ALERT! 5 Common Real Estate Scams You Need to Avoid

When you’re in the process of buying a house, being concerned about real estate scams is generally not at the top of your list. From packing up your belongings to gathering your financial documents, soon-to-be-homeowners are very busy. But with plenty of nefarious people out there trying to take advantage of unsuspecting individuals, precautions should be taken to protect your assets and financial future. Without an understanding of the threats, people could lose a lot of money —even their entire life savings — to savvy opportunists that know what to do and how to do it.

At BNTC, we work with excited clients every day, helping them to realize their dreams of purchasing a new home. We care deeply about security and make a dedicated effort to provide valuable information that helps to protect homebuyers from falling prey to scams.

Common Real Estate Scams Homebuyers Should Be Aware Of

1. Escrow Wire Fraud

One of the most popular ways in which homebuyers are taken advantage of is through escrow wire fraud. These fraudsters trick people by setting up fake websites that look almost exactly like authentic lending institutions or title companies. The catch is the contact information is different. The URLs, phone numbers, and emails may be just one letter or one number off. Once they have that in place, they call, text, or email unsuspecting homebuyers, pretending to be a real representative of the lender or title company to set up a transfer for the escrow funds.

By the time many of their victims realize they wired the money to the wrong account, those funds have been withdrawn — leaving it very difficult to get your hard-earned money back. This is why it is critical to always refer to your original documentation before completing any financial transactions. Don’t ever click on links in texts or emails without proper verification. Scrutinize the contact information and contact your company representative to confirm the appropriate wiring instructions.

For your financial security, it is essential to know where to file real estate scams. The Federal Trade Commission (FTC) protects America’s consumers and handles this type of fraud.

2. Duplicated Rental Listings

Did you know that more than 5 million people have lost money to fraudsters hawking duplicated listings? Often, it’s younger people that get hooked in, but that is not always the case. These real estate scams involve people who don’t have anything to do with a particular property creating fake listings on Craigslist or social media pages. They then charge people a fee — upfront — to let you see the property.

Places like New York and other very competitive markets are notorious for this. The scammers say it is a “deposit,” but once they get your money — they’re gone with no way to contact them. Always make sure to work with reputable, established rental companies or property owners. It’s also best to confirm and sign documents/submit funds in person and not via phone or email.

If you or someone you know has been the victim of duplicated rental listings, the FTC’s website will guide you on how to report real estate scams involving rental fraud.

3. Title Fraud

Title fraud is another one of the most common real estate scams in Florida and across the U.S. It centers around identity theft. The scammers will create fake documents that make it look like they own particular property, and then use that documentation to get a second loan on the property. This is dangerous because it can end up leaving the original homeowner (the one whose identity was stolen) stuck with the payout of that additional mortgage.

4. Loan Fraud

You know that old saying, “If something sounds too good to be true, it probably is,”? This is a perfect quote for loan fraud. These real estate scams cater to people trying to get the best deal possible on a mortgage. But these fraudulent loan companies, often advertising themselves as a real mortgage agency, will advertise guaranteed loans at a discounted price (usually remarkably low) if you pay an upfront fee.

It is always advisable to stick with well-known brokers, banks, and credit unions to protect your personal and financial information and not get scammed. The FTC works with loan fraud too.

5. Overseas Wire Scams

If you ever get any emails or messages on your phone regarding investment in international real estate — be very wary. There are certainly legitimate ways to purchase property outside of the U.S., but there are also many scammers out there trying hard to exploit those interests. These real estate scams are not uncommon and caused, according to the FBI, almost $1B in funds “diverted or attempted to be diverted” into illegal accounts (2017).

Protect yourself from these types of real estate scams. Be wary of:

• having to make decisions on strict deadlines,
• not being able to speak to someone on the phone,
• spelling errors in texts, emails, or other types of messaging systems including social media, and
• quick changes in contract terms

Practice Caution to Protect Your Assets

When it comes to your assets and financial future, practicing caution whenever you decide to make a transaction is your best defense. With the multiple types of real estate scams out there, you may, at some point, be targeted. Remember that contacting the FTC is how to report real estate scams and always work with known, respected organizations (and verify who has contacted you).