July 6

How to Avoid “Guru” and Real Estate Investor Scams in Austin


It’s no secret real estate markets are turning over and have become quite lucrative. For many, the opportunity to invest is difficult to pass up. However, this can lead to difficult real estate investing and “guru” scams in Austin and throughout the United States. We want to make sure you sell your house fast and with minimal risk. 

Because the real estate market is so good, a lot of new investors are trying to get into real estate investing. Unfortunately, these conditions often lead to real estate investing and guru scams. Many self-proclaimed “real estate investing gurus” have learned what they know from reading books rather than from experience. It is possible, however, to identify legitimate home buyers that can help you. Work with someone that has experience in both good and bad markets, and that knows how to help people in lots of different situations. 

Look at the quality of their advertising and consistency of message. Do they have customer testimonials? Do they have any reviews online? If they have negative reviews, do they have satisfactory responses or explanations to these reviews? Read on to learn how you can avoid real estate investing and guru scams in Austin. 

Questions to Ask 

Ask the potential investor what percentage of properties did not close and why. Ask them questions about the area where your house is and see how educated they are about your market. Ask for referrals from their previous clients. Check the BBB. 

Be sure the real estate investor is closing at a title company and make sure they use a legitimate title company and research the title company. If you need more information, ask the title company for their previous dealings’ info. 


Make sure they are using standard legal contracts. All professional real estate agents and brokers use standard contracts. A good indicator of a real estate investing scam could be the use of a contract that deviates from standard state real estate board documents. 

Read the Contract 

Read the contract and look for these key items: 

  1. How much earnest money are they willing to deposit in escrow at the title company? The more money they can put down, the more serious they are about the offer 
  1. Check for an option period. All real estate contracts have termination options. Know whether or not it’s a part of the deal. Make sure it doesn’t exceed 5-10 days. 
  1. Are they buying the house for themselves or remarketing it to other clients? If they are selling to others, how successful are they in dealing with other investors? 
  1. Make sure there is not a financing contingency.  Lisa Buys Austin Houses always pays cash for homes in Austin. The benefit to selling to investors at a discount is that they pay cash for the house, so make sure they are actually paying cash and taking the property as-is. 
  1. Who is paying for the title policy, survey and other closing costs? 

About the Discount 

Legitimate Investment companies all operate using the same or similar discounts on your house. The discount is fairly standard. So if you call several, the range should be within a couple thousand dollars depending on the investor’s motivation. If you receive one offer that is substantially more or even less, you might be dealing with an investor that isn’t familiar with the value of your property or cost of repairs. He may be likely to ask for price reduction before closing, or not close at all if he realizes he offered too much. 

Is the offer too good to be true? 

Closing Costs 

A lot of times, an investor could offer to pay “all your closing costs”. Make sure to ask questions. Are they paying title premiums and escrow fees? Are they also offering to pay your homeowner’s association transfer? Are they clear that the seller is paying any taxes owed? 

It’s important to be specific about what “pay for all closing costs” means, because investors have different ideas on what those are. 

We liken this to a blank check: offering to pay all your closing costs without being specific about what that includes is like an investor offering a blank check. There is often no way to know what outstanding liens may show up on the title. An educated investor wouldn’t offer to pay all closing costs without knowing up front what it entails. 

Estate Issues 

If you have estate issues (for example, no will for an inherited property,) ask the investor specifically what they are going to do to put the title in your name and what it will cost. An experienced investor will have a lot of education in accomplishing this for closing. 

Get More Information 

If you are thinking about selling your house and contacting a real estate investor, give Lisa Buys Austin Houses a call. We offer free assessments and quotes on your property. 

Contact us for a free, no-risk quote within 24 hours. 

Get a Quick Cash Offer    |    Call 512-598-4929

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