How to Detect a House-Flipping Scam

House flipping remains a classic way for people to earn extra income or even replace their day job. The process follows a simple formula: you buy a distressed property at a low price, increase the value by performing repairs, and then sell the house at a profit. Although the concept isn’t complicated, people don’t always know how to go about house flipping. So, they look for services to help. When doing this, it is wise to be mindful of some house flipping scam red flags.

Celebrity Endorsements

While some celebrities may endorse a product out of sincerity, many only do so for the money. Companies pay stars big money because their endorsements can bring in many sales. A question does arise here: Why does a quality service need a celebrity to endorse it? Can’t the company point to a track record of success and satisfied clients as proof of value? DoHardMoney.com warns that HGTV-style fix-and-flip schemes should be viewed with extreme skepticism. A celebrity endorsement doesn’t automatically mean the house flipping company is dubious but take the endorsement a red flag.

They Want You to Pay for a Class

Scammers usually have something to sell. Passive Income MD cautions that an informational or educational product claiming to teach you the path to wealth and fame is commonplace with real estate scams. Teaching someone a legitimate real estate skill is honest work. Claims to show “hidden secrets” intended to reveal a strategy for becoming wealthy without working hard are best met with a critical eye and ear.

History of Civil Suits

Worse than BBB complaints are civil lawsuits for fraud, nonpayment, and more. Court filings are public record, so you won’t have too much trouble uncovering any prior litigation. Read up on the court records; they can tell you a lot about the company’s business and ethical practices. Search records thoroughly. If negatives come up in the search, be glad you discovered them.

BBB Complaints

The Better Business Bureau (BBB) provides a reputation resource for consumers and others to check out. A business with a high volume of complaints probably isn’t the most reputable one. A consistent volume of complaints shows a track record for dissatisfaction. Why add yourself to the list of the dissatisfied?

Look for the number of resolved cases as well. Don’t look at resolved cases as necessarily something positive. The company still did something to create the initial complaints.

House flipping could lead you to a great way to make money. Don’t allow a scam company to promise a lot, deliver nothing, and take your funds. Be sure to be wary if they have celebrity endorsements, a poor BBB record, or any history of civil litigation.