Buying a home is an exciting proposition, and any thought about a real estate scam is probably the last thing on your mind in that moment. Soon-to-be homeowners are often very busy, right from reviewing properties to packing their belongings to organizing their financial documents.
However, there are nefarious individuals out there trying to take advantage of unwary people. It is always prudent to take precautions to protect your assets and finances. In the absence of an understanding of these real risks, you could lose a substantial amount of money, even your entire life savings, to professional scammers who know what to do and how to do it.
Common Real Estate Scams Potential Homeowners Should be Aware Of
Escrow Wire Fraud
Escrow wire fraud is one of the most popular scams in which homeowners are taken advantage of. These deceptive individuals trick people by creating fake websites that appear almost exactly as authentic credit institutions or credit companies. The difference lies in the contact information.
The phone numbers, URLs, and emails may be just one number or one letter off. Once these criminals have these aspects set, they text, call, or email unsuspecting homebuyers, pretending to be a real representative of the title company or lender to set up a transfer for the escrow funds.
By the time their victim realizes that they wired funds to the wrong account, that money has been withdrawn, making it extremely challenging to retrieve your hard-earned money. Therefore, it’s vital to always refer to your original paperwork before completing any financial undertakings.
Do not ever click on links in emails or texts without proper verification. Properly review the contact details and information about your company representative to confirm the appropriate wiring instructions.
For the sake of your financial security, it is vital to understand where to file real estate scams. In the US, the Federal Trade Commission (FTC) protects the country’s consumers and manages this form of fraud.
Duplicated Rental Listings
It is almost impossible to believe that over five million people have lost money to fraudsters handling duplicated listings. It is often younger people that get taken for a ride, but that’s not always the case. Such real estate scams involve individuals who do not have anything to do with a specific property creating fake listings on social media pages or Craigslist. Then they charge people an upfront fee to let them view the property.
Very competitive real estate markets are notorious for such scams. The scammers state that it is a “deposit.” However, once they get your money, they disappear with no avenue to contact them. It’s crucial to ensure that you always work with established, reputable rental companies or property owners. Also, it is best to confirm and sign paperwork/submit funds in person and not through email or phone.
If you or someone you know has been duped via duplicated rental listings, the FTC’s site will guide you on how to report real estate scams that involve rental fraud.
There is an old adage, “If something sounds too good to be true, it probably is.” This perfectly sums up loan fraud. These real estate scams cater to individuals trying to get the best deal possible on a mortgage. However, these nefarious loan companies, usually market themselves as a real mortgage agency, and will advertise guaranteed loans at a reduced price (typically remarkably low) if you provide an upfront fee.
It is best to work with reputable brokers, credit unions, and banks to protect your financial and personal information and not become the victim of a scam. The FTC handles loan fraud as well.
Title fraud is another common real estate scam in the country, and it centers around identity theft. The fraudsters create fake paperwork that makes it seem like they own specific property and then use that documentation to acquire a second loan on the property. This is a dangerous proposition as it can end up leaving the real homeowner (who is a victim of identity theft) stuck with the payout of that second mortgage.
Overseas Wire Scams
Be very wary if you ever receive any messages or emails on investment in international real estate. There are legit ways to buy property outside the United States, but there are also many fraudsters out there trying their best to exploit those interests. These real estate scams are common. According to the FBI, nearly one billion dollars in funds were “diverted or attempted to be diverted” into illegal accounts in 2017.
It is crucial to protect yourself from such real estate scams. Be wary of the following:
- Having to make decisions on tight deadlines.
- Not being able to talk to someone on the phone.
- Spelling mistakes in emails, texts, or other types of messaging platforms, including social media.
- Rapid changes in contract terms.
Be Cautious to Protect your Assets
Your best defense to protect your assets and financial future is to practice caution whenever deciding to make a transaction. There are various types of real estate scams out there, and you may be targeted at some point.
Consult a Leading Real Estate Attorney
At Davis, Bingham, Hudson, & Buckner, P.C., we deal with residential and commercial real estate matters for our clients. To understand more about how we can protect your rights, call today at (334) 821-1908. We provide strong real estate counsel and representation for your needs.