Cash home buyers. How to tell a real one from a tire-kicker.
Get a real cash offer from a buyer who will actually close. See the number online, see how it was calculated, and connect with a vetted local buyer when you're ready. A real cash home buyer and someone who claims to be one look exactly alike until you ask the right questions.
The difference shows up two weeks later, when one of them closes on time with the money you agreed to, and the other one comes back with a list of reasons the number needs to drop. Below is the seven-point checklist for telling them apart before you sign anything. Run through it. If a buyer cannot pass, you have learned something important.
Why this matters.
The cost of picking the wrong cash buyer is not just the wasted time. It is:
- The re-trade, where the buyer waits until you are committed (you have already told the neighbors, lined up movers, stopped paying for repairs) and then asks for $15,000 off the price because of something the inspection "found."
- The broken contract, where they walk ten days before closing with no penalty because they tied themselves to a contract clause that let them.
- The delay, where the buyer keeps pushing the closing date until you miss the deadline that made you sell in the first place (a foreclosure sale, a job relocation, a court date).
- The quiet disappearance, where they ghost between signing and closing because they could not actually line up the money.
The seven checks below are designed to surface all four of those risks before you sign. Most of them take five minutes. The ones that take longer are worth the time.
The seven-point checklist.
1. LLC registration and good standing
Almost every serious cash buyer operates through a Limited Liability Company (an LLC). That is not suspicious. It is standard. But it also means you can check whether the LLC is real, registered, and in good standing.
How to check. Every state's Secretary of State runs a free Business Entity Search. Google "[your state] Secretary of State business search," type the LLC name in, and the result page shows:
- The entity type (LLC, corporation, etc.)
- The formation date
- The registered agent (the person or service that accepts legal papers for the LLC)
- The status (active, in good standing, dissolved, not in good standing)
What the red flags are.
- The LLC does not show up. Either the name is wrong, or the LLC does not exist. Ask the buyer to clarify.
- The LLC is registered in a different state, usually Delaware or Wyoming. That is not necessarily a problem (many real investors register there for tax or privacy reasons), but the LLC should also be registered to do business in your state. Ask to see the foreign qualification.
- The status is "not in good standing" or "dissolved." That is a real problem. It often means the LLC owes back fees or tax, and contracts signed in the name of a dissolved LLC can be challenged later.
- The LLC was formed two weeks ago. New LLCs are not automatically bad, but a brand-new entity making cash offers should trigger extra diligence on everything else on this list.
Checking the Secretary of State takes three minutes. It catches the lowest bar of fake.
2. Proof of funds in the right format
Proof of funds (POF) is the document that shows the buyer actually has the money. A real cash buyer produces a clean POF without a fuss. A fake cash buyer stalls, sends something vague, or produces a document that does not hold up on close inspection.
What a real POF looks like.
- A bank statement, brokerage statement, or bank letter.
- Dated within the last 30 days.
- In the name of the buying entity (the LLC or the individual on the contract).
- Showing available funds at or above the purchase price.
- On actual letterhead or generated directly by the financial institution.
What does not count as a POF.
- A screenshot of a mobile banking app with no account number visible.
- A typed-up number on a Word document.
- A "verification letter" from a third party the buyer is working with, unless that third party is the bank or a licensed financial institution.
- A line of credit letter that has not been drawn down and requires property-specific underwriting. That is pre-approval, not proof of funds.
- An older POF from a previous deal. If it is six months old, the money may not still be there.
What to do with the POF. Share it with your real estate attorney. Ask the attorney to confirm it is in the right name, for the right amount, from a real institution. Five minutes of attorney time is cheap insurance.
3. Earnest money deposit size and placement
Earnest money is the deposit the buyer puts down at contract signing to show they are serious. If the deal falls apart for a reason that is the buyer's fault, they forfeit the earnest money. That is what gives them skin in the game.
What a serious cash buyer offers.
- $5,000 to $10,000 is typical for a house in the $150,000 to $400,000 range. For larger deals, $10,000 to $25,000.
- The money is held in the title company's or attorney's escrow account. Escrow is a neutral third-party account that does not release the money to either side without instructions from both.
