Selling a property can be a stressful experience for many reasons. If it is your first time selling, you may be overwhelmed simply by the number of options available to you.
If life forced your hand at selling the piece of property–perhaps an estate sale after the death of a loved one, a divorce, Houston flooding, a job loss leading toward foreclosure—this can add even more anxiety and stress to an already difficult and emotional process.
The last thing you want to face in such a scenario is the added complication of questioning the legitimacy of buyers. Many people wonder if companies like “we buy houses” are legit or scams.
Luckily, we have the experience to help you understand this subject. We can teach you exactly what to look for when assessing cash buyers and trying to determine if you are entertaining a legitimate offer (or not).
Read on for what you need to know about the legitimacy of cash buyers.
Cash Buyers: Understanding the Difference Between Wholesalers and End Buyers
The prospect of “cash buyers” can be both exciting and scary. Many sellers want to get rid of a piece of property quickly, so they are encouraged by the idea of a cash buyer. On the other hand, the internet is full of real estate scam stories associated with “we buy houses for cash” companies that are not legitimate.
Sellers need to be vigilant when it comes to looking out for we buy houses scams and avoiding a scenario where you end up disappointed and frustrated when something “too good to be true” turns out to be just that because of a scammer.
The most important piece of this cash buyer puzzle to understand comes down to the difference between wholesalers and end buyers and knowing which type you want to prioritize as a potential and legitimate buyer.
Cash Buyers Operating as Wholesalers
You may be familiar with the term “wholesaler” in the way that it applies to retail organizations. For example, you might think of a warehouse store like Costco or Sam’s Club.
However, when it comes to cash home buyers, a wholesaler is essentially a middleman between you (the seller) and the end buyer. The wholesaler enters into a contract with the seller and then works to find a buyer.
The wholesaler charges the buyer a higher price than the seller. Then they keep the difference in that price as a profit. That in itself is not terribly problematic, as you would expect the wholesaler to venture into this looking to turn a profit.
However, where this gets tricky is when the wholesaler cannot find a buyer for your home. That’s when they will try to reduce the price they have offered you or cancel altogether.
Cash Buyers Operating as End Buyers
When working with a cash buyer for your home, the ideal scenario involves working with what is known as an end buyer.
The end buyer is the one who is actually investing in your property, whether that means they are buying it for their own use or they are planning to update the property and “flip” it for a profit.
Flipping homes is a way that many people make significant profits from real estate, as long as they are willing to put the work in and have a good eye for remodeling and design, coupled with strong budgeting and time management skills.
The most important thing to consider about the end buyer is they are ultimately the party with access to the capital, and they have a specific interest in your property. This is a classic case of “cutting out the middle man” to make things easier. A transaction with an end buyer should be more transparent than one with a wholesaler.
Wholesalers vs End Buyers: How to Spot the Difference
For first-time sellers, it could be difficult to determine who you are dealing with when you are first approached by cash house buyers, and you may be anxious about whether or not you should entertain a particular cash offer.
Rest assured, it is relatively easy to determine which type of buyer you are dealing with, and all it takes is a few minutes of internet research to know how to tell if a cash buyer is legitimate.
Using your county’s public records, you will be able to determine what properties the company owns, if any. For example, in Harris County, you can search by company name. Below is an image of this database, with PPS House Buyers (our company) seen as the example.
If the company that approached you to pay a cash transaction for your home does not own a single property in the area, you can bet they are a wholesaler, and you should proceed with extreme caution. Your best bet is always to work with cash buyers who are also end buyers.
We at PPS House Buyers have experience in the Houston market, with many successful transactions under our belt. If you’re ready to discuss your property and get help with your situation, please get in touch.