How can I tell if a cash home buyer is legit?
A legitimate cash home buyer never charges you to make an offer, puts every term in a written purchase contract you can read before you sign, and closes through a title company or closing attorney you can look up yourself. Check the company's registration with your state and its complaint history with the Better Business Bureau and your attorney general, and ask in writing whether it will buy the house itself or assign the contract to another buyer.
By Andy Rong
Published
This guide is general information, not legal, tax or financial advice. Laws change and every situation is different, so check yours with a professional.
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What does a legitimate cash buyer do?
- Makes its offer for free. You never pay to get an offer, to have the house inspected or to sign.
- Puts the price, the closing date, who pays which costs and every condition in a written purchase contract, and gives you time to read it or have a lawyer read it.
- Closes through a title company or closing attorney. That office checks the title, pays off your mortgage and any liens from the sale price, and pays you the rest. Look the office up yourself rather than using contact details the buyer sends.
- Puts down an earnest money deposit that the title company or attorney holds, not the buyer.
- Tells you up front whether it will buy the house itself or may assign the contract to another buyer.
- Has a real business you can find: a registered company name, a business address and a history of reviews.
What are the red flags?
- A fee before closing, for anything. For help with a mortgage, the Federal Trade Commission says it's illegal for a company to charge you until it has a written offer from your lender and you accept it.
- Pressure to sign today, or an offer that expires within hours.
- A request to sign over your deed, or any paper that transfers the house, outside a closing with a title company or attorney. The FTC warns that once you transfer the deed, you're not likely to get it back, and the mortgage is still yours.
- Advice to stop paying your mortgage or to stop talking to your lender. A company helping with your mortgage that tells you to stop talking to your lender is breaking the law, the FTC says.
- An offer to let you stay as a renter and buy the house back later, if you sign it over now. The FTC lists these rent-to-buy deals among mortgage relief scams.
- A contract with blanks, a very long inspection period, or terms that let the buyer walk away for any reason while you're bound.
- A buyer who won't name the title company or tell you who will actually buy the house.
How do I look up a cash buyer in my state?
Search the company's exact name in your state's business registry, which shows whether it's registered and who's behind it. In the states where Covent buys, the Secretary of State keeps that registry; in Florida, it's the Division of Corporations' Sunbiz site. Then check your state attorney general's consumer protection office for complaints or alerts, and read the company's Better Business Bureau profile and online reviews to see how it has treated other sellers.
What does it mean if a buyer assigns the contract?
Some cash buyers, often called wholesalers, sign a contract to buy your house and then sell that contract to another investor, who closes the purchase. It's legal when it's done in the open, but you should know before you sign, because the person who closes may not be the one you met. Ask any buyer to tell you, in writing, whether it may assign your contract and whether your price and closing date stay the same if it does.
What should I check in the contract?
- The price, and what can change it before closing.
- The closing date, and what happens if the buyer misses it.
- Who pays the closing costs, the title fees and any transfer tax.
- The earnest money: how much, who holds it, and when the buyer can get it back.
- The inspection period: how long it lasts and what the buyer can do during it.
- Whether the buyer can assign the contract.
- When you hand over the keys, and whether you can stay after closing.
If anything in a contract is unclear, a real estate attorney can review it before you sign, usually for a flat fee. It's general information, not legal advice, so check your situation with a professional.
Selling to Covent Homes
Here's how Covent Homes works, so you can hold it to the same checks: what every Covent offer includes, and who closes the purchase is in the questions below.
No repairs or cleaning. You don't repair, paint or clean up for us. We buy the house in the condition it's in.
No showings before you sign. Nobody walks through your house before we have a signed contract, so there are no strangers in your home while you decide.
You pick the day. Choose a closing day 14 to 60 days out, and you get paid at closing.
Closing costs paid. Covent pays the closing costs, including title and escrow fees. You pay off your own mortgage or liens.
Stay 10 days free. After closing, you can stay in the house up to 10 days at no cost, so there's no rush to move.
Cash, no financing. We pay cash, with no lender and no financing contingency, so a buyer's loan can't fall through.
Questions homeowners ask
Is it safe to sell my house to a cash buyer?
It can be, if the buyer passes the checks above: no fees, a written contract, a closing through an independent title company or attorney, and earnest money held by that office. The money and the deed change hands at the closing, through that office, not before.
Should a cash buyer show proof of funds?
It's reasonable to ask. A bank statement or a letter from the buyer's bank shows it can close. The title company will also confirm the money arrived before the sale records and you're paid.
Who is Covent Homes?
Covent Homes buys houses for cash, as-is, from homeowners in Texas, Georgia, Tennessee, Florida, Indiana, Missouri, Kansas, and North Carolina, and you sign the purchase contract with Covent. Covent may close the purchase itself or assign its contract to another buyer; your price and terms stay the same either way. Covent LLC, which runs Covent Homes, also makes software for real estate professionals; that is a separate business.
Will Covent own the house after closing?
Sometimes. Covent may close the purchase itself, or assign its contract or resell to another investor buyer. Your price and terms stay the same either way, and the contract says so in writing.
Read more about your situation
Sources
The public pages this guide's facts and figures come from.
- Federal Trade Commission: Mortgage Relief Scams
About the author
Andy Rong leads Covent Homes, which buys houses for cash, as-is, from homeowners in Texas, Georgia, Tennessee, Florida, Indiana, Missouri, Kansas, and North Carolina.
Andy writes these guides to answer the questions homeowners ask before they sell, in plain words, with a public source for every fact and number.
Andy isn't a lawyer, an accountant or a financial adviser. The guides give general information, and each one says when it's time to talk to one.