'We Buy Houses' Scams: The Six Schemes and 12 Red Flags That End the Conversation

Usually it is just a low offer. The legal version of the business is simple: an investor pays roughly 65 to 80 percent of a home's after-repair value, minus the cost of repairs, then renovates and resells or rents it. That math produces numbers sellers dislike; see our guide to how much cash home buyers pay. A scam is something else entirely. It is not a purchase at a bad price; it is fraud aimed at your deed, your deposit, or your bank account, and the 'offer' is only the opening line.

The test is what the other side wants from you before closing. A real buyer, even a stingy one, wants a signed contract and a closing date, and pays their own costs along the way. A scammer wants something now: a fee, a signature on a deed, a refund of an 'overpayment', or a wire to new instructions. If you are not sure which kind of buyer you are dealing with, are 'we buy houses' companies legit sorts the industry into its four real categories; this page covers the part that is not a category at all.

Five of the six schemes below have been described by the FTC, the CFPB, or a state attorney general, and those descriptions follow the naming agency's language; the sixth is an industry pattern with no regulator name, included because it costs sellers the same month.

Upfront fee. You are asked to pay an 'application', 'processing', or 'title search' fee to receive an offer or to move your sale forward. Legitimate buyers pay their own costs. The Florida Attorney General's mortgage fraud guidance puts it flatly: homeowners should never pay any up-front fees, and fees may only be collected after services are completed. For anyone behind on a mortgage, the FTC adds that it is illegal for a company to charge you upfront for promises to help you get relief on your mortgage.

Overpayment check. A 'buyer' sends a cashier's check or money order for more than the agreed amount and asks you to wire back the difference. The check bounces after your refund clears, and the refund is gone. The Florida Attorney General's overpayment-scam warning describes the pattern across big-ticket sales generally, not real estate specifically: the thief poses as an interested buyer from out of town, the payment arrives in an amount greater than the purchase price, and the advice is to never accept payment for more than the price and never wire money to a buyer. In a house sale the 'deposit' version is the same scheme with a bigger number.

Equity skimming and deed transfer. Someone offers to 'help' by having you sign the deed over so they can market the property, take over the payments, or find a buyer, and you move out. The FTC's Mortgage Relief Scams page describes what happens next: once you transfer the deed, they simply rent out the home and pocket the rent while your lender goes ahead with the foreclosure, and transferring the deed does not change the fact that the mortgage is yours. North Carolina's attorney general documents the same scheme under the name 'We Buy Homes' scams: the company leases the property out to a new tenant, and the owner loses rights to the home but is still responsible for the mortgage payments. Its advice is the right one-liner: beware of anyone who asks you to sign over the title to your home based only on their promises. A legitimate subject-to purchase exists, but it is a closing with a contract and a title company, not a favor.

Sale-leaseback and rent-to-buy. You sell, stay on as a renter, and are told you can buy the home back later. The FTC names the fraudulent version 'rent-to-buy ripoffs': transferring the deed does not transfer the mortgage, the scammer usually does not sell the home back, the rent rises over time, and after missed rent payments you are evicted. The honest version, a sale-leaseback marketed as a way to 'unlock' your equity, is not automatically a scam, but the FTC issued a consumer alert on sale-leasebacks in October 2024 because the risks are often hidden in the fine print of complicated contracts: hefty fees, exorbitant rent, and eviction if you cannot afford the rent when it goes up. Its advice: take your time, read the fine print, and hire a lawyer first.

Title-company impersonation and wire fraud. Days before closing, an email that looks like it came from your title company or attorney sends 'updated' wiring instructions. The Florida Attorney General's real estate scams release describes escrow wire fraud as scammers posing as representatives of a title or escrow company with instructions for a money transfer; once the money is wired, they withdraw it and disappear. The release's guidance applies to sellers as much as buyers: confirm wiring instructions by calling a number from the original documents, and double-check any message that requests a change to instructions you already received.

Phantom buyer with no money. A 'cash buyer' signs your contract with a $100 refundable deposit and a 30-day inspection period, then spends the month shopping your contract to real investors. If nobody bites, the deal dies and you have lost a month and the offers you turned away. This is wholesaling, and it is not automatically fraud; a disclosed assignment backed by a real deposit is a legal transaction. It becomes a scam when the buyer claims to be closing with their own money and has none.

Twelve tells appear across all six schemes. Any one of them ends the conversation; you do not need a second.

