How to Protect Yourself from Real Estate Scams

How to Protect Yourself from Real Estate Scams

Introduction

Real estate transactions, whether buying, renting, or selling, are significant financial undertakings, making them a prime target for scammers. From rental scams to wire fraud during home purchases, these scams can lead to substantial financial losses. This blog will help you understand common real estate scams and provide actionable steps to protect yourself.

Common Real Estate Scams

1. Rental Scams

   • Fraudsters post fake rental listings, often copied from legitimate sources, and ask for an upfront deposit or rental fee before viewing the property.
   • How to Spot It: Be wary of landlords who cannot meet you, insist on communicating only online, or ask for money before you see the property.

2. Wire Fraud During Transactions

   • Scammers may hack into a real estate agent’s or title company’s email and send fake instructions to homebuyers, redirecting closing funds to fraudulent accounts.
   • How to Spot It: Double-check any changes in wiring instructions by calling your agent or the title company directly using a known phone number.

3. Title Fraud

   • Scammers use stolen identities to fraudulently transfer property ownership to themselves, then attempt to sell or mortgage the property.
   • How to Spot It: Regularly monitor your property records to ensure your title remains unchanged.

4. Foreclosure Relief Scams

   • Fraudsters prey on homeowners facing foreclosure by promising assistance for a fee but deliver nothing in return.
   • How to Spot It: Be cautious of anyone offering guaranteed solutions or asking for upfront payments.

5. Fake Real Estate Agents

   • Scammers pose as real estate agents and collect money for services or properties they don’t control or own.
   • How to Spot It: Verify the agent’s license through your state’s real estate regulatory authority.

Red Flags to Watch For

• Unusually low prices or deals that seem too good to be true.
• Requests for payment via wire transfer, gift cards, or cash before seeing the property.
• High-pressure tactics to sign contracts or transfer funds quickly.
• Poorly written contracts or documents with inconsistencies.
• Lack of property access for viewing or inspection.

How to Protect Yourself

1. Research Agents and Companies: Verify the credentials of agents and companies you are dealing with. Check their license status with your state’s real estate regulatory agency.
2. Visit Properties in Person: Whenever possible, visit the property to ensure it is legitimate and in the condition described.
3. Never Wire Money Without Verification: Before transferring funds, call your agent or title company using a verified number to confirm all wire instructions.
4. Use Secure Payment Methods: Do not make payments via unconventional methods such as gift cards or wire transfers to unverified sources.
5. Read All Contracts Carefully: Have a lawyer review any contracts or agreements before you sign.
6. Be Wary of Unsolicited Offers: Avoid offers from unknown parties that come out of the blue and seem too good to be true.

What to Do If You’re a Victim

1. Contact Local Law Enforcement: File a police report detailing the scam.
2. Report to the Federal Trade Commission (FTC): Visit www.ftc.gov/complaint to report the incident.
3. Notify Your Bank or Financial Institution: If you’ve transferred funds, contact your bank immediately to try to halt or reverse the transfer.
4. Check Your Property Title: Ensure no fraudulent transfers have been recorded and regularly monitor your property records.

Conclusion

Real estate scams can cause severe financial and emotional distress, but by taking precautionary measures, you can reduce the risk. By thoroughly researching all parties involved, verifying any payment instructions, and being alert to red flags, you can protect yourself from fraudsters. Always exercise caution and trust your instincts when something seems off.