What Really Happens When You Sell to a “We Buy Houses” Company

You’ve seen the signs stapled to telephone poles. You’ve gotten the postcards in the mail. Maybe you’ve seen the ads online: “We Buy Houses Fast! Cash! Any Condition!”

And if you’re like most people, your first reaction was skepticism. That’s fair. The “we buy houses” industry has a reputation problem, and honestly, some of that reputation is earned. There are bad actors out there who prey on desperate homeowners, use high-pressure tactics, and make lowball offers without any explanation.

But there are also legitimate companies doing honest work, helping people sell homes quickly when traditional real estate doesn’t make sense for their situation.

So how do you tell the difference? And what should you actually expect if you go this route?

This post is going to pull back the curtain on the entire process. We’ll cover how these companies make money, how they calculate offers, the real advantages and disadvantages, and the red flags you should watch for. By the end, you’ll know exactly what to expect when selling to a we buy houses company, and you’ll be able to make a confident, informed decision.

How “We Buy Houses” Companies Actually Make Money

Let’s start with the business model, because understanding why these companies exist helps everything else make sense.

Cash home buying companies make money in one of three ways:

• Buy, renovate, and resell (flipping). They purchase your home below market value, invest in repairs and upgrades, then sell the improved property at full retail price. Their profit is the gap between what they paid (purchase price plus renovation costs) and what they sell it for.
• Buy and rent. Some companies hold properties as long-term rentals. They buy at a discount, make necessary repairs, and generate income from tenants over time.
• Wholesale. Some companies never actually buy your house. They get it under contract at a low price, then sell that contract to another investor for a fee. This is legal, but you should know if you’re dealing with a wholesaler vs. an actual buyer.

Here’s the key takeaway: these companies need to buy below market value to make the math work. That’s not a scam. That’s just the business model. A company that pays full retail price for your home would go bankrupt. The question isn’t whether they’ll offer less than market value. They will. The question is whether the discount is reasonable given what you’re getting in return.

The Typical Process, Step by Step

Here’s what the process usually looks like when you sell to a cash home buying company:

1. You Make Contact

You call, fill out an online form, or respond to one of their ads. They’ll ask basic questions about your property: address, condition, number of bedrooms and bathrooms, and your timeline for selling.

2. They Research Your Property

Before making any offer, a legitimate company will research comparable sales in your area, check public records, and get a sense of your home’s potential value.

3. They Visit Your Home

Most companies will want to see the property in person (or at least get detailed photos or a video walkthrough). They’re assessing the condition, estimating repair costs, and verifying that their initial research matches reality.

4. You Receive an Offer

After their evaluation, they’ll present you with a cash offer. A good company will explain how they arrived at the number. If they can’t or won’t explain their math, that’s a red flag.

5. You Decide

There should be zero pressure here. You take the offer home, think about it, compare it to other options, and decide on your own timeline. Any company pushing you to sign immediately is one you should walk away from.

6. Closing

If you accept, the company typically handles most of the paperwork and pays closing costs. Closings can happen in as little as 7 to 14 days, though some sellers prefer a longer timeline, and a good company will work with your schedule.

How Cash Offers Are Calculated

This is the part most companies don’t want to explain. We think you deserve to see the math.

Most cash buyers use a formula based on the After Repair Value (ARV) of your home. Here’s how it works:

Offer = ARV - Repair Costs - Company’s Profit Margin - Holding and Closing Costs

Let’s say your home, fully renovated, would sell for $300,000 on the open market. Here’s a simplified example:

• ARV: $300,000
• Estimated repairs: $50,000
• Holding costs (taxes, insurance, utilities during renovation): $10,000
• Closing costs (buying from you and selling later): $20,000
• Company profit margin: $40,000
• Cash offer to you: $180,000

That’s 60% of the ARV. In practice, most cash offers fall somewhere between 50% and 80% of market value, depending on the condition of the home and local market conditions.

Is that less than you’d get listing with a real estate agent? Almost certainly yes. But the comparison isn’t that simple, and we’ll get to why in a moment.

Legitimate Reasons to Sell to a Cash Buyer

A cash sale doesn’t make sense for everyone. But for certain situations, it can be the best option available. Here are the most common reasons people choose this route:

• Speed. You need to sell fast due to a job relocation, divorce, financial hardship, or an inherited property you can’t maintain. Traditional sales take 60 to 90 days on average, sometimes much longer. Cash sales can close in under two weeks.
• Convenience. No staging, no open houses, no weekend showings, no waiting for a buyer’s financing to fall through at the last minute.
• As-is condition. Your home needs significant repairs that you can’t afford or don’t want to deal with. Cash buyers purchase homes in any condition, so you don’t need to invest money you might not have.
• Certainty. When a cash buyer makes an offer, there’s no mortgage approval to wait for, no appraisal contingency, and no chain of buyers and sellers that could collapse. The deal is far more likely to actually close.
• Avoiding agent commissions. A traditional sale typically costs 5-6% in real estate agent commissions. On a $300,000 home, that’s $15,000 to $18,000.

