How to Spot a Fake House Buyer

Watch: the 15-second test

What I say in the video: “Next time you get these so-called local cash buyers to put an offer on your house, ask them to put a 5K non-refundable earnest money deposit. If they squeal away, that's because they're trying to be a middleman for your house.”

I'm Derek with NorCal Home Offer. If you own a house in Redding or anywhere in Shasta County, you've probably gotten the texts, postcards, and calls: “We buy houses, cash, any condition.” Some of those come from real buyers. Some come from people who have no plan to buy your house at all. Here's how to tell the difference in plain English.

What is earnest money?

Earnest money is the deposit a buyer puts down after you both sign a purchase contract. It usually goes into escrow (a neutral third party, often the title company), not into the seller's pocket. It's the buyer's way of saying, “I'm serious, and I have skin in the game.”

If the deal closes, that money is credited toward the purchase price. If the deal falls apart, what happens to it depends on what the contract says.

What does “non-refundable” mean?

Most contracts give the buyer a window (an inspection or “due diligence” period) where they can walk away and get the deposit back. Once that window closes, or if the contract says the deposit is non-refundable from day one, the deposit “goes hard.” That means if the buyer backs out for a reason the contract doesn't allow, the seller typically keeps it.

That's the whole point of the test. A non-refundable deposit turns a buyer's promise into real money on the line.

Why a middleman won't put real money at risk

Some “cash buyers” are really middlemen (often called wholesalers). Here's how that usually works: they sign a contract with you at a low price, then turn around and try to sell that contract to another investor for a fee. They never planned to use their own cash to buy your house.

If they can't find an investor in time, they look for a way out of the contract, or they come back and ask you to take less. Meanwhile, your house has been tied up for weeks.

That's why a real non-refundable deposit scares them off. If they can't flip the contract, they'd lose their own money. A buyer who actually has the cash and plans to close doesn't have that problem.

To be fair, not every contract assignment is a scam. But you deserve to know who is really buying your house and whether they can close. If a buyer dodges that question, treat it as your answer.

Other warning signs of a fake or middleman buyer

The deposit test is quick, but it's not the only clue. Watch for these:

• They're vague about who is actually buying. The contract lists a name followed by “and/or assigns,” or they can't give you a straight answer about whose money is closing the deal.
• They won't show proof of funds. A real cash buyer can show a recent bank or lender statement that covers the price.
• Long inspection or option periods with easy outs. Thirty days or more to “inspect” a house they said they'd buy as-is, with the right to cancel for almost any reason, gives them time to shop your contract around.
• They want to market or show your house to other investors. Requests for extra walkthroughs with “partners,” “contractors,” or “my team” can mean they're trying to find the real buyer.
• The price drops right before closing. A last-minute “we found some issues” call, after weeks of waiting, is a common way to squeeze a seller who has already made plans.
• They push you to sign fast. “This offer expires tonight” pressure is a red flag. A real buyer will give you time to read the contract and ask questions.

Questions to ask any cash buyer

Before you sign with anyone (including us), ask these and get the answers in writing:

1. Can you show me proof of funds? Recent, and enough to cover the price.
2. Who is actually closing on my house? Is it you, your company, or someone you'll assign the contract to?
3. Which title company are we using? A real buyer will name a local title or escrow company you can call yourself.
4. How much earnest money will you put down, and when does it go hard? Get the amount, the date it's deposited, and the date it becomes non-refundable.
5. What's the closing date? A specific date, not “as soon as we can.”

We practice what we preach. When NorCal Home Offer makes an offer, we put down a $5,000 non-refundable earnest money deposit. If we back out, you keep it. Ask any other buyer to do the same.

A real cash buyer here in Redding

NorCal Home Offer is a local cash buyer based at 940 Merchant St, Redding, CA 96002. We're BBB Accredited with an A+ rating, and you deal directly with me, not a call center. We buy the house ourselves, as-is, and close through a local title company. You can read exactly how that works on our How We Buy Houses page.

If you're behind on payments and on a clock, see our foreclosure cash offer page. We buy throughout Shasta County and nearby. For more on vetting buyers, read Cash Home Buyers in Redding, CA: How to Choose the Right One.

Call (530) 999-7694 for a no-obligation cash offer.

Not legal advice. Contract terms vary. If you're unsure what a purchase agreement says, have a real estate attorney or your title company walk you through it before you sign.

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