It is a cause for concern how scammers victimize real estate professionals, property owners, sellers, buyers, and renters. Over a billion dollars of financial losses happen yearly because of real estate fraud. The worst thing is that scammers are getting more sophisticated and difficult to apprehend. 

However, individuals and companies in the real estate industry are upping measures to identify fraud and safeguard their investments. Here are some strategies to spot real estate scams and how not to be a victim. 

Lying About Property Features

It is common for sellers to present some features of their properties on the seller’s disclosure statements in a positive light. Thankfully, good agents advise them to be more truthful on their SDS, and many of these comply with the agent’s suggestions. 

However, fraudsters whose intent is to lie completely about home features on their SDS are increasing in numbers. They will hide major defects, such as foundation issues, roof damage, or mold in the property. The scammers will even work with a home inspector to conduct a fake inspection. 

Agents should educate buyers about the home-buying process and advise them to conduct their own home inspection on the property they want to purchase. Denying a buyer this right may indicate that there is something the seller is hiding from you. Real estate agents can also be sued if they try to cover up defects on a real estate property. 

Bail and Switch Loan Rates

This scam puts a borrower in a loan obligation that is unfavorable to him. The exploitative mortgage lender will offer a loan pre-approval pending a full credit review. The catch is there is an item in the terms of service that the lender will not mention to the borrower. It is the deposit the homebuyer cannot refund if he opts to cancel the application after a certain date. 

The homebuyer will get approval from the lender but with a higher interest rate than the first quote. If you are the buyer, you will force yourself to accept this exorbitant rate so you will not lose your deposit, especially if the situation is already beyond the cancellation date. 

Ensure that you are dealing with reputable and honest lenders. Moreover, read carefully the terms of service of a home loan to avoid getting scammed. 

‘Buy a House for Quick Cash’ Scam

Most probably, you have already passed by a “We Buy Homes for Quick Cash” sign along the road. Such ads are really enticing to sellers, but think twice before contacting the number on the ad because it might be a scam. 

Typically, it is a tactic by scammers whose intent is to bait desperate home sellers. The fraudster will convince the property owner to sign the deed with the promise of fast cash. After the seller signs the document, the scammer will have a chance to take control of the property and use it for profit. 

For homeowners, be sure to get expert advice from your agents when selling a home. Real estate agents are familiar with these scams, and they can help sellers to avoid falling victim to unscrupulous people who pretend to be homebuyers. 

Closing Wire Scam

Scammers pretend to be an agent or a representative of a title company and target property buyers. They will hack the communication channel of a principal party in a transaction, spy on it, and create a fraudulent email that looks like an authentic one. The scammers will choose those closing transactions, and they will instruct buyers to send funds to an account. 

One advice to avoid this scam is to have clear communication with the seller. Vital information like the wiring instructions should be established between both parties before sending funds to an account. 

Vacation Rental Scam

If you are looking for a rental property where you can stay during your vacation, you should be extra careful in your search. Some scammers pretend as vacation homeowners and post fake listings on Vrbo or Airbnb. These fraudsters will redirect renters to shady sites to process their booking payments. 

Vacation home renters should avoid booking outside popular platforms like Airbnb. If the website you are redirected to is suspect, leave the site immediately. Short-term rental property owners should also search through rental websites whether their own listings have been cloned and report these fraudulent listings. 

Final Thoughts

There are many forms of scams you should be aware of in the real estate industry. Be sure to take precautionary steps to protect your money in your real estate transactions, especially since scammers nowadays are getting more sophisticated in their schemes. If you sense something is fishy, avoid the transaction or report it. Be familiar with the various real estate scams and know how these fraudsters trap their victims.