What “We Buy Houses” Companies Actually Do (and How to Tell the Good Ones)

The letter shows up in the mailbox. Sometimes it is a postcard, sometimes a handwritten envelope, sometimes a sign stapled to a utility pole at the end of your street. The words are always close to the same four: we buy houses. What almost nobody tells you is that those four words cover three completely different businesses, with three different sets of incentives, and the one you are talking to decides whether your sale is boring and quick or a slow motion disappointment. This guide is the plain version: who these companies are, where the offer number comes from, what the contract actually commits you to, and the two or three questions that sort the serious buyers from the rest in about a minute.

Key highlights

• Three businesses share the same sign. A buyer closing with its own money, a wholesaler selling your contract to someone else, and a large national brand are not the same deal and should not be judged the same way.
• The offer is a subtraction, not an opinion. It starts at what the house is worth repaired and works backwards through the repairs, the holding months and the buyer’s margin.
• The assignment clause is the one to read. It is what lets the company you met hand your contract to a stranger before closing.
• Several states now regulate wholesaling by name. Texas requires written disclosure of an equitable interest, Oklahoma requires a license, and South Carolina wrote wholesaling into its code.
• A buyer pays you. Nobody legitimate asks a seller for money upfront, and the Federal Trade Commission says charging upfront for mortgage relief promises is illegal.

The short answer

A “we buy houses” company buys a house that would be hard to sell the normal way, at a price that leaves room for the work and the risk, and closes without a lender in the room. That is the whole model, and there is nothing shady about it. The problems start when the company on the sign is not actually the company with the money, or when the number you shook hands on is not the number that reaches the closing table. You do not need to become an expert to protect yourself. You need to know which of the three businesses you are dealing with, and you need to read two paragraphs of the contract before you sign it. The rest of this guide explains both.

Three businesses, one sign

Everything downstream depends on this, so it is worth getting straight before anything else.

The buyer that closes with its own money

This is a company or an individual investor that signs a contract, funds the purchase, takes title, and then fixes and resells or rents the house. It carries the risk and it controls the closing date, which is exactly why it can promise one. It is also the only one of the three that can honestly tell you the deal is done when you sign.

The wholesaler

A wholesaler signs a contract with you, then sells that contract to an actual buyer for a fee, usually before closing. You may never learn the fee, and in many deals you never meet the person who ends up owning your house. Wholesaling is not automatically a scam and a good wholesaler does real work finding houses. The catch for you is simple: a wholesaler cannot guarantee a closing date because it does not control the money. If nobody on its buyer list takes the deal at the price it needs, the contract quietly dies and you are back at the start, several weeks older.

The large national brand

These are the venture-backed and franchise names that advertise instant offers. They are real buyers with real money, but their pricing is a model rather than a person, and their marketing has drawn regulator attention. In August 2022 the Federal Trade Commission said one of the biggest had been tricking sellers “into thinking that they could make more money selling their home” to it than on the open market, when in fact “the vast majority of consumers who sold to Opendoor actually lost thousands of dollars” compared with a traditional sale. The order was finalized that October at 62 million dollars, and it bars deceptive or unsubstantiated claims about what a seller will take home. We compare that model with a local cash purchase in detail here: cash offer versus an iBuyer.

How the offer number actually gets built

Sellers often expect a cash offer to be a discount off an online estimate. It is not. It is built from the other end, and once you see the order it stops feeling arbitrary.

The buyer starts with what the house will be worth after it is repaired, based on what comparable finished houses near you have actually sold for. From that it subtracts the repair budget, which on an older house is usually larger than the owner thinks, because it includes the things a buyer discovers rather than the things a seller lists. Then it subtracts the carrying cost of the months the work takes: taxes, insurance, utilities, and money that is not earning anything while it sits in your drywall. Then the cost of selling it again at the far end, which for most investors means an agent and closing costs. Whatever is left over, minus the margin that makes it worth doing at all, is your offer.

That is why the gap between a cash offer and a listing price is mostly roof, plumbing and time rather than greed. It is also why a buyer who gives you a confident number before seeing the house is telling you something about itself. We break the percentages down separately in what percentage cash home buyers actually pay.

Context helps here. Nationally the median existing-home price was 417,500 dollars in September 2026, the median home took 33 days on the market before going under contract, and all-cash sales were 27 percent of transactions, down from 30 percent a year earlier. Those 33 days are the clock starting, not stopping: they end at a signed contract, not at a closing, and a financed buyer’s loan, appraisal and insurance still come after.

What the contract really says

Most sellers read the price and skim the rest. Three paragraphs are worth more than the price, and they are usually short.

The assignment clause. Look for language saying the buyer may assign the contract, or for the words “and/or assigns” next to the buyer’s name. That is what lets the company you met transfer your deal to a stranger. It is not automatically bad, but it tells you which of the three businesses you are in, and you are entitled to ask for it to be struck.