- The deposit is wired or sent by certified check within one to three business days of the contract being signed.
Red flags.
- A buyer offering $500 or $1,000 of earnest money on a six-figure house. The deposit is too small to actually deter them from walking.
- A buyer wanting to hold the earnest money themselves, or pay it directly to the seller, or delay the deposit until "due diligence is complete." All three are ways of keeping no real skin in the game.
- A buyer who offers a promissory note for the earnest money instead of actual funds. A promissory note is not cash. It is a promise to pay that they can revoke.
A buyer who resists a standard earnest money deposit in an escrow account is telling you something. Listen.
4. Contract contingencies
Contingencies are the clauses in the contract that let the buyer walk away for specific reasons without losing their earnest money. Every contract has some. The question is how many, how long, and how broad.
What a clean cash contract looks like.
- A short inspection contingency: 3 to 7 days. The buyer inspects, confirms what they expected, and either moves forward or backs out.
- A short title contingency: usually keyed to the title company producing a clean commitment, with a short window (5 to 10 days) for the buyer to object.
- No financing contingency. Cash means no loan.
- No appraisal contingency. Cash means no appraisal.
- A firm closing date, usually 7 to 21 days out.
Red flags in the contingency section.
- An inspection or due-diligence period of 14, 21, or 30 days. That is a wholesaler looking for time to flip the contract, or a buyer giving themselves time to re-trade after you are emotionally committed.
- A broad "satisfactory inspection at buyer's sole discretion" clause. That gives the buyer an unlimited out. They can walk for any reason, because their satisfaction is not a testable standard.
- An "and/or assigns" designation on the buyer line. That means they reserve the right to assign the contract to someone else, which is the wholesaler pattern.
- A financing contingency hidden in the fine print, even though they told you they were paying cash.
- A long or open-ended closing date, or a closing date tied to external contingencies (like "closing to occur within 7 days of buyer securing funding").
Ask your attorney to mark up any contract before you sign. If the buyer resists changes to the contingency section, that is signal.
5. Attorney review and timeline realism
In some states (Illinois, New Jersey, parts of New York, and others), most residential real estate contracts go through attorney review — a short window, typically 5 to 10 business days after signing, during which either side's attorney can modify or cancel the contract. In other states, buyer and seller each usually retain counsel separately or rely on the title company. If you are not sure how your state handles it, ask before you sign.
What to watch for.
- A cash buyer who objects to your attorney reviewing the contract. There is no legitimate reason to object. A buyer who pushes back on attorney review is a red flag.
- A contract with a closing date that is not realistic. Seven days is possible for a cash close with clean title. Three days is almost never possible for a legitimate transaction (the title search alone usually takes longer).
- A buyer who refuses to put the closing date in writing, or keeps the date vague ("closing to occur as soon as possible"). That is not a closing date. That is a plan to close whenever they feel like it.
If a buyer claims they can close in seven days, ask them who the title company is. If they do not have one lined up at contract signing, the seven-day claim is not real.
6. Complaint history and public record
You cannot fully audit a private buyer the way you can audit a public company. But there are a few places to look that will at least catch the obvious bad actors.
Where to look.
- Your state's real-estate regulator. Every state has one (often a Department of Financial and Professional Regulation, a Real Estate Commission, or a Department of State). If the buyer is a licensed real estate broker (or operates under one), the regulator publishes disciplinary actions. A cash buyer who is also a licensed broker is common and legal; a history of disciplinary actions is worth knowing about.
- County court records. Most county clerks publish civil case dockets online. A buyer with a trail of small-claims or breach-of-contract suits in their name or their LLC's name is worth investigating.
- Your state Attorney General's consumer complaints office. Every state AG enforces a consumer-fraud or deceptive-trade-practices statute[1] and many publish consumer alerts or enforcement actions against specific real-estate cash buyers [2].
- The Better Business Bureau. BBB is a private, paid-membership organization. A clean BBB profile is one reference point, not the last word. A pattern of unresolved complaints on a BBB profile is worth looking at. A strong BBB rating alone is not a reason to trust a buyer. Treat BBB the way you would treat a Yelp review: useful context, not proof.
