Scam Alert: Cash For Home Offer May Not Be What You Think

Tempting offer proves to be fool's gold

shutterstock_25600228A few weeks ago I found a sheet of paper wedged in my apartment doorway. The letter simply read:

My name is Michael and I’m very interested in buying you’r [sic] house. Please call me only if you’r [sic] interested. I will pay for it all cash[sic] call me at…

Michael.

If you’r [sic] not interested please ignore this letter. Thank you for your time. And have a blessed day!

There was no official letterhead, company name, or Website. Out of curiosity, I called the number and spoke to “Michael.” I told him I’m looking to sell a three-family brownstone and he immediately told me, based on the area (sight unseen), he could give me $300,000 in cash for the place.

When I asked about an appraisal, he said the appraiser will only “tell [me] what I want to hear and not the actual market value.” To start the process “Michael” wanted to come over that day to begin filling out paperwork, especially since he was leaving the country in two days and would not be back for a month — major red flag.

“Sell you home for cash” signs are ubiquitous, and unfortunately, sketchy, says Manny Alvarado, operation specialist for the New York Regional office of the U.S. Department of Housing and Urban Development (HUD).

“Most of the time it’s a scam,” says Alvarado. “People say they’re going to buy your house for cash and then they tie it up in a contract for two or three months and what they’re really doing is getting financing,” he explains. Once financing is secured realtors will try to flip to making up to 100% profit.

While I did not know the exact value of the brownstone in which I lived, there were two brownstones in the area (one directly across the street) whose asking price ranged from $500,000 to $700,000.

“Low balling may be due to the fact that the sellers are offering the home up in cash,” says Roger Clay, president of the Insight Center for Community Economic Development. While going through a real estate agent, using lawyers, and taking the traditional route of selling a home may seem be more bureaucratic, Clay says it may work in the homeowners favor since there are “more eyes on the transaction.”

The New York regional office of HUD has been cracking down on these quick sale scams for 12 years, says Alvarado. These salespeople prey on minorities and the elderly, he adds.

“HUD doesn’t have jurisdiction over the sales. It comes under the New York State Department of State Division of Licensing Services. ”

To check out if a real estate agent is legit, Alvarado recommends visiting your state’s Department of State Division of Licensing.

If you are at risk of foreclosure, find a HUD approved counseling agency by visiting HUD.gov.

Renita Burns is the editorial assistant at BlackEnterprise.com.

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