Craigslist has some advantages: Everyone's heard of it, it's convenient, and it gets lots of traffic. As of November 2020, it's ranked No. 37 for all internet sites in America, according to Alexa (NASDAQ: AMZN). But Craigslist is kind of like a cheap motel off the interstate in a shady part of town: You could check in, but would that be the best decision? Would you feel safe and secure there? Here are some reasons you might want to buy real estate on Craigslist and why you might want to avoid doing so.
There are a couple of ways to find property on Craigslist, and both ways are easy. You could simply search for real estate for sale in your area. When you find something you like, contact the seller and take it from there. Or you could proactively place an ad yourself on Craigslist, letting sellers know you're looking for property to buy. You could then get sellers contacting you.
You could get a great deal
A top reason investors look on Craigslist to buy real estate is to get a great deal on off-market property. Most (or all) the ads you'll see are for distressed properties, typically at 70% of after repair value (ARV), which is often the barometer for investors looking to buy a flip. It's certainly possible to get a great deal on Craigslist, but should you take the risk?
Scammers are rampant
What if the house you see for sale isn't really for sale? Scammers often use the site to steal people's money. The way they do it with real estate is to post a fake listing. Scammers copy a legitimate listing from another site and place it on Craigslist with their contact information on it, making it seem as if it's really their listing when it isn't. These types of scammers are looking for someone to put down a deposit, sight unseen. The only thing you'll see if you pay upfront to a scammer is your money vanishing right before your eyes -- with nothing to show for it.
Another scam is the bait-and-switch one. A house will be listed, but when you inquire about it, it's no longer there. But wait: A more expensive property is available for you to buy (or a property in worse condition or one in a different part of town). The scam is that the good deal never existed, or if it did, it was still advertised after it sold to lure buyers like you in.
If you want to try buying real estate on Craigslist, you might want to do so only if the money you're spending isn't enough to devastate you if the deal turns out to be fraudulent or is just a bad deal. That said, you can minimize your risk by always viewing the house in person, both inside and out, and meeting with the seller.
If you can't do this, send someone you know who can. If the seller won't meet with you or your representative, they're likely scammers. Never buy unless it's from the owner or an agent who represents the owner. Find out who the owner is by looking up property tax records for the county the home is in.
The Millionacres bottom line
Buying real estate on Craigslist might seem like a good idea, but it can be risky. Using the site to buy a used appliance or bicycle is one thing, but real estate is a bigger transaction. You should always minimize risk when investing in real estate, and buying property from the site might prove to be too big a risk to take.
Whatever you do, never hand over any money upfront, and consider working with a real estate agent or attorney to help verify the deal is legitimate.