There's arguably nothing worse than a real estate scam. Renting or buying a new place requires a ton of money. There's the property value, which likely already costs millions of bucks, various fees & charges, important taxes, and the commission for your real estate agent
, solicitor, and more. Imagine having to spend on all of that just to end up with a scam? It won't just break your bank account, it can easily break your mind! So in order to avoid real estate scams, you have to know what they are. Or at least, the most common ones like title fraud, fake listings, mortgage fraud, and double sale, among many others.
When you plan to buy a new property, you barely focus on the deed. Or rather, you think about it last since you regard it as the final step of the process. It's when you've paid for the property and get the keys to your new home that you have to put your name on the deed as the new owner. And when you do, lo and behold, the name currently on there is different from that of the seller. This automatically nulls the purchase, invalidates your new ownership of the property, and you're left with nothing but mortgage debt. See how awful title fraud is?
In the top property listing websites in France
, the UK
, and more, you'll find thousands, if not millions of available properties that are ready for purchase. Make sure to find your new home here than on social media. Why? Because fake listings are more common on these sorts of platforms. In this real estate scam, scammers use photos from other properties to lure unsuspecting victims, mostly tenants. And when they've finally found one, they'll ask you to pay upfront, not even giving you a chance to see the place in person first.
Speaking of tenants, if you're one, you ought to be careful not to fall victim to rental fraud. This is when a scammer poses as a landlord and lets you rent out a place. Whether it's a solo apartment in New York
or a vacation villa in St. Barts
, they let you stay for as long as you need to. But unbeknownst to you, they don't even own the place themselves. It turns out that they never had the right to rent out the space in the first place and you're left with an angry homeowner (who themselves also got scammed) and no place to live.
Fake listing is actually part of another, wider-scoped real estate scam called Hacker Scam. As its name says, this is when online hackers infiltrate and disrupt the real estate industry's digital landscape. They copy data from legitimate sites and spread misinformation on social media and other more vulnerable platforms. What makes it worse is that anyone can fall victim to them, from buyers looking for a new home to homeowners planning to sell their properties.
When you're buying a new property, be careful not to fall victim to developer scams. This is where scammers entice people with low-interest rates for their services, seemingly a steal considering the time frame they provide. Little do they know, however, that as the turnover date approaches, there is little to no progress in the development of the property. As it turns out, you've been paying your monthly equity for nothing at all.
Let's say you bought a new property in Spain
. You're just about ready to move in until you find out that there are other people claiming that they bought the home, not you. As it turns out, however, the owner duped both of you by selling the property to two different buyers at the same time. Now, you're left with a tug-of-war of sorts trying to figure out how to fix the situation. You've wasted time and money.
When you take out a loan, be it a mortgage or a housing loan, make sure to apply to legitimate financial institutions only. The bigger their names, the better! Though their application process may be too meticulous for your own taste, at least you lessen the risk of getting scammed. Particularly the real estate scam of loan flipping. This is where the scammer persuades you to refinance your mortgage/loans repeatedly, charging you with high fees with each transaction. At the end of the day, you're stuck in a repayment loop you might not ever get out of!
Staying on the topic of loans and mortgages, you also have to be wary of mortgage fraud. Though this real estate scam mostly victimizes financial institutions and lending companies, it can still affect you indirectly. For instance, if you're buying a new home but you can continue on with the process because of the current homeowner's mortgage problems, there's a good chance they're committing mortgage fraud. They constantly misrepresent their financial situation, making it difficult for institutions to deal with them and, in turn, prolonging the purchasing process on your end.
Escrow Wire Fraud
If you plan to use escrow to help finance your real estate endeavors, make sure you work with a legitimate company. The real estate scam of escrow wire fraud is more common than you might think. Scammers would set up fake escrow companies, entice with seemingly favorable conditions, and essentially run away with other people's money. Some would even go so far as to pose as your escrow company and ask you to send your money through different, often unorthodox means.
Let's say you bought a new luxury home in Miami
, Florida in the US. It's a huge property with a private pool
and everything! You'll want to move in right away and ask a moving company to help you with your stuff. Initially, they set an estimate that you agree with. But then, once they've packed your belongings, they inform you that they showed you the wrong quotation earlier. Th new number they present is much higher, practically double or triple what was initially set. And now, you don't know what to do since they're basically holding your stuff as ransom.
Just like in any other industry, real estate has its own set of problems. There are many common real estate scams out there and you'd better be careful to avoid them. You may lose a lot more than you realize if you ever fall victim to one.