1. Any fee before closing. Application, processing, title, or 'lock-in' fees are the upfront-fee scheme by definition.
2. An offer without anyone ever seeing the property. Real buyers price what they have looked at, in person or through someone local.
3. No proof of funds, or a screenshot instead of a bank letter. A real proof of funds is a dated statement or bank letter a title company can verify.
4. A deposit held by the buyer, or no deposit 'because we close fast'. Earnest money belongs in a title company's escrow, never in the buyer's account.
5. A deed, power of attorney, or 'authorization' to sign before you are paid. Nothing that transfers title, or the right to sign for you, gets signed outside a closing.
6. Being told to stop paying your mortgage, or to pay someone other than your servicer. Both appear on the CFPB's list of foreclosure-relief warning signs.
7. 'This expires tonight.' Pressure to act immediately is the one ingredient every scheme above needs.
8. Discouragement from showing the contract to an attorney, or a stack of papers you are rushed through. The FTC describes the 'rescue loan' version: buried in the stack is a document that gives them the deed to your home.
9. Being told not to talk to your lender. The FTC notes that companies which tell you to stop communicating with your lender are breaking the law.
10. A company name that is not in the state business registry, or that differs from the name on the contract.
11. A check for more than the price. This is the overpayment scheme, and the correct response is to refuse the check, not to refund the difference.
12. Wiring instructions that change by email. Real title companies do not change wiring instructions by email without a phone call to a number you already have.

Because default creates both a deadline and a public record, and every scheme above runs on urgency. Once a lender files a foreclosure case and records a lis pendens, your address lands on lists that marketers and scammers buy, which is why the letters start the week the case is filed. The FTC's guidance for owners having trouble paying a mortgage or facing foreclosure leads with the opposite instinct from the scam's: contact your mortgage servicer or lender right away to see if you can work out a plan. Its section on avoiding mortgage relief scams exists because of how reliably distressed owners are targeted.

Florida wrote a statute around this. Section 501.1377 regulates foreclosure-rescue consultants whenever the services involve stopping or delaying a foreclosure or curing a mortgage default: the consultant must have a written agreement, cannot collect any payment before completing all the promised services, and must honor a three-business-day right to cancel that the homeowner cannot waive. Once a notice of pendency (the lis pendens) has been recorded, a separate set of rules applies to foreclosure-rescue transactions, the equity-purchase deals in which you convey the home and keep a lease or repurchase option; those carry their own cancellation right and limits on the repurchase price. Violations are treated as unfair and deceptive trade practices under Florida law, with a penalty of up to $15,000 per violation. The statute does not undo a bad deal, but it tells you which features a legal one must have.

Free help exists and is not a scam. HUD-approved housing counseling agencies, reachable through HUD's Talk to a Housing Counselor page, are the counselors the FTC points to for free, legitimate help, and Florida's statute largely exempts them from its consultant rules (the exemption covers nonprofit organizations and anyone acting with HUD's express authority or written approval). If selling is the right answer, our guide to selling a house in foreclosure covers the mechanics, and cash buyers for foreclosure situations explains how a real closing before the sale date works.

Stop signing, then call your bank and your title company at numbers from their own websites, not from the email or the person who contacted you. If a wire went out, the bank's ability to recall it drops by the hour, so that call comes first. If you paid a fee by card, dispute it the same day. If you signed anything that looks like a deed, a power of attorney, or an 'authorization', photograph every page and call a real estate attorney before the county recording office opens.

Then report it, in three places. File with the FTC at ReportFraud.ftc.gov, its fraud-reporting portal. File a complaint with the Florida Attorney General through its online complaint form if the property is in Florida, or with your own state's attorney general if not. And if a mortgage, lender, or servicer was involved, submit a complaint to the CFPB, which sends it to the company for a response. In Florida, if what you signed was a foreclosure-rescue services agreement, the three-business-day cancellation right under section 501.1377 cannot be waived or limited; send the cancellation in writing and keep proof that you sent it.

Verification plus competition. Verification is the procedure for checking a cash buyer: the state registry, proof of funds, an escrowed deposit, a direct question about assignment, and an attorney's hour on anything unusual. Competition is the structural fix. Every scheme above depends on you negotiating with one party in an information vacuum; multiple written offers, each with a verified deposit in a title company's escrow, make an upfront fee absurd, a deed-first favor unnecessary, and a phantom buyer visible against the real ones.

That is also the honest answer to the lowball problem. A low number from a single buyer is not a scam, but it is not a market either. How BuyerMatch.ai vets buyers and makes them compete in writing is built on that principle; it does not buy houses itself, so the only thing on its side of the table is the match.