When it comes to scams, you might primarily be concerned about online scams or investment scams. However, there’s another common type of scam that you should be on the lookout for as well: real estate scams.
There are many different types of real estate scams that you can fall victim to, so it’s important to know what some of the most popular are and how to spot them.
Top 5 Real Estate Scams in 2022 ( & How To Spot Them)
1. Wire Transfer Scam
In a real estate wire transfer scam, the fraudsters target people in the process of buying homes. They typically pose as escrow companies to trick unsuspecting home buyers into wiring them escrow funds, which they then transfer to a different offshore account before they disappear into the wind.
How To Spot a Wire Transfer Scam
Scammers often trick people into believing they represent a legitimate escrow company using spoofing tactics. What this means is that they create websites, phone numbers, and email addresses that are almost identical to the real escrow company. They might simply change 1 digit in a phone number or add 1 letter to an email address or URL.
To avoid this type of real estate scam, always double check any communications you receive from escrow companies and look for inconsistencies or anything that looks off. Also, never wire transfer any money without verifying details of the transfer over the phone with someone you’ve already spoken to or in person.
2. Deed Fraud
Deed fraud, also known as home title fraud, is when scammers illegally obtain the deed or title to a property. They often pose as real estate agents to obtain sensitive information and falsify documents to steal ownership of an unoccupied home. Once they have obtained ownership of a home, these fraudsters may rent it out or try to sell it to another unsuspecting victim.
How To Spot a Deed Fraud
Some red flags to watch out for that might mean you have become the victim of deed fraud are notices of unpaid utility bills (because scammers change the address they get sent to), a notice of foreclosure, or evidence of someone living in a vacant property you own.
3. Loan Flipping
Loan flipping is when ill-intentioned lenders aggressively persuade homeowners to refinance their mortgage over and over again and try to get them to take out bigger loans over time. These scammers charge high fees and homeowners who fall for their ploys can end up with loans that are too big to ever pay off.
How To Spot Loan Flipping
If you are not actively searching for a mortgage loan, but lenders are contacting you repeatedly to try and persuade you to refinance, this can be a sign of a loan flipping scam. This is especially true if you recently refinanced your home. It’s almost never a good idea to refinance your home multiple times in a row in quick succession.
4. Foreclosure Relief
Foreclosure relief scammers typically access public records of homes in pre-foreclosure processes to find their victims. They target people who are desperate to not go into foreclosure and offer them foreclosure relief, promising that they can drastically reduce their mortgage payments in exchange for a large lump sum.
How To Spot Foreclosure Relief Scams
Foreclosure relief scammers sometimes pose as government or social housing authorities, or claim they have talked to your mortgage company, which isn’t true. Be wary of anyone making offers that sound too good to be true about helping you save your home from foreclosure.
5. Rental Scams
In rental scams, fraudsters post fake rental ads for properties that they don’t actually own or manage. They often steal real information and pictures from existing ads to make their fake ads more convincing and lure in interested renters.
Once they have a potential renter on the hook, they ask for a deposit for them to see the house or hold the property for them. Once they get the money, they disappear and the would-be renters never actually get to see the property.
How To Spot A Rental Scam
The easiest way to spot and avoid rental scams is to not trust anyone who asks for money up front, before they even show you a rental property. Any legitimate landlord should be willing to show you the property before you enter into any negotiations about money.
What To Do If You’ve Been Scammed
How To Report a Scam
The process for reporting real estate scams varies from country to country. For instance, in the United States, you can report a real estate scam to local law enforcement or to the FBI. In the UK, you can report property fraud to Action Fraud, the National Fraud and Cyber Crime Reporting Centre.
In most other countries, reporting real estate scams to your local law enforcement is a good place to start. If there is another place you should be reporting it as well, they will point you in the right direction.
If you’re not sure how to report a real estate scam in your country, you can find more information by Googling something like “where to report real estate scams in,” followed by the name of the country.