Any business that requires a lot of knowledge and specialized skills to navigate is subject to the presence of scammers. They take advantage of people’s insecurities and ignorance regarding the business in question and, through confidence, fearlessness and just the right amount of information, they pose themselves as the “real deal” to earn money, but deliver nothing but angst and headache.
Sadly, real estate scams are very common. Important tools like The OFFICIAL Real Estate Agent Directory® exist to connect buyers and sellers with reputable trustworthy real estate agents but, from time to time, home sellers and home buyers end up dealing with hacks or even so-called professionals that are willing to commit real estate fraud to earn more and/or make quick bucks. They operate out of your need to either buy or sell a house as soon as possible and their lack of morals and empathy. And, because our industry moves a lot of money, sometimes one real estate fraud is enough for the scammer to make a lot of money, move to another state – where he’ll pull an even bigger real estate scam – and never be found again to be held accountable for the damages he/she made.
So, whether you’re a first-time home buyer or seller or a seasoned one, it’s best to learn about the most common real estate scams to avoid becoming a victim. Here are some of them:
Phantom Properties
You found a property you liked, the conditions are nice, the area seems good. But for many reasons, your contact (either the Landlord or a real estate agent for the owner) is always coming up with problems for you to visit. And worse, he’s always saying he’s been so busy with other possible buyers, setting a clock for you, who becomes afraid to lose the property that seems so perfect.
Make sure the property exists. Whether it is to rent or to own, do your research. If you can’t drive through the neighborhood yourself and give the good old “I was just in the neighborhood” – but beware because if he/she is for real, it might backfire on you, as they might feel you’re a bit pushy/strange – you can browse through google street view to get an idea of whether the listing is under a wrong or non-existent address.
If it is an apartment or condo unit, there are times when you really won’t be able to go inside the unit, because there’s currently a Tenant there and the Landlord wishes not to disturb him/her. The thinking behind this is that, if they allow for everyone that’s interested in the unit to go inside of it and take a look, the Tenant’s life will be miserable. Plus; what if the Tenant’s feedback about the place is bad? But most of the times, if you are serious about it – if you show a pre-approved mortgage, if you make an offer reserving the right to back down if you don’t like what you see after the visit – the Landlord usually talks with the Tenant and assign a day for you to go there. If, still, he doesn’t let you visit… major red flag! It smells like a real estate scam. A way to work around that is calling the building or property manager independently to ask about the situation of the Landlord or the real estate agent who says it’s dealing with the property. Get the 411. If everything checks, ask the property manager if there is a similar vacant apartment so you can get the feel. Sometimes it’s even better, and you’ll be able to negotiate a better price; who knows?
Out of the Country
Claiming to be out of the country is a very popular real estate scam. It seems perfectly reasonable, right? The owner had an emergency that made him relocate – usually a sappy story involving elder relatives or diseases – so now he’s trying to find someone over the internet to rent the place and possibly help with his costs to heal grandma. Of course, he will only send the key once you make a deposit; how can he trust you won’t start living there? If he’s good; he’ll have many photos of the place and will paint even more vivid pictures of how it was to live there, the neighbors…
Because of all of this sudden happening, he just wants someone to stay there and the rent is super cheap; just enough to help with the costs to heal grandma, which are less expensive than in America. Yes, everyone who commits not only real estate fraud but any type of scam needs to be a smooth talker. They make it look like a steal… but you’re the one getting robbed. Since they are “out of the country,” they are magically unable to sign or verify any legal documents but do require a deposit. No matter how sincere someone seems, if they are out of the country, avoiding the deal may be the safest course of action. That actually leads us to our next point…
Money Upfront
After shopping online became so popular, we got used to living in a world where we pay first and wait a bit to receive the goods we are paying for. So, paying a security deposit or first month’s rent right away may not seem like a big deal. And many times that is the norm. However, in order to avoid a real estate scam, be sure to do that only when you sign a contract. This is the good you are paying for with the security deposit and first month’s rate: the landlord’s obligation to let you live there and the penalties if he/she doesn’t. Scammers make it seem like the apartment or condo is a hot deal, and if you don’t pay something to reserve the place, you’ll lose it. Once you pay, the real estate fraud is revealed when the scammer disappears with your money, and your dream property that was never his to rent to you and maybe didn’t even exist.
Mortgage Scam
Sometimes everything is correct and you’re dealing with trustworthy real estate agents and home sellers, but scammers get in the way and everything goes sour. Here’s what happens: knowing that real estate scams can be really profitable, many hackers invade real estate broker’s e-mails and basically stay dormant there, reading and waiting for the moment where they notice a client is closing a home. The hacker, then, sends an e-mail via the broker’s address with a link for quick payment, so the home buyer can transfer the funds with a click of a button to the escrow account. But it actually transfers to the scammer’s account.
Most Brokers and Agents know better and warn their clients that serious communications like those will be made by phone and not e-mail. But sometimes, we just get distracted and wind up clicking. There’s no way to work around that but double warning you guys and remembering once more not to click on anything you receive in an e-mail. Even if it looks too legit, contact the sender just to make sure. We know how the life of a real estate agent is, busy and all, but call them, talk to the secretary (if yours has one) and only transfer money when you’re 100% sure. A good idea is to also contact the bank in question. Call and verify if the routing number provided matches the person you are actually sending it to before you get caught on a real estate scam and your money gets lost in offshore accounts.
To all these real estate scams, remember: there’s no rush. Scammers count on your hunger for a property to make basic judgment mistakes. And, sure, we all understand the need to relocate and start new. But the alternative is much worse. It’s better to lose a fine home than to “gain” a big loss of money. You are better off by keeping it slowly but surely.
