Buying a home will be your biggest purchase in life. Not only is this process challenging and stressful, but to make things worse, there are scammers out there waiting to take advantage of you. Of all the factors to consider when buying a house, real estate scams should not be something you need to worry about. Unfortunately, that is not the case. In order to help protect you from common real estate scams, we put together a list of some common things scammers like to do.
Overview
It is sad that there are people out there that will try to scam you for everywhere. Whether it is a Nigerian prince asking for money, or someone trying to get access to your financial information, scammers will do whatever it takes. This is no different when it comes to real estate scams.
There are many types of real estate scams. In most cases, they involve misrepresenting a property to prospective buyers. However, in the worst case, a scammer might trick someone into buying a property that doesn’t even exist or that they don’t own.
This is why it is very important to conduct all of your due diligence before purchasing a house, condo, or any other type of real estate. Here are the most common real estate scams you need to be aware of.
Rental Scam
Today’s housing market has driven many people to rent. According to CNBC, the rental market is actually stronger than the for-sale market at the moment. Plus, apartment rent growth and occupancy set new records. So, if you are a possible renter, you need to be aware of rental scams. While moving into an apartment can be rewarding and great, it does involve making financial decisions that can lead to poor outcomes.
Duplicate Listing
There are a couple types of rental scams out there. One of these common real estate scams is that someone will create a duplicate posting of an actual apartment for rent. If you happen to come across this, and inquire about it, you will be met with some questionable responses. If the person on the other side of the phone, or who responds to you email says that you need to put a deposit down immediately, you should raise a red flag. They may just take your deposit and run with it. To avoid this type of scam, be sure to get a virtual tour, or in person tour if possible. Also check to see if the apartment is listed on a major site like Apartments.com. If the apartment is in a large complex, check to see if it is listed on the property manager’s website.
High Background Check Fees
Another type of rental scam is when a lessor may charge you for a background check. If you are looking to rent an apartment, then it is definitely reasonable that the lessor will want to run a background check on. If the cost seems very high, chances are it could be a scam. The possible scammer in this case might not have an apartment to rent. Or, they may have created an actual listing for an actual apartment, but have no plans on renting it out. They then charge exuberant fees for a background check and just pocket the money.
If you have any questions about the fees you are getting charged, ask the lessor what company they are using. You can also do some digging to see how much that company charges for such a background test. If there is a discrepancy between what you are getting charged and the actual cost of the background check then this is a red flag.
Wire Fraud Scam
No list of common real estate scams will be complete without wire fraud scams on the list. These are the most common types of real estate scams, especially amongst first time home buyers. In most cases, a wire fraud scammer will pretend to be a legitimate real estate agent or realtor. They might even pretend to be a lawyer, attorney, or bank representative working on behalf of the real estate agency. The scammer will then request you send money to them. The money could be for closing costs, home inspections, or more.
To avoid this type of scam, be sure to conduct your due diligence on any real estate agent or realtor. Google them for reviews to see how their past dealings have worked out.
Foreclosed Property Scams
Buying foreclosed properties to make money has become a very popular business. The process of flipping these houses has even become a side gig or hobby for some people. Usually the allure to this is that they can buy a foreclosed property for cheap. All they have to do is put some work into it and sell for a big profit. However, they should be aware of foreclosed property scams.
Foreclosed property scams are pretty complex. They involve someone posing as a representative of a bank that owns the foreclosed property. This scammer may even go so far as creating a website with a list of foreclosed properties on it. Scammers in this type of scam will then tell you that you can purchase the foreclosed property directly from them. Once you send them some money, or share your financial information, they will simply disappear.
Purchasing foreclosed property can sometimes be confusing. Sometimes you are not sure who is actually selling it – it could be a bank, a third party, or even an insurance company. Either way, before you buy a foreclosed property, be sure you talk to the bank that owns it. Even if they are not selling it, or sold it off already, they will be able to give you all the details you know.
Common Real Estate Scams – Summary
If you are looking to rent an apartment, or are in the market for a new home, beware! There are many common real estate scams out there. Considering the complexity of these types of transactions, and the fact some people may just not understand how it all works, real estate scams occur way too frequently. After reading this you should now be aware of some of the types of scams out there. Remember, before renting or buying, make sure the property really exists and is not a duplicate listing. Also, if a background check seems more expensive then it should be, a scammer might be trying to take advantage of you. Lastly, don’t fall for any tricks when it comes to purchasing foreclosed properties.