- Google searches. Search the LLC name, the principal's name, and any brand names the buyer uses. Add words like "complaint," "lawsuit," "review," "scam." See what comes back. Read the results critically; anyone can post anything online. Look for patterns, not single posts.
Zero public record is not a red flag on its own; many small, clean cash buyers do not generate public records. A pattern of complaints, lawsuits, or enforcement actions is a red flag.
7. A reference deal
The simplest test of all. Ask the buyer for a recent deal they closed on in the area. Not a testimonial. An address.
What to ask. "Can you give me the address of a house your LLC closed on in the last six months, in this county?"
What to do with it. Go to the county recorder's or clerk's website (every county has one — the exact name varies; Google "[county name] recorder of deeds" or "[county name] clerk recorder"). Search by address or by grantee (buyer) name. If the deal is real, the deed will be there, filed within a few days of closing. You will see:
- The sale price (from the transfer tax stamps or declaration)
- The date
- The grantor (the seller) and grantee (the buyer, which should match the LLC name on your contract)
Why this test works. A real cash buyer closes deals regularly and can show you proof on public record within minutes. A buyer who cannot produce a single closed deal in the last six months either does not close deals or is hiding something. Either one is a problem.
One caveat: buyers who are new to the market or who buy through multiple LLCs may give you an address that is held under a different entity. Ask them to confirm in writing which LLC closed the deal, and then verify that the LLC in the deed matches an LLC they control. If they cannot or will not, move on.
A quick note on wholesalers.
Some of the buyers who approach you are not actually buyers. They are wholesalers. A wholesaler gets your house under contract and then sells that contract to a real end buyer, usually for a markup of $5,000 to $20,000. The person at your kitchen table is not the one writing the check at closing.
Wholesaling is legal in most states within specific limits. State real-estate license acts[3] generally treat repeat wholesaling activity as brokerage, and unlicensed individuals are limited to a small number of deals per year before they need a real estate license. The exact threshold and disclosure rules vary by state [4]. A wholesaler operating within the rules and disclosing what they are doing is running a legitimate business.
The red flags from the checklist above catch most wholesalers who are trying to hide what they are doing:
- The contract says "and/or assigns" on the buyer line. They are planning to assign.
- The inspection window is 14 to 30 days. They are shopping the contract during that time.
- The earnest money is small. They do not want to risk much of their own money.
- They cannot name the end buyer or produce a closed-deal reference that matches.
If you want to work with a wholesaler anyway, fine. But get them to put in writing that they are a wholesaler, that they plan to assign, and that the assignment fee is disclosed. If they will not write that down, you have your answer.
What the seller still owes, either way.
Whoever buys your house, a few seller obligations do not change.
Seller disclosure. Nearly every state has a residential real-property disclosure statute[5] that requires sellers to disclose known material defects on a statutory form. The form language and the threshold of "knowing" varies by state, but the duty itself is universal. Cash offers often carry "as-is" language in the contract. As-is protects the buyer from expecting repairs. It does not override your duty to disclose what you already know. Your attorney or title company can produce the right form for your state and county.
Sell honestly. It protects you legally and it keeps the transaction from unraveling after the fact.
If the buyer fails the checklist.
You have options. You can:
- Come back with questions. A legitimate buyer who was just unprepared for some of these checks can usually answer in a day or two. If they answer well, keep going.
- Ask for terms that compensate for the risk. Larger earnest money. A shorter inspection window. A higher purchase price.
- Get a second offer from a different cash buyer. A real cash buyer will not be offended that you are shopping.
- Walk away. Sometimes the offer that looked good on paper does not hold up once you look at the buyer behind it. That is the point of the checklist.
An offer from a buyer who cannot pass these checks is not actually an offer. It is a maybe. Treat it like one.
The honest summary.
Real cash buyers exist and are worth working with. They usually pass this checklist without fuss, because passing it is a normal part of running a legitimate business. The ones who cannot pass it are the ones who cost sellers money, time, and peace of mind.
The checklist takes less than an hour end-to-end, most of it spent reading through the buyer's paperwork and making a few phone calls. That is cheap compared to a re-traded deal or a broken contract two weeks from closing.
Use it every time. It does not matter how nice the buyer seemed on the phone.
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