When is the last time you were scammed?
Hopefully, it wasn’t in the recent past. And that you weren’t swindled out of too much.
Unfortunately, in a world where hackers and identity theft are a way of life, getting scammed has become much more commonplace.
And the real estate world is no more protected from this reality than any other industry.
In fact, technology and the internet have made some of the following real estate scams much easier to execute.
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1. Foreclosure “Relief”
A homeowner facing foreclosure is desperate and vulnerable. And unscrupulous scammers will take advantage of this.
Homes that are in pre-foreclosure are public information. Scammers know how to access this information. Then they swoop in to save the day with offers that will help save your home AND reduce mortgage payments.
If it sounds too good to be true, that’s because it is. The big catch is that you have to pay a rather hefty up-front fee.
And to convince you that they’re legit, these fraudsters will go so far as to claim that they’re connected with the government or other housing assistance programs.
If you’re in this situation, you would be far better off working directly with your loan company to see if they can modify your existing loan. You can also request forbearance.
Another option would be to enlist the services of a HUD-accredited housing counselor who can give you options and possible solutions.
2. Unethical Professionals
It’s so much easier to avoid real estate scams when you have a great broker. But do you know what to look for when searching for a real estate professional?
If you said someone who has is well-established and has a long history, then you may very well get scammed.
An agent may have all of the necessary certifications. But that doesn’t mean that he or she is going to be honest and ethical. Even if the agent works for a respected brokerage.
There are agents with ulterior motives who will always put their needs first. They may try to charge you for heinous fees; hide information in long contracts; even charge a commission without selling a home.
Shifty brokers can also double-deal buyers to unfairly sell a home to a lower bidder.
As we mentioned before, some of these swindlers are actually well-established brokers. So before choosing an agent, do your research. Check out the company’s reviews on Google, pore through testimonials, and definitely talk to previous clients.
You may even want to connect with other professionals in the industry to get their input.
3. Flipping Loans
Scammers involved in loan flipping very often target senior citizens in hopes that there is memory impairment.
With this scam, a predatory lender is able to repeatedly convince the targeted homeowner that he or she needs to refinance their mortgage. It’s not unusual for more money to be borrowed each time.
Each transaction means high fees and points for the homeowner. And what’s the ultimate result? Higher loan payments the homeowner can’t afford to make because they’ve been tricked into borrowing ost of their home’s equity.
If you’re a senior citizen and a homeowner, be wary of this scam. Discuss any decisions about tapping into your home equity with a trusted relative or friend. Particularly if these offers are completely unsolicited.
4. Title Fraud
White title fraud may technically fall under the title of identity theft, it does involve real estate.
With title fraud, a scammer hacks your personal information so that he or she can impersonate you and place a mortgage in your name on the title of a home.
The scammers can easily take off with hundreds of thousands of dollars, while you’re left in a lurch.
The first action you’ll want to take is to get title insurance on your home. That way, if your identity is stolen, you’ll be protected should someone try to pull this scam on you.
Also, just be very careful to keep your personal information safeguarded. Shred or tear up any documents that have important data before disposing of them.
5. Escrow Wire Fraud
If you start receiving emails, phone calls or texts from someone from your title or escrow company, it could be important.
But if the person calling is simply giving you instructions on where you can wire your escrow funds, do NOT fall for it. These scammers have gotten very savvy at creating fake websites that look like your company’s site and you could soon be sending money to an offshore account.
And there will be little recourse to your getting it back.
One way to tell that an email, text or website is fake is that there’s usually some subtle mistake – such as one incorrect number or letter. Even if you don’t see that, always verify by looking over original documents to obtain your lender’s contact information. Then call.
Even if you determine it is legitimate, always confirm the escrow account number before wiring any funds.
6. Rental Scams
If you’re in the market for renting an apartment or flat, then you’re probably familiar with Craigslist or other social media pages. They’re loaded with rental properties that are available.
Where some of the scams we’ve discussed target senior citizens, this one preys on younger people. And they are far more common than you might think.
With this racket, scammers who have no connection with the property being offered will ask for payment in order to see the property. Then they’ll take your money and disappear.
Anyone who asks for a cash deposit upfront to see property is likely scamming you, warns Pinnacle, a professional property management company in Los Angeles. You can be sure you’re dealing with the real property owner before seeing a property by searching the local property appraiser’s website to determine who the owner is. There should be contact information.
7. Omitting Information
We discussed previously how certain shyster agents will hide information in a long and drawn-out contract.
But then there are those who purposely leave out information from the purchase agreement because they stand to fare better if they hide something about the property.
For example, an unethical agent may choose to simply leave out the fact that newly upgraded appliances are included in the purchase. Then during the closing, the sellers are able to switch out those appliances with older ones because it wasn’t clear in the contract.
Sellers and corrupt agents may also conveniently fail to include any defects in the home that could result in costly repairs – or even present as a danger to the new occupants.
So be sure you hire a realtor who knows how to write a detailed agreement of purchase and sale on your behalf. And be sure to have a home inspection performed as well. It could be the difference between buying your dream home or sinking into a money pit.
Beware of Real Estate Scams
Now that you know the ins and outs of some of the latest real estate scams, we hope you’ll be able to steer clear of them. After all, your home should be your castle!
And for more great articles, keep checking back with our blog!