Buying a house is every person’s dream, but there is also a lot of pressure to buy one. As the real estate market is competitive, there is always an inclination to act swiftly when you find the perfect house. Although unfortunately, scammers take advantage of this situation where they trick potential buyers into paying 2x for the property’s current worth or the one that does not even exist or fudging the terms of the deal.
A Real Estate scam occurs when a scammer claims to be a real estate agent as a cover to steal money from the people who participate in this errand. According to FBI officials, more than 14,000 people have been victimized by this real estate or house rental scam in the previous year. A Real Estate scam takes place in several ways. One of the most common real estate scams is a mortgage scam, where a loan broker or shady lender promotes misinformation about the property to extract money from off-guard borrowers or victims.
Few of the most common Real Estate Scams
Lucrative Real Estate fraud –
Lucrative real estate fraud is typically complex and molds into various forms, from misinterpretation to counterfeit documents. However, one of the most common types of lucrative real estate scams is the swindling of funds. Swindling of funds takes place when a borrower redirects the funds they acquire from a loan or payment to an expense it wasn’t approved for. For example, if a property management company collects rent payments and uses those funds to pay for another property, it would be called a swindling of funds. Lucrative real estate scam also involves false financial statements or records to purchase or rent a home.
House scrutiny scam –
One of the most common and vital scams is House scrutiny. Further, it is defined by the buying and selling process, where the lender ensures whether the borrower is paying the fair market value of the property. For instance, in house scrutiny, the lender hides potential issues facing inside the house. However, to prevent this scam, you must check thoroughly about the lender and their background, make sure to ask lots of questions, and look for signs of misconduct.
Contract or Deed scam –
Contract or Deed scam implies the involuntary transfer of possession without the owners’ knowledge. In this process, scammers try to transfer property possession of the owner to another person or borrow money using that property as security. This is the most vicious real estate scam; if you fall victim and have bet your house, there is a possibility you may lose it, or a contract deed can also result in an expensive fix.
Rental scam –
In this scam, most tenants look around online for houses on a rental basis. Scammers take advantage of this opportunity by listing fake properties that do not exist. Priory, they will post a minimal amount for the property, and as you agree with the clause and agree to payment, they obtain a high market price by refraining that they have listed the following price previously. However, you must pay the amount as you have submitted all the sensitive information documents. And in the end, you got to know that it was a scam and no such property existed.
Warning signs –
If a real estate scammer demands to make an upfront payment, deposit, or a down payment on the property to lock the deal, refrain from it. Many scammers post listings stolen from authorized websites and repost them to different marketplaces. Interested buyers are told to send a payment or deposit to lock in the deal. But in the end, the scammer blocks and cuts off contact with the buyer and escapes.
A tenant is pressured to act immediately, or they will lose a good deal if they don’t respond immediately; this is the most well-known technique used in every scam. However, one should take a long time to read the paperwork or fail to send money.
Scammers perform a lack of paperwork and documentation to lock the deal. Scammers fast forward the process by assessing the victim, go ahead and send them the money by promising deeds, contracts, and other formalities are being processed, which is never in the process.
Scammers often demand to transfer a title or deed of the property. This kind of scam typically targets seniors while assuring them to handle all aspects of a mortgage on their behalf or arrange a house sale for them.
How to protect yourself from Real Estate Scams?
Never give out your sensitive information, such as personal or financial, if you don’t know the following individual personally. Also, do not give out any information in unsolicited emails or messages.
Avoid upfront payments before you have access to all the services that have been proclaimed to you earlier.
If you are in the process of securing a deal and getting to know about some changes in the activities, take time and verify the situation, avoiding exaggerating and ending up making bogus decisions.
Consult with a certified real estate agent or lender whom you can trust. If a person contacts you out of nowhere, refrain from acknowledging their terms.
If possible, deal in cash if you recite a certain amount because sometimes wire transfers may cause loss. For instance, if you have sent the lender the token money through wire transfer and he refuses to receive it and asks for repayment although he has received it.
Real Estate scams are daunting and can affect you mentally or physically. However, to prevent this scam, work with experts and professionals to rent out your house or get a place to rent. Without acquiring knowledge about the process, do not proceed, or it may result in a loss. Also, if you have been scammed, associate with the officials regarding the scam and file a complaint providing the fraudulent activities that took place during the fraud. It will further assist the authorities blacklist the scammers, helping others spot and avoid them.