The inspection or due diligence window. This is the period in which the buyer can walk away, or come back with a lower number, often for almost any reason. Ask how many days it is and what happens to the deposit when it ends. A short window with a firm price afterwards is worth real money compared with a bigger number that is free to shrink.

The earnest money. How much is it, when is it deposited, who holds it, and when does it stop being refundable? A buyer putting up meaningful money with a title company, early, is a buyer who intends to close. A buyer putting up a token amount has bought itself a free option on your house.

The law caught up with wholesaling

For years the assignment business lived in a grey area. Several states have now written rules, and they are a useful map of what regulators thought was going wrong.

• Texas. Occupations Code section 1101.0045 lets a person sell or assign a purchase contract without a real estate license only if they do not use it to engage in brokerage and they “disclose in writing the nature of the equitable interest to any seller or potential buyer”. Doing it without that written disclosure is defined as engaging in real estate brokerage.
• Oklahoma. The Predatory Real Estate Wholesaler Act took effect on November 1, 2021 and requires real estate wholesalers to obtain a real estate license, with duties to the seller that cannot be waived.
• South Carolina. The code now defines wholesaling as having a contractual interest in buying residential real estate and then marketing the property to a different buyer before taking legal ownership, and says advertising property owned by another with the expectation of compensation requires a license. Brokerage firms are prohibited from engaging in it. Notably, the definition does not cover simply assigning or offering to assign a contractual right to purchase.

You do not need to police any of this yourself. The practical use is narrow and real: if the person in your kitchen cannot tell you plainly whether they are buying or assigning, and whether they hold a license in your state, that is the answer.

Your options, side by side

For a seller weighing a letter in the mailbox against the normal route, the honest menu looks like this:

What a straight cash purchase actually looks like

When the buyer is the one with the money, the process is short enough to describe in a paragraph. You tell the buyer what the house really is, including the parts you would rather not mention, and you get a written offer. If you accept, a title company or closing attorney takes over: it searches the title, finds the liens, the back taxes and the probate gap nobody knew about, and works out what has to be paid off out of the proceeds. There is no lender, so there is no appraisal, no financing contingency and no insurance underwriter with a vote. You pick the date. You take what you want from the house and leave the rest. The full walk-through of that process is here: how selling to a cash home buyer works.

The title search is the part that genuinely takes time, and it is the part worth being patient about. It is also where a serious buyer earns its margin, because clearing an old lien or a missing heir is work that a financed buyer would simply walk away from.

Green flags and red flags

After enough of these, the pattern gets easy to read.

Green flags. The buyer wants to see the house before naming a number. It answers the assignment question directly. It can show proof of funds without drama. It uses a title company or closing attorney you can look up and call. It tells you plainly what it does not do. It puts the offer in writing and does not pressure you to sign today.

Red flags. A number quoted sight unseen that drops after the walkthrough. Pressure to sign at the kitchen table tonight. A reluctance to say who will be on the deed. Anything that involves you signing over the deed before you have been paid in full. And above all, any request for money from you.

That last one deserves its own line, especially if you are behind on payments. The Federal Trade Commission is blunt about it: “It’s illegal for a company to charge you upfront for promises to help you get relief on paying your mortgage”, a company “can’t tell you to stop talking to your lender”, and on deed transfers, “transferring the deed does not transfer the mortgage, so you’ll still owe payments on your mortgage loan”. A buyer buys the house and pays off the loan at closing. Anything else is a different transaction wearing a house sale’s clothes. We go deeper on the warning signs in how to avoid cash home buyer scams, and on the basic trust question in are “we buy houses” companies legit.

How Sterling Home Offer helps

We are the first kind: we buy single-family houses with our own funds and we are the party on the deed at closing. That is not a boast, it is just the fact that makes the rest of our promises possible. A no-obligation cash offer within about 24 hours, based on the house as it stands and on what houses near you have actually sold for. Strictly as-is, so old roofs, water damage, tenants in place, probate, back taxes and a full garage are normal here rather than deal-breakers. No commissions and no fees, and no request for a cent from you at any point: the offer is the number and it does not shrink on the way to closing. Your date is the date, whether that means two or three weeks because you are in a hurry, or two months because the court or the movers are not ready. And if we are not the right answer for your house, we will say so.

The bottom line

“We buy houses” is not a scam and it is not a favor. It is a trade: you give up some of the price, and in exchange you skip the repairs, the showings, the cleanout and the risk of a financed buyer collapsing in week five. Whether that trade is good for you depends entirely on your house and your situation, and you are the only one who can judge that. What you can control is who you make the trade with. Ask who will be on the deed. Read the assignment clause and the inspection window. Never pay a fee to someone who wants to buy from you. Do those three things and the letter in your mailbox turns from a gamble into an ordinary business decision.