Buyers have very little time to consider their options in the highly competitive real estate market. As a result, you must act quickly to make an offer, or the opportunity to buy that house may pass you by. Haste has the drawback of leading to reckless decisions; if you’re not careful, your ideal home might swiftly turn into a nightmare. Let’s take a look at five of the most prevalent real estate con games and how to avoid them.
1. Wire Fraud in Escrow
Over 13,500 persons were victims of real estate-related wire fraud in 2020, according to the FBI and the National Association of Realtors, a statistic that has steadily climbed each year. Pretending to be their real estate agents, scammers will trick prospective house purchasers into transferring bogus closing expenses directly into their accounts. Unfortunately, there is no way of reclaiming those payments once they have been moved.
How to Avoid Being Conned: Carefully review all closing documentation and double-check the amounts and destinations of any wire transactions. You can be confident that your money is going to the correct place: your real estate agent or closing firm.
2. Loan Refinancing
Loan-flipping is persuading people to refinance their properties many times while charging hefty fees for each loan. Because of the repeated refinancing, the loan payments are large and the equity is low. Senior individuals and those with cognitive difficulties are commonly targeted by this fraud.
How to Avoid Being a Victim of This Scam: Maintain close touch with any elderly or disabled persons in your life. Ask additional questions if they mention refinancing to verify the process is going well.
3. Imitation Rental Listing
Scammers have never had it simpler to market bogus properties because most rental postings are now available online. Fake rental listings can lead to low-quality rentals with high costs, or even properties that don’t exist at all.
How to Avoid This Fraud: The easiest way to avoid this scam is to double-check all of the information with a reverse address lookup. Before signing any rental paperwork or placing a deposit, you should also pay a visit to the property.
4. Theft in Appraisals
Appraisal fraud is a type of mortgage fraud in which the value of a home is intentionally inflated over its fair market value. Scammers use the help of an appraiser ready to place a fake value on a home, leaving unwary buyers with a damaged or rotting property.
How to Avoid This Fraud: Getting a second opinion is your best bet for avoiding this scam; try hiring a second appraiser to double-check the number.
5. Scam of the Home Inspection
A home inspection scam, like appraisal fraud, includes an unethical inspector and a seller attempting to take advantage of a hasty buyer. Inspection con artists will conceal flaws in the house in order to inflate the perceived worth, omitting serious structural or mechanical defects on purpose. These problems are frequently not discovered until after the sale has been completed, at which point the expenses of repairs are passed on to the new owners.
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How to Avoid This Scam: Take a tour of a home you’re thinking about buying and don’t be afraid to ask plenty of questions. Keep a tight eye on their report, and if an inspector doesn’t have access to a certain region yet deems it to be free of concerns, that’s a red sign.
