Like any industry, the real estate market comes with its own list of fraudulent dealings. Making yourself aware of the top few real estate scams means that you might identify them before it is too late. Awareness and avoidance are the surest ways to stay safe.
1. Unlicensed Real Estate Scam
Certainly, a LinkedIn profile and snazzy business cards do not give someone a license to sell property! Unfortunately, this scam happens a little too often. With this scam, home sellers are caught in the schemes of con artists who pose as real estate agents. The home sellers are sold fake homes and they deposit escrow money into fake accounts. Then, these fake agents are never seen again.
2. Fake Escrow Services
This is one scam that you avoid. Behind an unlicensed agent, a fake escrow service usually follows. The best way to identify fake escrow services is through the following:
Escrow service is provided by a regular name in banking.
The agent is asking for an advance payment before you even view the property.
The price is too good to be true.
While there are instances where escrow services can be provided with slightly strange terms, this is rare. Take proper precautions to ensure that your service provider is the real deal, or you can end up losing your investment.
3. Duplicate Listings
Finding properties on sites such as Craigslist is usually a direct link to duplicated listings. These scam artists find listings on genuine property sale sites, save the images, and duplicate the listings on a public site. They alter the price, the information, and the contact details to suit their own needs. Then, they wait for a victim. Unfortunately, innocent people can get so excited about the incredible price that they can even wire money overnight to secure the purchase.
4. Title Fraud
Scam artists understand that not all buyers will fall for initial tricks; thus, sometimes, their plans run a little deeper. Clever buyers will request paperwork, such as deeds and titles, to ensure that their investments are sound. However, these documents are easy to fake. Scam artists will fabricate all of the necessary paperwork, right down to the loan and mortgage agreements. When buyers feel safe with these, they are more likely to deposit money on a whim.
5. Bait-And-Switch Scheme
This scheme sees the seller as the victim. A fraudulent agent creates fake documents that show a potential offer that is well above the asking price. The seller is so excited about the number that he or she signs off on the sale, without taking a closer look. Then, the escrow period falls into place. However, in reality, there is no actual buyer for the property. The scam artist has an offer for far less than the asking price; this is an offer that he or she knows the seller would never agree to.
As time goes by and the urgency of the sale gets direr, the seller becomes impatient. The realtor confesses that there is no longer a buyer for the stated rate, but there is one for far less. The seller is now in a desperate position, and he or she has little choice but to accept the lower rate, due to the accumulating costs of having this property in limbo.
Being a victim in a real estate scam is a real risk. Thus, always review the documents before you sign anything, and read all of the fine print.