How to Vet a Cash Home Buyer Before You Sign

Anyone can put "we buy houses" on a sign or a website. That's exactly why you should check out a cash buyer before you sign anything, and that includes me. A good buyer won't mind the questions. A buyer who gets annoyed by them has told you what you need to know.

Below is the checklist I'd want a family member to use.

Ask for proof of funds

"Cash" should mean the money exists today. Ask for a recent bank or brokerage statement, or a letter from the lender funding the purchase, showing enough to close. It's fine for a buyer to black out account numbers. It's not fine for them to dodge the request.

Look at the date. A statement from months ago doesn't prove much. And the name on the document should match the person or company signing your contract.

Find out who is actually buying

The name on the contract matters. If it's a company, look it up on the state's Business Records Service, run by the New Jersey Division of Revenue and Enterprise Services, which lets you search entities and pull status reports on businesses on file with the state.

Then ask a plain question: "Are you buying this house yourself, or will you assign the contract to someone else?" Some cash buyers, including me at times, sell the contract to an end buyer rather than closing themselves. That can work fine for a seller, but you deserve a straight answer up front, and you should know who will show up at closing.

Also ask whether the company you're talking to is the one that will buy, or whether it passes inquiries along to someone else. For houses outside New Jersey, I sometimes refer the seller to a partner, and I only do that with the seller's permission.

If anyone tells you they're a licensed agent, the New Jersey Real Estate Commission keeps a public licensee search you can use to confirm it.

Get the key terms in writing

A real offer is a written contract, and these are the terms to read closely:

• Price. The number on the contract, not the one mentioned on the phone.
• Deposit. How much earnest money, and who holds it. New Jersey's Department of Banking and Insurance says in its home buying guide that an escrow agent named in the contract holds the deposit in an escrow account.
• Inspection or due diligence period. How many days the buyer has to back out, and for what reasons. An open-ended window could leave your house tied up with no firm commitment behind it.
• Closing date. Whose schedule it fits, and whether it can move.
• Closing costs. Who pays what. With me, that depends on the deal, so it gets spelled out in the offer rather than assumed. Our seller closing costs guide shows the usual items.
• Condition. If the buyer says "as-is," the contract should say it too, along with what you're allowed to leave behind. With me, you can leave whatever you don't want, and I handle the cleanout after the sale.

Have your own attorney read it

In New Jersey, a sales contract prepared by a real estate licensee must include an attorney review clause giving both sides three business days to consult a lawyer, according to that same state guide. It also notes that a contract prepared by an attorney may or may not include that review period. A contract that a buyer hands you directly may not have one either, so don't count on getting a window to back out after signing. Talk to a real estate attorney before you sign, not after.

Local or national?

Big national brands and local investors can both treat you well. What matters is who makes decisions about your house. Ask whether the person you're talking to will walk the property, set the price and stand behind it, or whether a distant office can change the terms later. Whoever you talk to, local or national, check the specifics above.

Red flags that should slow you down

• Pressure to sign today. A fair offer is still fair tomorrow. I close on the seller's timeline and I don't push, and you should expect the same from anyone.
• A price far above everyone else's. Ask what could change that number before closing, and make sure the answer is written into the contract.
• Fees charged to you for the "privilege" of an offer. A buyer's offer should cost you nothing.
• No willingness to explain the number. A serious buyer can walk you through value, repairs and costs. See how investors price houses for what that should sound like.
• Reluctance to use an attorney or a title company. Your money and your deed should pass through professionals.
• Changed payment instructions by email. The CFPB warns that scammers send spoofed emails posing as agents, attorneys or settlement agents with false wiring instructions, and it advises confirming account details in person or at a phone number you already agreed on. Apply that to where your sale proceeds go.

A short list of questions to bring

1. Can you show me proof of funds dated in the last month?
2. Whose name will be on the contract, and will you close yourself?
3. How much is the deposit and who holds it?
4. How long is the inspection period, and what lets you cancel?
5. Who pays which closing costs?
6. Can I pick the closing date?
7. How did you arrive at this price?

You can ask me every one of these. My offer is free and there's no obligation, and if listing with an agent would get you more, I'll say so. The agent vs. cash buyer guide lays out that choice. To start, read about our company or request an offer.