What to Know About Those ‘We’ll Buy Your Home’ Ads and Mailers

How prevalent are these scams? It’s hard to say. Most companies “are flying under the radar,” says Greg Lemon, director of the Nebraska Real Estate Commission. Anecdotally, Clayton says, his office has seen an uptick in solicitations over the past year and a half, as housing demand exceeds supply.

“These folks can rather quickly flip a property and turn a handsome profit by preying on people who are in a desperate situation and don’t know the true value of their homes,” he says.

Whom they target

House flippers often cast a wide net, yet their solicitations are also highly targeted. Because so much data is online, companies can find ZIP codes with a high concentration of older homeowners who likely have significant home equity. Scammers comb public records to identify foreclosure filings, divorces and recent deaths.

“If your mom just died, that’s a bad time,” says Samantha Lowery, deputy director for enforcement with the Nebraska Real Estate Commission. “And then somebody comes in and says, ‘We’ll give you money for the house, and you can walk away.’ That can be appealing to people in distress.” As Clayton notes, “They find homeowners in difficult situations and pressure them to enter these contracts quickly and to close the sales quickly.”

In May 2023, ProPublica, an investigative journalism nonprofit, published a report titled “The Ugly Truth Behind ‘We Buy Ugly Houses.’ ” The investigation, which focused on HomeVestors, found that its 1,100-plus franchises “used deception and targeted the elderly, infirm and those so close to poverty that they feared homelessness would be a consequence of selling.” Victims included an 82-year-old woman with dementia who signed a contract to sell her home at two-thirds of its value and a 72-year-old woman with a hoarding problem who was falsely told that the city would take her home.

“You were always lying to them. That’s what we were trained,” one former franchise owner told ProPublica.

HomeVestors overhauled its policies after the investigation, ProPublica reported in January. But plenty of companies use shady tactics to buy people’s homes.

“Many of these scammers and institutional buyers will initiate a high volume of solicitations, and it’s not particularly costly,” Clayton says. “Even if a small percentage of homeowners take them up on their offer, the scam is extremely lucrative and cost-effective.”

How to protect yourself from homebuying scams

If you’re thinking about working with a “We Buy Homes” company, take these steps to protect yourself.

• Know the value of the home. “If you’re ready to sell, the first thing you should do is figure out what it’s worth,” Lowery says. “We live in an age of information. Go on Zillow and look up what your neighbor’s house sold for.” Even better, she says, contact a real estate agent to determine your home’s market value or research prices on the county assessor’s website. Scammers count on people’s ignorance.
• Never reply (even to complain). If companies pester you with calls, emails and texts, don’t ask them to stop, Clayton warns. Responding tells them “this is a good number, there’s a live person on the other end, it’s still a potential lead,” he says. Instead, add numbers to the Federal Trade Commission’s “Do Not Call” list and forward spam texts to the number 7726, which helps wireless providers spot and block similar messages.
• Avoid loan searches online. Let’s say you search the internet for a short-term loan or home equity loan. You’ll likely enter your name, address and contact information into a website. Scammers and institutional homebuyers can purchase that data. They often obtain leads from other sources, Clayton notes, and they hunt for people in desperate financial situations.
• Understand what you’re signing. Legal booby traps may be lurking in a contract. One example is the lack of an expiration date. “Some of these contracts can last for years, making it impossible for the homeowner to sell their property to someone else,” according to a guide from the Nebraska Real Estate Commission. In North Carolina, scammers have told homeowners they were signing a receipt for a cash advance, when they actually signed a purchase-and-sale agreement or even a deed of conveyance, Clayton says. Contracts often contain provisions allowing the wholesaler to cancel the deal for any reason, Lemon adds: “If they can’t make a profit off it, they move on to somewhere else.”
• Prepare to be shuffled. Wholesalers may put a property under contract, then market it to other wholesalers. “Just because you’re dealing with one person doesn’t mean your property won’t be assigned to 14 other wholesaling companies within an hour,” Lowery says. If a property doesn’t sell quickly, the contract is more likely to bounce from wholesaler to wholesaler, and “closing may not happen at all,” Lowery says.
• Get legal advice. “We always advise people when they enter into a transaction, particularly one like this, to talk to an attorney,” Lemon says. Other options include consulting advisers such as a financial planner. Even if you can’t afford an expert, ask a trusted friend or family member to review the contract, because once you sign it, it’s hard to escape. “It can be very difficult and very expensive to try to unwind one of these purchase-and-sale agreements,” Clayton says. “And the scammers do not hesitate to aggressively enforce the contract.”
• Report scams. Think you’ve been cheated? Report it to your state’s attorney general’s office or real estate commission. You can also file complaints with the Better Business Bureau, the Federal Trade Commission and the U.S. Consumer Financial Protection Bureau.