever Offers, which can help you source competitive offers without the hassle of calling up investors on your own.  
  • If you're considering the investor route to save time and money, but wouldn't mind having an agent do the leg work, consider working with a top-rated low commission realtor instead. An experienced realtor can help you target cash buyers and sell quickly without the risks of going it alone.
  • If you're on the fence and want to test the waters before making a decision, start with Clever Offers. With Clever, you can explore instant cash offers worth up to 100% of your home value, or opt for a 7-day listing targeting a much larger pool of cash buyers — allowing you to sell in as little as 7 days for the highest possible price.

Keep reading to learn more about how 'we buy houses' companies work — including how to spot scams and protect your interests when entertaining a cash offer.

Common 'we buy houses' scams

While most 'we buy houses' companies are legitimate businesses, there have definitely been scams targeting home sellers looking for a quick cash offer. 

If you’re in a difficult financial or personal situation, these bad actors might try to prey on your sense or urgency — so it’s important to always vet potential buyers before parting with your home, money, or personal information.

Here are a few of the most common scams that we’ve seen associated with companies claiming to offer cash for houses:

ScamHow It Works
Phishing emailsA fake buyer emails a cash offer, then requests your private information, such as personal banking details. This can lead to identity theft or other fraudulent activity.
WholesalingInvestors obtain the right to sell a property, then resell the contract to a cash buyer. Technically this is legal — but it can be misleading for the seller, especially if there’s a clause that lets the investor to back out if they can't find a buyer.
Upfront feesThe cash buyer requests a deposit or payment for fees upfront. A legitimate cash buyer should never ask you to pay anything before closing day.
Equity skimmingAn investor promises to help a distressed homeowner by offering to buy the home and sell it back to the homeowner later. Once the title is in the fake investor’s name, they take all the equity out of the home, leaving the homeowner in an even worse situation.
Foreclosure reliefA company offers to help a homeowner who's facing foreclosure by making their mortgage payments. The company collects a reduced monthly payment from the homeowner, but ultimately never makes payments on the actual mortgage.
Show more

Signs a cash buyer may not be legit

While scams are illegal, some investors use tactics designed to rip you off legally by making an offer that's low, but still legitimate — or trying to get you to lower your sale price at the last minute. Here are a few red flags to look out for.

They don't visit the property before making an offer

A major red flag is "if an investor says they're going to buy a house, but they never come out to see it," says Philadelphia-based real estate investor Igor Avrantiner, whose We Buy Houses franchise maintains a 5-star customer rating on Google.  

A serious buyer needs to evaluate a property's condition, estimated repair costs, and potential resale value in person before committing to a purchase. 

Not visiting a property before making an offer raises questions about the investor's true intent. They may be trying to sell the contract to another buyer without doing their due diligence, which could lead them to cancel the contract at the last minute if they're not successful.

They try to get you to sign an offer before completing inspections

Avratiner also warns about buyers who say they're going to have an inspector or contractor come out to evaluate repairs after signing a purchase contract. The buyer may intend to use inspections solely as justification to renegotiate for a lower price. 

Inspections should inform offers rather than follow signed deals — especially since investors go in anticipating that the homes they're looking at will require some repairs. 

"All of that due diligence should be done up front," Avratiner says.  

They don't put down a reasonable deposit

According to Avratiner, the typical deposit (often referred to as earnest money) on a cash home sale is "1-2% of the purchase price, or $1,000–2,000 on a $100,000 home." However, he's seen less honest investors offer as little as $50. 

Low or absent deposits allow predatory investors to easily walk away after tying up the property, wasting the seller's time and blocking legitimate offers. Reasonable deposits indicate genuine motivation.

They don't have an online presence

The lack of an online presence is another red flag to watch out for. 

An important part of vetting an investor is "researching the company and reading Google, Facebook, Yelp, and BBB reviews online to ensure the company is reputable," says investor Matthew Pezon. "Look for complaints with the Better Business Bureau or for consistent, negative reviews online."

