If you’re in the market for a new home, congrats! Buying a property is a major life milestone. However, before you pop the champagne, it’s important to know the risks associated with real estate. Not necessarily the risks of actually purchasing a home. Instead, we’re talking about real estate scams. Unfortunately, there are people out there who are out there to make a quick buck at your expense.
Thankfully, knowledge is power. Once you are well-versed in common real estate scams, you can dodge them more easily.
1. The “Too-Good-To-Be-True” Rental Listing
We’ve all seen real estate listings that promise a lavish penthouse for the price of a shoebox. Buyers’ eyes light up as their imaginations run wild with thoughts of an amazing deal. There is a legal way to overembellish property details called puffing which is commonly used in real estate. We’re not talking about legitimate properties that a realtor has overexaggerated about. There are legitimate scammers out there who will fake an entire listing to try to steal money from people.
Scammers list imaginary or already rented properties at jaw-droppingly low prices online. Their hope is to lure you in. Once you’re hooked, they ask for a deposit or first month’s rent without showing you the property. They take your money and vanish into thin air. Usually, these interactions take place on Craigslist. How do you dodge this real estate scam?
Always do your research and try to identify early on that the person if real. Never wire money without having a legitimate lease. Always insist on seeing the property and meeting the landlord in person before making things official.
2. Phantom Middlemen
Another example of a real estate scam deals with realtors. Many agents will claim to have the ideal property for you. They talk the talk and walk the walk, but there’s one tiny problem—you never get to meet the actual property owner. The agent says they’re acting on behalf of the owner who’s abroad, in a remote location, or otherwise unavailable.
They pressure you to sign a lease and hand over a deposit without ever showing you the inside of the property. In reality, they have zero connection to the property and are out to scam you. How can you avoid this real estate scam? Always insist on meeting the owner and verifying property records. You can easily check ownership details at your local land registry office or online.
3. Title Fraud
Title fraud is where someone forges documents to make it seem like they own a property, then sell it or take out a mortgage on it. When the dust settles, you could find yourself without a house or bank account. Spooky, right? To avoid becoming the star of this horror story, you need to be proactive. Hire a reputable title company to do a thorough background check on the property and the owner. Make sure the person you’re buying from is the actual owner. Then, verify with the title company that there are no outstanding debts tied to the property. A title insurance policy can also offer an extra layer of protection.
4. Loan Modification and Foreclosure Relief Scams
Hard times hit us all. If you’re struggling to make mortgage payments, the last thing you need is someone trying to scam you. In loan modification or foreclosure relief scams, a person will promise to negotiate a deal with your lender. They will get you out of your foreclosure for a fee.
After you pay, they vanish. At this point, you’re left in even hotter water with your mortgage lender. To steer clear of these scammers, remember you don’t need a middleman to talk to your lender. If you’re facing financial difficulties, reach out to your lender directly. Never pay upfront fees for promises of mortgage relief.
Avoiding Real Estate Scams
Knowledge is your best defense against real estate scams. The more you know, the easier it is to spot something sketchy from a mile away. Tread carefully in the world of real estate. Especially if you’re trying to sell your house quickly, make sure you do your research before working with someone.
Published by HOLR Magazine.