Are Cash Home Buying Companies Legit? What Massachusetts Sellers Should Know

Most are. Some are not. And a third group is legitimate but is not what it appears to be, which is the category that catches Massachusetts sellers out most often.

Rather than asking whether the industry is trustworthy, which is not a question anybody can answer for you, this sets out how to check a specific buyer. If you are trying to find the best cash home buyers to deal with, five checks will tell you almost everything, and one of them is a public record search you can do yourself in ten minutes.

The three types you will encounter

Actual buyers. They have funds, they buy the property, they own it afterwards. Their offers are lower than market value and they will tell you so.

Wholesalers. They put your property under contract and then assign that contract to somebody else for a fee. They are not buying your house. They are selling their right to buy your house. This is not illegal in itself, but it means the person you shook hands with may never own the property, and if they cannot find an end buyer, your sale evaporates.

Lead sellers. They collect your details and sell them on. You will know them by the volume of calls that follows.

None of this is hidden if you know what to ask. All of it is invisible if you do not.

Check one, the Registry of Deeds

This is the check almost nobody does, and it is the most revealing.

Massachusetts Registry of Deeds records are public and searchable online by county. Search the buyer’s name, or their company name, as grantee. You will see the properties they have actually bought and when.

A buyer who has recorded a steady stream of purchases in your county is doing what they say. A company with an aggressive marketing presence and no recorded deeds is very likely wholesaling or generating leads, whatever their website says.

Ask which county they buy in most, then go and look. It costs nothing and it takes minutes.

Check two, proof of funds

Ask for it in writing. A genuine cash buyer will produce a bank statement or a letter from their bank without hesitation, because they are asked regularly.

Hesitation, or a proof of funds letter from an entity that is not the buyer, is informative.

Check three, read the contract for an assignment clause

Look for language permitting the buyer to assign the agreement to another party. If it is there, understand what it means: they may not be your buyer, and the deal depends on them finding somebody else.

You can ask for it to be removed. A real buyer will usually agree, because they intend to buy. Refusal tells you what the plan actually is.

Check four, ask who conducts the closing

Massachusetts requires a licensed attorney to conduct the closing and handle title. Ask which firm they use, and instruct your own attorney regardless. A buyer who is vague about this, or who suggests you do not need your own representation, is not somebody to sell a house to.

Check five, watch what happens after the walkthrough

The most common bad practice in this industry is not fraud, it is the price drop. A high number secures your agreement, then the figure falls sharply after the visit, usually when you are committed and short of time.

A serious buyer’s initial number should survive the walkthrough with only minor adjustment for something genuinely unexpected. Our guide to what makes a fair cash offer explains how the number should be built in the first place.

What protects you in Massachusetts

Two things worth knowing.

Chapter 93A. The Massachusetts Consumer Protection Act, Chapter 93A, prohibits unfair and deceptive practices in trade or commerce and provides for multiple damages and attorney fees where conduct is wilful or knowing. It is a genuinely powerful statute and it applies to how a company deals with you.

The offer binds both ways. Under Massachusetts law an offer to purchase containing the material terms and stating that it creates binding obligations is a contract once signed, a position the Supreme Judicial Court confirmed in McCarthy v. Tobin. That cuts both ways: it commits you, and it commits them.

How to spot the best cash home buyers from the rest

Ask how they arrived at the number, and whether they will walk you through the arithmetic. A real buyer works backwards from resale value minus repairs, holding costs, resale costs and margin. Someone who cannot explain their own offer either did not calculate it or does not want you to see it.

Ask what happens if they cannot close. Ask whether the deposit is at risk and in whose escrow it sits. Ask how they intend to handle the municipal lien certificate, because the answer reveals whether they have closed in Massachusetts before.

The behavior this article warns about is the reason a good share of our own leads exist. Between a quarter and a third of sellers who contact us are on a second plan, and a cash buyer who changed their number after the inspection is one of the versions we hear most often. It is a legitimate reason to ask any buyer, in advance, what would have to happen for their figure to move.

The short version

Legitimacy is not a property of the industry, it is a property of the specific company in front of you, and it is checkable.

Look them up as grantee at the Registry of Deeds. Ask for proof of funds. Read the assignment clause. Instruct your own attorney. Watch what happens to the number after the walkthrough.

If a buyer passes all five, the remaining question is only whether their price is worth the certainty, which is a judgement rather than a risk. You can request a cash offer and run these checks on us as readily as on anybody else.