The Cash Buyer Trap
Is your “buyer” actually looking for a buyer?
Have you noticed fewer “We Buy Houses” letters in your mailbox? Fewer ads promising cash for your home?
I know where a lot of that marketing went. Ads and mailers cost money. It’s cheaper to have agents text other agents all day: “Do you have any off-market fixers? Looking for our next project.”
As agents, we get these messages constantly. Some days I can’t tell whether a human wrote them.
If you’re a homeowner, you may be wondering who all these cash buyers are, especially when finding a regular buyer can feel harder than it used to.
Some are real investors. They buy houses, spend their own money, take on renovation risk, and sell a finished product. I work with those people and I’m glad to. Others are leeches dressed up as investors. Their “next project” is finding a seller willing to sign a contract they can shop to someone else.
I just caught it happening to my seller.
We accepted an offer on a Mesa Verde home listed publicly on the MLS. Two days into escrow, my colleague Adam forwarded me an email pitching the same house to investors at a higher price. Showings were available “today and tomorrow only.”
Excuse me. Whose house is it?
Anyone interested in that property could have seen it on the MLS and made my seller an offer. Instead, our buyer had it under contract and was marketing it as an investor opportunity. My seller didn’t choose that higher price, and my seller wasn’t the one who stood to pocket the difference.
Adam gets two or three emails a day from this operation alone. Now he’s getting pitches from other people offering the same house for even more. They’re trying to flip a contract someone else is already trying to flip. It’s absurd.
This is exactly why I keep my network close. Without it, my seller might not have known until it was too late.
My job was to protect my seller’s timeline and their bottom line. We sent the buyer a shortened notice to perform on their contingency removals. When the 24 hours ran out and they hadn’t met their contractual obligations, we promptly cancelled. We were back on the market immediately, accepted another offer, and closed at a higher price than the first one.
Here’s how the numbers game works: tie up as many houses as possible, commit as little money as possible, and shop every deal immediately. An agent who brings in a signed contract can get a cut of the profit. A buyer who can’t find someone farther down the chain may stall, demand a big price reduction, or try to walk.
The homeowner pays for the experiment. The property is tied up, carrying costs keep running, and a buyer who actually wanted the home may have moved on. If the seller needs to close quickly, that delay becomes leverage.
What can a seller do?
First, hire an agent who knows the contract and the industry. An agent who’s desperate to get any offer accepted may miss the warning signs. A well-connected agent asks about the buyer, the proof of funds, and the deposit, and picks up the phone when something doesn’t smell right.
Second, pay attention to section 3K of the California purchase agreement. It sets how long a buyer has to request an assignment, and elsewhere the contract says a seller can’t unreasonably refuse a timely request. When I represent a seller, I counter 3K to 0 days and spell out the seller’s position on assignments in the agreement.
Will that stop every buyer from asking? No. But it tells the person across the table I know what they may be up to. Showing your teeth before escrow opens is often enough to send a contract shopper looking for an easier target.
A good offer comes from someone prepared to buy your home. Make sure that’s who you’re dealing with before you take it off the market.
Has this happened to you? We’d love to hear your story.
And if you’re looking for savvy representation for your next sale or purchase, reach out. 949-891-0939