Is Selling to We Buy Houses Company Safe? | Safety Guide

Yes, selling to a we buy houses company can be safe when you work with legitimate buyers and take proper precautions. However, not all cash buyers are created equal, and some use shady tactics that can cost you thousands.

This guide will help you spot the good from the bad, understand what to expect, and make a smart choice about your home sale.

What Are We Buy Houses Companies?

We buy houses companies are cash buyers who purchase homes directly from homeowners. These businesses come in three main types:

iBuyers

Large tech companies like Opendoor and Offerpad use computer programs to make quick offers. They typically buy homes in good condition and can close fast.

Fix-and-Flip Investors

These buyers purchase homes that need work, fix them up, and sell them for profit. They often pay 50-70% of a home’s value after repairs.

Buy-and-Hold Investors

Individual investors who buy properties to rent out or keep for long-term investment. They may offer more competitive prices than flippers.

How Safe Is It Really?

According to industry data, legitimate cash buyers can close in as little as 1-2 weeks, whiletraditional home sales take around 60 days. The speed is real, but so are the risks.

The Good News

Many we buy houses companies are legitimate businesses that provide real value:

• Speed: Close in 7-14 days instead of 60+ days
• Convenience: No repairs, showings, or agent fees
• Certainty: Cash offers rarely fall through
• Flexibility: You can often choose your closing date

The Bad News

A2023 ProPublica investigation found that some franchise offices “used deception and aggressive sales tactics to persuade homeowners in vulnerable situations to sell their homes for far below market prices”. This led to increased oversight from state attorneys general.

Red Flags That Signal Danger

Watch out for these warning signs that suggest a scam:

Pressure Tactics

Legitimate cash buyers can close the deal in just two to three weeks, so there’s no need for extreme urgency. Be wary if someone:

• Pressures you to sign immediately
• Claims “this offer expires today”
• Won’t give you time to think or get advice
• Uses high-pressure sales tactics

Money Red Flags

If the home-buying company asks you to pay a fee in advance, it’s very likely a scam. You’re the seller: It’s you who should be receiving a sizable deposit.

Other money warning signs include:

• Asking for upfront fees or payments
• Offering no earnest money deposit
• Providing an extremely small earnest money amount
• Requesting temporary title transfers

Contract Issues

Be careful if the home buyer’s contract includes broad contingencies allowing them to cancel or delay the purchase for practically any reason.

Look out for:

• Vague “walk away” clauses
• Excessive inspection periods
• Unclear closing terms
• Missing buyer information

How to Protect Yourself

Do Your Research

Your best safeguard against getting ripped off by a ‘we buy houses’ company is to compare multiple offers to ensure the terms you’re getting are fair.

Here’s how to research properly:

1. Check Online Reviews: Look up the company on Google, Better Business Bureau, and social media
2. Verify Business License: Confirm they’re registered to do business in your state
3. Ask for References: Request contact info for recent sellers
4. Google Their Address: Make sure they have a real business location

Get Multiple Offers

Never accept the first offer you receive. Here’s why:

• Compare Terms: Different buyers offer different closing timelines
• Check Prices: If a home could sell for $300,000 after $50,000 in repairs, an investor might offer $160,000 for it
• Understand Fees: Some buyers charge hidden fees at closing
• Negotiate Better: Multiple offers give you leverage

Have a Professional Review Everything

You should also have a trusted professional — such as a lawyer or licensed real estate agent — look over the contract before signing.

Consider hiring:

• A real estate attorney for contract review
• A licensed agent for market value assessment
• An appraiser for independent home valuation

Understanding the Offers

What’s a Fair Cash Offer?

Like all cash buyers, We Buy Houses investors typically pays less for houses than a buyer might pay on the open market in a traditional home sale. If you’re selling to a company like We Buy Houses, expect an offer that’s 50–80% of your property’s after repair value (ARV).

Here’s what influences the offer:

• Current condition of your home
• Market value in your area
• Repair costs needed
• Profit margin the buyer needs

Why Offers Are Lower

Cash buyers need to make money, so they factor in:

• Repair costs: Even minor updates add up
• Holding costs: Property taxes, insurance, utilities
• Profit margin: According toATTOM’s latest report, property investors nationwide generated a 28.7% gross profit margin before expenses in the third quarter of 2024
• Risk: Market changes, unexpected problems

Legal Protections That Exist

Federal Trade Commission (FTC) Oversight

TheFTC has taken action against companies like Opendoor, resulting in a $62 million settlement for alleged misrepresentations to homeowners. This shows the government is watching this industry.

State Attorney General Action

After the ProPublica investigation, several state attorneys general increased oversight of we buy houses companies. HomeVestors now allows three days for a seller to cancel a contract due to this pressure.

