17 Jun 5 Common Real Estate Scams
We unfortunately live in a world where tricking people out of their money is a profession taken on by those who live amongst us. When looking to buy or rent a house, the last thing you want is a con artist managing your living arrangements– because there are not only large amounts of money being exchanged, but you’re entrusting your livelihood with a stranger. This is why it is important to be able to recognize a real estate scam. Here are 5 of the most common scams…
- Phony Seminars
The major problem with this scam is that it is initially offered with no cost to you. With offers of tickets to a free seminar, a free gift for attending, and promises of no high pressure sales tactics, it seems like a good deal right? Well when you arrive at the seminar, it’s unlikely you will get that “free” gift without purchasing tickets to additional seminars. This wouldn’t be so much of an issue if you’re willing to pay, but these seminars will usually teach you nothing of value, thus wasting your time.
- Appraisal Fraud
An appraisal fraud is when a property is said to be worth more than it actually is. This type of fraud is connected to many types of mortgage fraud, entailing the manipulation of comparables, market values, or property characteristics in order to obtain a higher appraisal. Generally the person doing the higher property appraisal will do so by falsifying an appraisal document or using an appraiser accomplice to obtain the higher value.
- “Rental” of Empty Houses
This scam makes victims out of both the homeowners and the renters. In this con game, hustlers will look for homes that will go unlived-in for an extended period of time, usually while the actual homeowner is away on extended vacation or working in another state or abroad, then post listings for the homes online. Sometimes they will claim to be the owner of the home and other times they will claim to be someone authorized to rent in the homeowner’s stead. From there, con artists will break into the house and change the locks or just break in using a spare key they found on the property. It isn’t uncommon for people who run this scam to forge official looking documents for the renter to sign and then collect rent until the scam is realized. The same tragic ending always occurs with the homeowner returning to find some well-intentioned strangers renting out their home.
- “Rental” of Houses for Sale
In this scenario, a fake real estate agent posts a false rental listing for a home that’s actually for sale. They then offer the house at a much lower price than it’s worth to draw in potential buyers quickly, defending this low price by saying the homeowner has to rent out the property quickly since they’re leaving the state for a particular reason, whether it be work, school, or something else. Then the fake agent will take deposits from any and all interested renters, have them sign fake rental agreements, and then disappear. This scam is especially risky because the con artist will not only take your money but information that can be used to steal your identity.
- Fake Rental Listing
This scam is similar to the two above, but involves a lot less effort for the con artists. In this case, the con artists will copy legitimate property listings online and repost them elsewhere posing as the agent or landlord of the given property. Then they will ask for a security deposit and possibly another down payment upfront, wiring it to them in advance while the contract is being drawn up. Be very wary of online real estate scammers!
While these real estate scams are a scary reality, they can be avoided. A good rule of thumb is that if it sounds too good to be true, then it probably is. Avoid using cash and wire transfers as these methods are difficult to track. Do your research, ask questions, and use a licensed REALTOR®!