Real Estate Scams: What Every Investor Should Know to Avoid Losing Money.3 min read
A real estate scam is a fraudulent and illegal activity undertaken by a scammer by using techniques for buying, selling, renting, or financing real estate properties globally. Scammers undertake these schemes by running them individually or deceptively collaborating with a well-known real estate firm that proves the legitimacy of the services.
Typically, real estate scams work by taking advantage of an individual looking for a decent property, mostly for investment purposes. Scammers lure the potential victims by providing magnifying services that, in reality, are dubious. They also convince the victims to provide an upfront or advance payment under false pretences.
However, once a victim provides sensitive information to the scammer, they escape with the credentials and use them further in other deceptive activities. Moreover, scammers use several techniques, such as showcasing a legitimate-looking property online that, in reality, doesn’t exist.
How can you detect a real estate scam?
Detecting or identifying a real estate scam can never be easy, as scammers have designed untraceable and augmented techniques that lures the victim to adhere to the scheme without surveying about it. However, mentioned below are some of the pointers that can help you detect real estate fraud:
- If a seller or broker asks for an upfront payment through a wire transfer or gift voucher, it can be dubious. Scammers use this technique often, as it is not possible to reverse a transaction done through a wire transfer network.
- If a rental or property listing seems too good to be true and contains unusually low prices and low-quality photos uploaded on the website or sent by the broker directly, this can be suspicious.
- If a broker or tenant exhibits an augmented property but implies few terms, you need to take an immediate decision on the offer as it lasts for a certain period. Beware of such offers, as scammers don’t provide much time for researching.
- If you can’t find any contact information for the house owner or agent, or if they are vague when you ask for contact information, it may be a sign that the transaction might be a scam.
- If the homeowner or agent responds deliberately slowly to your inquiries, provides vague or inconsistent details, or at worst doesn’t answer your questions directly, it may be a sign of a scam.
How do I avoid losing money in a real estate scam?
- Do your research about the property and rental agreement you are adhering to. Check public records, such as property ownership, title history, and liens.
- Work with a reliable and reputable homeowner or agent, or associate with a legitimate real estate agency. Survey about their credentials, reviews and ratings for enlightening its good reputation in the industry.
- Refrain from acknowledging unsolicited offers, such as emails or phone calls, from people claiming to have a great investment opportunity or a property for sale at a very low price.
- Refrain from signing any document related to property purchase without reading it thoroughly and abiding to the clause. Moreover, you can hire an attorney to review the document and its legitimacy.
- Avoid sending money from the property deal through wire transfer. Once the money is transacted to wire transfer it is impossible to reverse the transaction as it does not have a course of action as such.
Real estate scams are widespread and it is imperative for a homebuyer to look out for certain red flags. Generally, scammers exploit the trust of the innocent individuals and homebuyers by convincing them to give out personal and financial information under false pretences. The main goal of the scammer is to acquire sensitive information of a potential victim and use it further in several fraudulent activities. However, to overcome such scams it is essential to hire an attorney that is well aware of the industry and the real estate marketplace. Also, check their background before associating with them and do not trust blindly on any decisions surfaced in the market randomly.