The real estate business is booming right now, and thousands of people have made their fortune in this industry. It’s a great market for starting a career as well as investing your money, but it’s obviously not without risks.
One of the most dangerous risks involves what is referred to as real estate scam or fraud, which can be difficult to identify and debilitating to have to deal with. Realty fraud is surprisingly common, perhaps because of the volatility of the market and the high price points.
Too many buyers and sellers are largely uninformed about the risks in property purchases because most people buy a home so infrequently, so they don’t have enough experience to recognize the signs of a bad deal. Scammers aren’t hesitant to prey on their ignorance.
If you should find yourself the victim of a real estate scam, you can prosecute the perpetrator and come out on top, but it tends to be a drawn-out, expensive hassle anyone would prefer to skip. Here are some of the most unmistakable clues that you’re probably facing a real estate scam.
- Sketchy Deposit Requests
If the seller is demanding you put down a deposit or down payment on the house to “secure the property” before you’ve even seen it or met with the agent, it’s almost certainly a scam. You’ll very rarely submit a deposit with the seller in person, and anything that tries to get you to do otherwise shouldn’t be trusted.
- Lack of Paperwork
Anytime someone asks you to send money before signing any papers, deeds, or other documents, run the other way. Sometimes con artists will tell you the paperwork is still being processed, but they need the money to secure your down payment. You should never pay without signing certified paperwork first.
- Covert Meetings
Typically, you’ll work out legalities and payments through your bank and online transfers, rather than in-person communication. Scammers who are trying to convince you they’re the real deal will ask you to meet them in person. But they’ll choose a casual or covert meeting place rather than an office.
- High-Pressure Deals
The majority of realty scams will feature high-pressure language that encourages you to act with extreme urgency. No reputable agent should rush you into a decision of this magnitude, so you’ll likely find yourself in trouble if you go ahead.
- Unrealistic Guarantees
You might come across an advertisement that claims it can help you consolidate your home loans or rescue a foreclosure. If it sounds too good to be true, it is.
- Investor Lacking Funds
When an investor offers to “buy your house for cash,” he or she often doesn’t actually have the money to do so. You can ask the bank to verify that the party has the funds to purchase your home, and if the money’s not there, you’ll know someone’s trying to pull one over on you.
- Unavailable Buyer
Say you’re trying to get in touch with a buyer or real estate agent, but “because of the time difference” the person’s never available for in-person phone calls or conversations with your attorney. The truth is, if he or she were a legitimate party, the person would take the trouble to make it happen.
- Unprofessional Interactions
Sometimes, a number will be included in an advertisement. You’ll call the number and get an answer, but the voice will simply say “hello” or offer some other casual, unprofessional greeting. Professionalism is a telling feature to look for in a reputable agent.
- Foreign Buyer
If a foreign buyer approaches you, wants to look at the house in person, and has all the proper paperwork for the sale, it’s probably legitimate. If the person wants to buy a home sight unseen, on the other hand, that should raise a major red flag. He or she might also ask for money to help get to the U.S., which should also turn you off.
- Mortgage Elimination
If someone offers to make your 30-year mortgage disappear in a matter of months, he’s lying. There are no shortcuts when it comes to paying off your mortgage. Expecting one will more likely land you in more debt.