5 Key Questions to Ask a Cash Buyer Before Selling Your Home

If you own a home, at some point you’ve probably received calls, texts, postcards, seen ads on social media, or seen signs driving around town saying, “we’ll buy your house CASH” or “receive a CASH offer today!” In most cases, these are wholesalers. It is important to understand that wholesalers are marketers—not cash buyers or investors. They aim to get your property under contract for a set price and then assign that contract to an end buyer or investor. They are the middleman.

But not all wholesalers are bad. In fact, they often can provide unique solutions to a variety of problems. The good wholesalers are the ones that are creative, reliable, and reputable. You want to make sure that if you’re signing a contract, they will follow through with what is expected. I have gone into detail when selling to a wholesaler or cash buyer might be a good idea [insert When to Sell Your House for Cash link]. In this blog post, however, I will be focusing on the five key questions to ask a “cash buyer”.

When you consider entertaining an offer from a “cash buyer”, know who you’re talking to. These are five questions to ask a wholesaler before considering selling to them.

• Are you buying the property yourself? In some cases, you will be talking to an acquisition manager, someone who is part of a bigger company. They don’t necessarily own a bunch of property, and they might still be learning the ropes. If they’re part of a bigger organization, that is usually okay since they have the backing of a reputable company. However, if they don’t own other property and they aren’t part of a larger organization, that is a red flag you need to consider when deciding whether they can follow through.
• Can you show me proof of funds? These “cash buyers” are a lot of times marketers who are trying to break into real estate. There is nothing wrong with that, but you do need to understand that they are not actually purchasing the property. If they can show you their personal proof of funds, great. If they can show you proof of funds from their investor, also great. But if they can’t show anything, that means they don’t have an end buyer at the time they are signing the contract. They will have to market your property, usually in the form of an email blast and/or Facebook post, and they may or may not ever find that buyer.
• How many deals have you done? There are a lot of new wholesalers out there who haven’t done any deals yet (or very few). There is a lot to know to become successful in wholesaling, and you must ask yourself if you’re willing to allow this wholesaler to learn at your expense.
• What are your website and social media accounts? You can learn a lot by just visiting a website, Facebook page, or the like. If you use social media, it will be easy to see whether this person you’re talking to seems legitimate or not. It is not the end all be all, but it is a good place to start.
• What is the amount of the deposit you’re willing to put down? Wholesalers run the risk of getting your property under contract and then not being able to find an end buyer. Depending on the terms of the contract, they can lose their deposit if they don’t close. So, when negotiating, ask for a bigger deposit. That can weed the unreliable ones out.

Do your due diligence on them as they are on your property. I have been in real estate for several years now, have done a lot of deals, and have met a lot of “investors” trying to break into the industry. Some are trustworthy, and they are usually ones who become successful, especially if they are also hardworking. Others are not, and they try for a couple of years at most and then go off to do something else. Ask these five key questions so you don’t find yourself selling to one that can’t follow through.