Your Rights as a Seller

You have the right to:

• Review contracts thoroughly before signing
• Cancel within specified timeframes (varies by state)
• Get independent legal advice at any time
• Report suspicious activity to state authorities

When It Makes Sense to Sell

Good Situations for Cash Sales

Selling to a we buy houses company might be right if you:

• Need to move quickly due to job relocation
• Can’t afford repairs to sell traditionally
• Want to avoid showings and open houses
• Have a property in poor condition
• Are facing foreclosure and need fast cash
• Inherited a property you don’t want to keep

When to Avoid Cash Buyers

Consider traditional selling if:

• You have time for a regular sale process
• Your home is in good condition and market-ready
• You want top dollar for your property
• The local market is hot with lots of buyers

Colorado-Specific Information

Colorado Market Conditions

In Colorado, the median price for a single-family home is $584,000 statewide, with the Denver-metro area at $626,779. Despite more homes for sale, prices haven’t dropped significantly because demand is still outpacing supply in many areas.

Local Considerations

Colorado homeowners should know:

• Inventory is increasing: There are about 3.9 months of supply currently, up more than 30% from last year
• Market is cooling: More time to consider offers
• Prices remain stable: Good time to get fair value

If you’re in Colorado and considering a cash sale, companies likeWe Buy Colorado can help with situations likeforeclosure,divorce, orinherited properties.

Steps to Take Before Selling

1. Get a Market Analysis

Before accepting any offer, understand your home’s value:

• Check recent sales in your neighborhood
• Get a CMA (Comparative Market Analysis) from an agent
• Consider an appraisal for the most accurate value

2. Calculate True Costs

Compare cash offers to traditional selling:

• Agent commissions (typically 6% of sale price)
• Repair costs needed to sell traditionally
• Holding costs while on the market
• Closing costs and fees

3. Verify Buyer Credentials

Before signing anything:

• Check business registration with your state
• Verify proof of funds (bank statements, pre-approval)
• Confirm insurance and bonding if applicable
• Review online presence and customer feedback

4. Read Everything Carefully

Don’t rush the process: Selling your home for cash can be a quick process, but don’t rush it. Instead, take the time to research the company, get multiple offers, and read the contract carefully before making any decisions.

Pay attention to:

• Closing timeline and contingencies
• Who pays what fees at closing
• Inspection periods and repair responsibilities
• Cancellation rights for both parties

Common Scams to Avoid

The Equity Stripping Scam

Most of the “We Buy Houses for Cash” scammers want to convince homeowners to sign over control of their homes. They might:

• Ask you to sign the deed early
• Promise to “save” your home from foreclosure
• Request power of attorney over your property

The Bait and Switch

Some companies will:

• Make a high initial offer to get you interested
• Lower the price significantly after “inspection”
• Add unexpected fees at closing
• Change terms at the last minute

The Fake Buyer

Watch for “buyers” who:

• Have no proof of funds
• Ask you to pay fees upfront
• Pressure you to sign immediately
• Won’t provide business credentials

Questions to Ask Any Cash Buyer

Before working with any we buy houses company, ask:

1. How long have you been in business?
2. Can you provide proof of funds?
3. What’s your process for determining offers?
4. Are there any fees I’ll pay at closing?
5. How quickly can you close?
6. Can you provide references from recent sellers?
7. What contingencies are in your contract?
8. Do you have proper licenses and insurance?

Alternatives to Consider

Sell As-Is to Regular Buyers

When selling your house as is, an agent will list and market your home with the caveat that you won’t make any repairs. An as-is sale can net you significantly more than selling directly to a ‘we buy houses’ company.

iBuyers vs. Local Investors

• iBuyers: Companies like Opendoor offer convenience but may charge fees
• Local investors: Often more flexible on terms and timing
• Wholesalers: May offer quick sales but typically lowest prices

Traditional Sale with Agent

If you have time, a traditional sale might net more money:

• Higher sale price: Usually 10-30% more than cash buyers
• Professional marketing: Better exposure to buyers
• Negotiation help: Agent handles offers and counteroffers

Final Thoughts

Selling to a we buy houses company can be safe and beneficial when done right. The key is working with legitimate buyers, understanding the trade-offs, and protecting yourself throughout the process.

Remember: speed and convenience come at a cost. You’ll likely get less money than a traditional sale, but you’ll save time, avoid repairs, and have more certainty.

Before making any decisions, get multiple offers, have professionals review contracts, and trust your instincts. If something feels wrong, it probably is.

For Colorado homeowners ready to explore their options,contact us to learn how we can help with your specific situation. Whether you’re dealing withforeclosure,need repairs, or aretired of being a landlord, we’re here to provide honest guidance and fair offers.

The most important thing is making an informed decision that’s right for your situation. Take your time, do your research, and choose the path that gives you the best outcome for your unique circumstances.