Even if an investor is legitimate, the lack of online reviews prevents sellers from researching a company's reputation, so it may be best to steer clear. 

They misrepresent their intent to wholesale the property

"Some investors will intentionally hold themselves out to be the end buyer, but they're actually not," warns Avrantiner. 

In reality, they have no intent to purchase homes directly. Rather, they get you to sign a contract for what seems like a reasonable price and then attempt to sell the contract to another buyer — often for thousands of dollars in profit. This is a process known as wholesaling.

While wholesaling is a legal business practice, a lack of transparency around this type of agreement takes advantage of the seller — since it's generally higher risk and less reward than selling directly to an investor.

Some wholesalers may make offers that sound great but then struggle to find another buyer to purchase it at a higher price — resulting in their wanting to cancel the contract at the last minute.

They may even try to put your home on the market while under contract — something that you could just as easily do yourself, without giving away your profit.

Sign that you're dealing with a wholesaler may include:

  • A contract containing 'exit' clauses or contingencies that let the buyer cancel at any time, especially without forfeiting their earnest money
  • "Assignment" clauses allowing the buyer to sell the contract to another party or list the property on the MLS while you're still under contract
  • Delays in getting the contract over to you to sign, or a closing window of more than 30 days, giving the investor more time to shop for another buyer
  • Low or no earnest money deposit, allowing the seller to back out of the contract without financial penalty
  • A poorly defined inspection period or lack of clarity around what happens if a buyer decides to back out past the inspection period — a window of no more than 7–10 days to conduct inspections and finalize negotiations is typical

They pressure you to sign before you've had your contract professionally reviewed

High-pressure sales tactics — such as telling you that an offer is only good until the end of the day — are another warning sign. A reasonable investor will allow adequate time for you to review the contract with a professional, get competing offers, and make sure you're comfortable with your decision.

"Be wary of buyers who try to pressure you into overnight decisions," says Bart Waldon, Managing Partner of Land Boss. "Take time to weigh all options before accepting an offer.

How to vet a cash offer from a 'we buy houses' company

Know your home's value

The best way to guard against getting ripped off by a 'we buy houses' company is to know what other buyers would pay for it. Many realtors are willing to provide a free comparative market analysis, which will show you what your house is worth in your market based on recently sold homes in similar condition.

While investors might only offer 70–80% of a home's potential worth, they should be transparent about how they arrive at their offer price. Some investors will even sit down and show you the comparable home sale data and cost estimates they used to come up with their offer amount.

"If at any point things become shady or you are given an offer that is too good to be true, most likely it's not going to turn out well for you," says Matthew Coan, owner of Cash Savvy Home Buyers, says, 

Look beyond the offer price

While accepting the highest offer may be tempting, you should also make sure you understand the terms of the deal to avoid any last-minute surprises. According to Efrain Lopez of House Love Treatment Buyers LLC, particular terms to pay attention to include: 

  • Closing timeline. The closing timeline can be a crucial consideration for sellers. If they need to sell quickly or have a specific time frame to move out, the seller may prefer an offer with a faster closing date.
  • Contingencies. In real estate, contingencies allow one or both parties to back out of a deal if certain conditions aren't met, such if a buyer's financing falls through or an inspection report turns up a major issue. When working with a 'we buy houses' company, sellers should prioritize offers with fewer or no contingencies, as these reduce the chances of the deal being delayed or falling through.
  • Earnest money deposit (EMD). A higher earnest money deposit demonstrates a buyer’s commitment to the sale and reduces the likelihood of them backing out. The seller may consider offers with a larger EMD more seriously — or negotiate for a higher EMD if one buyer’s offer is close to another. 
  • Buyer’s financial strength. A cash buyer with proof of funds from bank statements or a financial backer can be more attractive than an offer from someone relying on financing that may be subject to approval. If a seller receives an offer with a financing contingency attached, they can ask for a pre-approval letter and a higher earnest money deposit before accepting.
  • As-Is vs. repairs. Offers that include "as-is" clauses (where the buyer accepts the property in its current condition) can be more appealing, especially if the seller doesn't want to invest in repairs. Make sure buyers complete inspections and agree to purchase the property in its current condition before signing.
  • Flexibility. The buyer’s willingness to accommodate a seller’s specific needs, such as staying in the property for a certain period (post-closing occupancy) or allowing them to leave unwanted items behind, can also influence an offer's overall appeal.
  • Closing Costs. Some buyers offer to cover a portion of the seller’s closing costs, which can be a key differentiator if the seller is looking to reduce their out-of-pocket expenses.