The Honest Downsides

Here’s where we’re going to be completely straight with you, because you deserve honesty more than a sales pitch.

You will get less than market value. This is the single biggest downside. If your home is in good condition and you have the time and resources to list it traditionally, you will almost certainly net more money that way. A cash offer trades dollars for speed, convenience, and certainty.

Not all companies are equal. Some will give you a fair offer based on real numbers. Others will try to lowball you as aggressively as possible. The range between offers from different companies on the same property can be surprisingly wide.

You might feel pressure. Some companies use urgency tactics, like telling you the offer expires in 24 hours. A legitimate company gives you time to think.

Wholesalers can waste your time. If you’re dealing with a wholesaler who can’t find an end buyer, the deal can fall apart after you’ve already turned down other options.

Red Flags That Signal a Scam

Not every “we buy houses” company is legitimate. Watch for these warning signs:

• They won’t explain how they calculated the offer. If a company can’t walk you through their math, they’re hiding something.
• They pressure you to sign immediately. Phrases like “this offer is only good today” or “we have other sellers waiting” are manipulation tactics.
• They ask you to pay fees upfront. You should never pay a cash buyer to buy your home. If they’re asking for “processing fees” or “inspection fees” before closing, walk away.
• They want to change the price after you’ve agreed. Some companies make a high initial offer to lock you in, then “discover problems” during inspection and drop the price significantly.
• They have no online presence or reviews. A company with no website, no reviews, and no physical address is a company you should avoid.
• They won’t provide proof of funds. A real cash buyer can show you they actually have the money to close.

Questions You Should Ask Before Accepting Any Offer

Before you sign anything, ask these questions. A trustworthy company will answer all of them without hesitation:

1. How did you calculate this offer? They should be able to show you comparable sales, their repair estimate, and their margin.
2. Are you the actual buyer, or are you wholesaling this contract? Know who you’re really dealing with.
3. Can you provide proof of funds? A bank statement or letter from their lender showing they can actually close.
4. Who pays closing costs? Most legitimate cash buyers cover closing costs, but confirm this upfront.
5. What happens if you find problems during inspection? Will the offer change? Get this in writing.
6. What is your timeline to close? And can you adjust it to fit your needs?
7. Can I see reviews or references from past sellers? Real companies have real track records.
8. Is there any obligation if I get an offer? The answer should always be no.

How to Verify a Company Is Legitimate

Do your homework before signing anything. Here’s a quick checklist:

• Check the Better Business Bureau (BBB). Look for complaints and how they were resolved.
• Read Google and Yelp reviews. Look for detailed reviews from real sellers, not generic five-star reviews that all sound the same.
• Verify their business registration. Check with your state’s Secretary of State office to confirm they’re a registered business entity.
• Ask for references. A company that’s done real deals can connect you with past sellers who had a good experience.
• Look for a physical address. A PO Box or no address at all is a warning sign.
• Have a real estate attorney review the contract. This is especially important if you’re unfamiliar with real estate transactions. An attorney can spot unfavorable terms you might miss.

Understanding what to expect when selling to a we buy houses company means doing your research before you commit. The 30 minutes you spend verifying a company could save you thousands of dollars and a lot of stress.

The Bottom Line

Selling to a “we buy houses” company isn’t right for everyone, and anyone who tells you otherwise is selling you something. But for the right situation, with the right company, it can be a smart, practical decision.

Now you know how the business model works, how offers are calculated, what the real advantages and disadvantages are, and how to spot the companies worth trusting. You know what to expect when selling to a we buy houses company, and you know the right questions to ask.

Whatever you decide, make sure it’s your decision, made on your timeline, with full information. That’s all we want for you.

Frequently Asked Questions

Are We Buy Houses companies legitimate?

Many are, but the industry also attracts scammers. Legitimate companies have verifiable business addresses, positive online reviews, and will provide proof of funds. Check the Better Business Bureau and local county records before working with any cash buyer.

How much do We Buy Houses companies pay?

Most offers fall between 50% and 85% of the home's fair market value. The exact offer depends on the property's condition, location, needed repairs, and current market conditions. Always get multiple offers to ensure a fair price.

How fast can a We Buy Houses company close?

Most legitimate cash buyers can close in 7 to 14 days. Some can close even faster if there are no title issues. This is significantly quicker than the 30 to 60 days typical of a traditional sale with a real estate agent.

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