Common Real Estate Scams You Need to Know About : Internet Scambusters #1166
Finding your dream home or vacation property can be fun and exciting until you discover that the property does not exist, and you have been scammed out of thousands of dollars.
Buyer Beware: Real Estate Scams and How To Avoid Them
Scamming a buyer during the home-buying process seems unlikely due to all the rules involving title companies and having a realtor on your side. However, real estate scams do happen. These scams trick people into giving away money, personal information, or both for properties that either don't exist or are misrepresented.
Scammers often take advantage of people's trust, urgency, and lack of knowledge about the market, causing serious financial losses. Even realtors can fall victim to scams.
Common Real Estate Scams to Watch Out For
Here are some of the newest real estate scams affecting the market:
- Fake Property Sales – Scammers create fake property listings for properties that aren't for sale or don't exist. Victims are coerced into making deposits or full payments before realizing the fraud.
- Rental Scams – Scammers target renters by advertising fake rental properties, often at unbelievably low prices, and then demand upfront deposits before disappearing.
- Title Fraud – Scammers steal a homeowner's identity to transfer property titles into their name, allowing them to sell or mortgage the property without the owner's knowledge.
- Foreclosure Relief Scams – These scams target homeowners facing foreclosure. Fraudsters promise to negotiate with lenders on their behalf, charging fees upfront and delivering no assistance.
- Wire Fraud Scams – Scammers hack into communications between buyers, real estate agents, and title companies to redirect deposit or closing payments to fraudulent accounts.
Are Real Estate Scams Limited to Specific Areas?
Real estate scams can happen anywhere. However, they are more common in places with high housing demand or high prices, such as big cities or fast-growing suburbs.
Scammers often target:
- First-Time Buyers who may have limited knowledge of the buying process.
- Out-of-State Buyers who cannot personally inspect properties.
- Foreign Investors unfamiliar with local regulations.
- Desperate Homeowners facing financial difficulties or foreclosure.
How Do Real Estate Scammers Operate?
Real estate scammers use different platforms to advertise fake property sales, including:
- Popular real estate websites.
- Fake real estate agency websites or cloned versions of actual ones.
- Social media ads showcasing fake properties.
- Unverified online classifieds.
Red Flags to Identify Fake Real Estate Property Listings
Spotting real estate scams early can save you a lot of trouble. Watch for these warning signs:
- Too-Good-to-Be-True Prices – Properties listed below market rates should immediately raise suspicion.
- Pressure to Act Quickly – Scammers often create urgency, insisting you pay immediately to secure the property.
- Requests for Unusual Payment Methods – Demands for wire transfers, prepaid cards, or cryptocurrency should be avoided.
- Lack of Property Access – If sellers refuse to allow property tours or inspections, they might be hiding something.
- No Verification Documents – If sellers cannot provide ownership documents or valid contracts, it is a warning sign.
Do Banks and Title Companies Monitor for Real Estate Scams?
Many banks and title companies have ways to spot fraud. Banks check for unusual wire transfers, and title companies confirm ownership records before finalizing deals. However, these systems are not perfect, so buyers should stay alert.
What to Do If You’re a Victim of Real Estate Scammers
If you find out that you have been scammed in real estate, act quickly. Follow these steps:
- Stop Payment – If possible, cancel the payment made to the scammer, especially for transactions involving wire transfers or checks.
- Contact Law Enforcement – File a report with your local police department and provide all documentation related to the scam.
- Report the Crime – Notify agencies like the Federal Trade Commission or the Internet Crime Complaint Center (IC3) about cyber-related scams.
- Alert Banks and Credit Agencies – If you’ve provided personal or financial information, inform your bank and monitor your credit for identity theft.
- Seek Legal Counsel – A lawyer specializing in real estate fraud can advise on potential recovery or legal action against the scammer.
How to Prevent Becoming a Victim of Real Estate Scams
Protect yourself from real estate scams by following these safety tips:
- Verify Listings – Cross-check property listings on official sites or with multiple sources to ensure validity.
- Inspect Properties in Person – Always physically inspect the property or hire a trusted agent to perform the inspection.
- Request Documentation – Ask for proof of ownership, deeds, and legitimate contracts before making payments.
- Work With Professionals – Use licensed real estate agents, attorneys, and title companies for all transactions.
- Be Cautious With Online Deals – Avoid making payments without proper verification, and never rely solely on online communication.
Example of a Real Estate Scam
Here’s a typical case of a real estate scam so you know what to look out for:
- A "seller" advertises a fully furnished three-bedroom home at a very low price in a desirable neighborhood. When contacted, they explained they had to relocate unexpectedly and needed a quick sale. They push you to send a deposit to "secure the property before anyone else gets it." The scammer might even use words like, "I've already got three other buyers interested, but I want to give you the first shot."
Once you transfer the funds, the scammer disappears, and you find out the house either doesn’t exist or is already owned by someone else.
Resources
Check out these resources to help educate you on real estate scams.
Conclusion
Real estate scams can seriously harm buyers, investors, and renters. To avoid these scams, stay informed, be watchful, and work only with trusted professionals. If you're entering the real estate market, take the time to learn about possible risks. Trust your gut if something feels wrong. Find out as much as possible about the seller and the property to ensure everything is accurate.
Stay informed to help protect yourself and others. Understanding these real estate scams and how they operate is important.
Remember, stay safe and informed!