Brian Spitz


Real Estate Investing & Guru Scams in Houston: How to Avoid Them

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 Houston and throughout Texas. We want to make sure you sell your house in Houston 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. 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 Houston.

Questions to Ask

  • What percentage of properties did you close last year?
  • What were the reasons some properties failed to close?
  • Can I see referrals from previous clients?
  • Are you Better Business Bureau accredited?
  • What title company(yes) do you use and what is their website?
  • What types of contracts do you use? (Make sure they are standard contracts – in Texas, this would be TREC). 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 TREC proceedings.

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 serous they are about the offer
2) 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.
3) 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?
4) Make sure there is not a financing contingency. Big State Home Buyers always pays cash for homes in Houston. 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.
5) Who is paying for the title policy, survey and other closing costs?

About the Discount

Legitimate Investment companies all operate using similar discounts on houses. The discount is fairly standard. 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.

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 premium and escrow fees? Are they also offering to pay your homeowners association transfer? Are they clear that the seller is paying any taxes owed? Its important to be specific about what “pay for all closing costs” means, because investors have different ideas on what those are.

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.

For the full article, check out Big State Home Buyers website,