It’s not always a wonderful world out there and we hear on the news all the time about people taking advantage of other people for financial gain. Real estate is not exempt from the scammers of the world. Here are a few of the most common scams and ways you can avoid them.
Common Real Estate Scams
Down Payment Wire Fraud
A scammer hacks into the emails of a closing, mortgage or real estate company. After they learn a client has a closing date scheduled, they set up a dummy email account to look like one of the emails of a person involved in the transaction. The fake email may be off by a few letters or one word and if you aren’t watching closely—you might think it is coming from someone at the title company or the realtor. They send an email with wiring instructions for where the buyer should send their down payment and closing costs, which could be thousands of dollars. To prevent this—if you are buying a house, make sure the wiring instructions you receive are from a 100% legitimate email and verify the email was sent with a phone call to the closing company or bank. Also note: realtors do not send wiring instructions.
Craigslist Rental Scam
Scammers will visit public websites like Zillow; gather info/photos about houses that are on the market. They run fraudulent “house for rent” ads on Craigslist. When an interested renter contacts them, they will require a “showing fee” or “application fee” to be sent in before viewing the property. After the fee is received and the appointment is set, the renter goes to the house to find out it is for sale, not rent and the whole thing is a scam. The fix is easy. Reputable owners and management companies don’t require any kind of pre-viewing application or showing fee. And no tenant should send in any kind of advance rent payment on a property they haven’t seen. Don’t pay them.
Foreclosure Relief Scam
Foreclosure action is part of the public record—anyone can see the information. This scam involves a person knocking on your door & offering foreclosure relief. That is not illegal but could be a scam. If they require a cash payment to begin their services, be wary. Check them out online, Google the company name, and even check with the local police. You want to be sure who is receiving your money and what you will get for it.
Lipstick On A Pig
This occurs with for sale by owner properties. The homeowner knows there is a major defect like mold, water or fire damage and they cover it up. They are working with an unethical or incompetent home inspector who provides a pre-inspection report that doesn’t note the defect. The sellers encourage buyers to accept their report and not have another inspection done by a neutral party. Easy fix. Always have your own home inspection done by a reputable inspector.
Buy A Deed
After you purchase your home, you receive a very formal-looking letter advising you to send $85-90 to them for a certified copy of your deed. While this is not illegal, there are several spammy aspects. After the deed is recorded, the county automatically sends you a copy. And even if they don’t – you can go to the courthouse and purchase a copy for under $5.00. Not sure how many people fall for this, but the scammers keep sending the letters, so assume they are making money.
How To Avoid Being Scammed
The best “fix” for these real estate scams? Work with an experienced real estate agent, someone you can trust to help protect you from the latest scams, and who will guide you through the home-buying or selling process. We work with a team of reputable home inspectors, closing officers, and mortgage brokers. One of our primary missions is to make sure our clients work with honest, legitimate experts and do not fall prey to scammers. We tell our clients all the time – who you invite into the home buying or selling process is critical to a happy, successful outcome.