"A high offer price is attractive, but the overall structure of the deal can make or break the transaction," says Brian Harbour, who manages real estate acquisitions at Real Deal Home Solutions. "Sellers should carefully evaluate each offer’s terms and negotiate for a balance of price, speed, and security that best aligns with their goals."

Screen buyers carefully

Most cash buyers are honest, but there are some who are either inexperienced or less than reputable. A shady cash home buyer can cause a deal to fail, especially if they don’t have enough funds to close the deal, which can leave you scrambling to find another buyer.

"Sellers should verify proof of funds, ask for references, and consult with a professional like a real estate attorney to ensure they are getting a fair deal," says SD House Guys co-founder Alexander Capozzolo, 

In addition, you can ask for past closing statements as proof that the buyer has successfully bought and sold homes. That’ll show that they’re experienced and that any offer they make is less likely to fall through.

Ask buyers how they arrived at their offer price

For extra peace of mind, ask buyers to explain how they arrived at their offer number. If you’ve gotten multiple offers, you can also ask particular buyers to explain why their offers are lower or higher than others.

Coan says "If a seller wants to work with a real estate investor then go with an honest one that will be fully transparent with you. It is not hard, or uncommon for a legitimate real estate investor to break down all of the numbers for you and put on full display where they are getting their offer from."

If a buyer is unwilling to provide a breakdown of their estimate, that could be a red flag. It may indicate that the buyer is inexperienced or doesn't want you to see that they’ve either underpriced your home or made you an offer that’s too good to be true.

Have a professional look over the contract

Having a professional such as a real estate attorney or agent review a buyer's purchase contract can uncover hidden fees or fine print that could make a deal less fair to you.

For example, many cash buyers will waive the inspection contingency that allows traditional buyers to bring in a professional home inspector to verify the property's condition. If your contract does contain an inspection requirement, that could give the buyer an opportunity to dramatically lower their offer or walk away if you're unwilling to renegotiate. 

Without getting your contract reviewed by a professional, you’re at a higher risk of your deal falling through or getting less than you anticipated.

Get competing bids

To get the best possible price for your house, you need to expose it to competition. Requesting an offer from an investor is free, and you have no obligation to accept it — so there’s no harm in shopping around.

You can request cash offers by calling local investors directly, but this process can be time-consuming. Another option is to work with a real estate agent, who can request offers on your behalf and screen them to make sure the terms are fair. However, realtors typically charge a commission, and the traditional listing process may leave you in a time crunch if you need to sell your house fast

.If you’re looking to save time and money, a free service like Clever Offers can help you source offers from multiple trusted investors in their network. You can compare offers without pressure while saving time and knowing you’re only dealing with reputable buyers.

Other ways to sell your house quickly for cash

If you need to sell quickly, know that "we buy houses" companies aren’t the only option.

Sell to an iBuyer

Pros

  • Sell your house as is — no repairs, staging, or showings
  • Pick your own closing date, ranging from 1–2 weeks to 2–3 months
  • iBuyers tend to pay more than rental property investors and home flippers

Cons

  • iBuyers aren't available in every market — usually just around larger cities
  • They have strict purchase criteria — preferring newer homes in good condition
  • You'll be charge a service fee, plus repair and closing costs

If your home doesn’t need too much fixing up, you could also consider selling to an iBuyer. Companies like Opendoor and Offerpad operate on a large scale, and their offers are much closer to market value. 

