How to Avoid Scams When Working With Cash Buyers in Los Angeles
Selling a house in Los Angeles can be stressful enough without having to worry about whether the person offering you a “fast cash deal” is actually legit. While there are many reputable cash buyers who can help you sell quickly and hassle-free, there are also bad actors out there who prey on sellers—especially those in difficult situations like foreclosure, divorce, or inherited property sales.
In this guide, I’ll break down how to spot the red flags, what real-life scams look like, and the exact steps you can take to protect yourself. We’ll even cover some recent statistics so you know how common these scams are in LA’s hot real estate market.
Why Cash Buyer Scams Are So Common in Los Angeles
Los Angeles is one of the most competitive housing markets in the U.S., with median home prices hovering around $935,000 in 2024 (according to the California Association of Realtors). That high value attracts all kinds of investors—both legitimate and shady.
The very nature of a cash sale—quick closings, no traditional lender oversight, fewer inspections—makes it easier for scammers to operate. A cash buyer who’s not reputable might:
- String you along, then lower the price right before closing
- Convince you to sign over ownership without paying you
- Disappear after you’ve taken your home off the market
The Most Common Cash Buyer Scams in Los Angeles
Let’s look at the main types of scams, with some pretend-but-realistic examples so you can picture how they happen.
1. The “Bait and Switch” Price Drop
This scam starts with an attractive offer—maybe even over market value—to get you emotionally invested and mentally “sold” on the deal. The buyer then ties up your property under contract so you can’t entertain other offers, and at the last minute claims they “found” repairs or legal issues that require a huge price drop. They’re banking on the fact that you’ll feel cornered and just accept the lower price to move on.
Example:
Marta in Echo Park was thrilled when a cash buyer offered $850,000 for her duplex—$20K more than she expected. But two days before closing, they demanded a $70,000 price reduction due to “foundation issues” they claimed their inspector found. Marta later learned those issues were exaggerated, but by then she had already turned away other buyers.
2. The “We’ll Pay After You Move Out” Trick
Some scammers convince sellers to sign over the deed before funds are transferred, promising payment “right after” or “once you vacate.” They frame it as a way to start renovations sooner or to speed up their plans, but in reality, they’re removing the last bit of leverage you have—ownership of the property. Once they have the deed, they can sell, rent, or refinance the home without ever paying you.
Example:
Victor in Van Nuys sold his late mother’s home to what seemed like a friendly family-run investment company. They insisted on taking title so they could “start repairs right away,” with payment to follow within 48 hours. Victor moved out—and never saw a dime.
3. Overpayment Scams
Here, the scammer sends you a cashier’s check or wire transfer confirmation for more than the purchase price and asks you to refund the “extra” money. They might claim it was a bookkeeping error or extra for repairs they don’t need. It feels harmless because you think you’re just returning what isn’t yours, but when the check bounces or the wire turns out to be fake, your bank holds you responsible for the loss.
Example:
Joanne in Koreatown agreed to sell to an out-of-state “cash buyer” she met online. They sent her a check for $10,000 over the agreed price, claiming it was a “mistake.” She wired the difference back—and her bank later told her the check was fake.
4. Title Fraud
Title fraud occurs when someone transfers ownership of your property without your knowledge—either by forging your signature on a deed or impersonating you during the closing process. In California, where property values are high, title fraud can be especially devastating because the equity stolen is often in the hundreds of thousands. Even if you catch it, untangling fraudulent ownership can take months or years in court.
Example:
Carlos in Highland Park was negotiating with a cash buyer who seemed legitimate. A month later, he found out the buyer had recorded a fake deed transferring ownership to themselves—without any payment.
The Cost of Falling for a Scam
Scam victims in real estate don’t just lose money—they often lose their homes. According to the FBI’s Internet Crime Complaint Center, real estate and rental scams caused over $350 million in losses nationwide in 2023, with California ranking at the top for reported incidents.
In LA, where property values are so high, a single scam can wipe out hundreds of thousands in equity.
How to Protect Yourself When Selling to a Cash Buyer
1. Verify Proof of Funds Early
A real cash buyer will provide a recent bank statement or letter from their bank showing they actually have the funds available. Beware of vague “proof” like screenshots, letters without dates, or documents that look altered.
Pro Tip: Make sure proof of funds is dated within the last 30 days.
2. Research the Buyer Thoroughly
- Google them: Check for reviews, complaints, and whether their business name is registered.
- Look up their LLC in the California Secretary of State’s business search.
- Ask for references from past sellers.
If they can’t—or won’t—give references, that’s a red flag.
3. Never Sign Over the Deed Before You’re Paid
In California, legitimate closings happen through a neutral third party—usually an escrow company or title company. Funds and documents are exchanged simultaneously. If the buyer suggests skipping escrow “to save time,” walk away.
4. Use a Trusted Escrow or Title Company
Pick the escrow company yourself or make sure it’s a well-known, reputable one. Scammers sometimes use fake escrow companies with convincing websites.
Real Example:
In 2022, a Los Angeles couple lost $60,000 in a fake escrow scam when the “company” vanished right after receiving their funds.
5. Watch for Unrealistic Promises
If an offer sounds too good to be true—it probably is. Common red flags:
- “We’ll close tomorrow!”
- “We’ll buy without seeing it!”
- “We’ll pay way above market value!”
Legit buyers may move quickly, but they’ll still follow standard processes.
6. Don’t Rush Because of Pressure Tactics
Scammers know urgency clouds judgment. They’ll push with lines like:
- “We have another seller ready to sign if you don’t decide today.”
- “We can’t hold this price past tomorrow.”
A legitimate buyer will respect your need to review documents and seek advice.
7. Get Legal Advice Before Signing Anything
If you’re unsure about contract terms—especially contingencies—have a real estate attorney review them. A small legal fee can save you from a costly mistake.
Red Flags in a Cash Offer Contract
When reviewing a purchase agreement, look out for:
- Ambiguous closing timelines (e.g., “close in 30 days or later if needed”)
- Unclear inspection rights (scammers can use endless inspections to force price drops)
- Vague financing terms (even a “cash” buyer might plan to get a loan)
- Contingencies that benefit only the buyer (e.g., “subject to partner’s approval”)
Real-World “Safe Sale” Example
Let’s flip to the positive side:
Denise in Sherman Oaks inherited a 1960s home in rough shape. She got three cash offers and did her homework:
- Verified each buyer’s proof of funds
- Googled their business names and checked for complaints
- Chose her own escrow company
- Had a real estate attorney review the contract
She closed in 14 days with no surprises—and walked away with exactly what was promised.
The Bottom Line
Selling to a cash buyer in Los Angeles can be fast, convenient, and stress-free—but only if you choose the right one. Scammers thrive on urgency, lack of research, and situations where sellers feel desperate.
Protect yourself by verifying funds, researching the buyer, insisting on escrow, and never rushing into a deal you don’t fully understand. Your home is one of your most valuable assets—treat its sale with the care it deserves.
💡 If you’re looking for a trusted, local Los Angeles cash buyer, we’ve been helping sellers since 2016—always closing through licensed escrow companies and paying exactly what we promise. You can reach out here for a no-obligation offer.