However, they tend to pay slightly less than what you could net on the open market. They also charge service fees of about 5%, plus variable repair costs based on their home inspection.

Still, selling to an iBuyer is an easy way to sell your house as is for a decent price, allowing you to skip repairs and avoid the showings and negotiations that come with a traditional sale.

Work with a realtor

Pros

  • Cast the widest possible net
  • Potential to bring in more competitive offers
  • Save on realtor fees when you work with a low commission brokerage

Cons

  • Some realtors lack experience dealing with distressed properties, so be sure to ask them about prior sales
  • Buyers may still be limited to investors — especially if your house needs major repairs

The best way to ensure you get a competitive offer is by listing your house with an experienced real estate agent — particularly one willing to negotiate their commission

For example, San Diego-based realtor and house flipper DJ Olhausen was recently contacted by a client needing to sell an inherited home that needed a lot of work to make it livable. 

While the owner had initially reached out to Olhausen seeking a cash offer, he suggested listing it on the MLS for a better price. "Her current and best offer from a flipper was at $515,000, and I was convinced we could get her over $600,000," Olhausen recalls.

"We took professional photography, held open houses, and I personally reached out to all of my investor friends to try and stir excitement," says Olhausen. "By the time we were ready to review offers, we had 10 offers — with our top offer being $675,000."

Also remember the real estate commission is negotiable, and some agents may be willing to cut you a deal if you find yourself in difficult circumstances. You can also find built-in savings by working with a top-rated low commission brokerage.

Bottom line: Is a cash offer from a 'we buy houses' companies a ripoff?

While most 'we buy houses' companies are not there to rip you off, you may be disappointed by their offer price. 

The investors behind these companies make a profit by purchasing homes at a bargain — usually about 70% of after repair value (the estimated market value after repairs and renovations) — then fixing them up and selling for more. 

A home that could fetch $350,000 after some improvements might only get $225,000 from an investor. Sellers who accept a low offer and then watch their home being sold for $100,000 a few months later will understandably feel ripped off.

However, if your home needs significant repairs and you need to sell quickly to get out from under the mortgage payments, selling to an investor for less than market value might be an option worth entertaining. 

For example, if your house has serious structural problems, traditional mortgage lenders may see it as too risky to offer a loan on. Since most buyers need a mortgage to afford a home, this drastically reduces your prospects. In this case, selling your house to an investor might be the only option.

With an investor, you'll get the cash right away, which can help you avoid racking up months of additional mortgage payments and other expenses. But you'll need to consider whether that convenience is worth the cost. 

Requesting an offer from a 'we buy houses' company is free, and there's no obligation to accept it. If you're not happy with the offer, you can always keep it on the back burner while you look at other options.

Get the best of both worlds. Compare instant cash offers from multiple vetted investors in your area, and get up to 100% of your home's value. Or, choose a 7-day listing to sell your home quickly for the highest possible price. Compare cash offer today.

Related Links

Want to explore more options for selling your home? Read these articles to find out more.

The Top Buyer Companies for a Stress-Free Home Sale: We vetted the leading iBuyers to help home sellers choose the best fit.

Real Estate Agent vs. Real Estate Broker vs. Realtor –What’s the Difference?: Whether you’re a buyer or a seller, a real estate agent is a valuable partner in your real estate journey. We examined the similarities, differences, and licensing requirements for the types of agents you might meet.

How to Sell Your House Fast: The Best Ways to Unload Property in a Hurry: For home sellers who need to close immediately, we gathered tried-and-true strategies for finding a buyer ASAP.

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Our experts continually research, evaluate, and monitor real estate companies and industry trends. We update our articles when new information becomes available.

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