Purchasing a home is an exciting milestone and the last thing you should worry about is being scammed in the process. In this blog, we are going to look at the four most common real estate scams and how you can avoid them.
1. Wire Fraud
As you approach closing, one real estate scam that has become increasingly popular is wire transfer scams. Criminals are posing as the title company, real estate agent, or bank via email and providing instructions for how to pay your down payment and closing costs. The scammers use phone numbers, websites and email addresses that may look like the real deal but there is just one minor change the average person would never notice.
For example, instead of receiving an email from email@example.com, you might receive an email from firstname.lastname@example.org. Did you notice the difference? If you follow the instructions provided in the scam email, then the scammers will withdraw the funds and leave you with few options of tracing them to get your money back.
How to Protect Yourself:
Protecting yourself from becoming the latest victim of wire fraud is simple with attention to detail. Before sending your money to the suspecting criminal, perform an independent web search for the lender or title company phone number and call the numbers that are listed to confirm the details of the wiring instructions.
We urge you not to click any links, call any phone numbers or send money online without confirming the wire instructions with the lender or title company. Your lender will have your account number and balance on file, so confirming this with them will also be a smart move on your end. Once you send money to the real lender or title company, give them a call to confirm that they have received it.
2. Nonexistent Home
When browsing for homes, apartments, or other real estate property – it is easy to get tied into the pretty photos, but this is where criminals can get you. Some scammers will post photos of rentals and homes for sale on craigslist and social media sites to lure in unsuspecting individuals. These scammers will ask for an upfront payment without seeing the place and when it comes time for the key exchange, they are no longer around.
How to Avoid This:
While the home, apartment, or property may be in a hot market – don’t rent or purchase the place without touring it first. Ensure that you are working with a real property owner or real estate agent by seeing the property in person and meeting with them in person at their office.
3. Faulty Home Inspection
Before purchasing a home, it is recommended to perform a thorough inspection with a qualified home inspector. A certified home inspector will search for unseen problems or hidden issues in the home, however, if the inspector is unqualified then the results will be the exact opposite. Like the other real estate scams, a home inspection scam can occur when the buyer does not have the necessary knowledge to know that they are being taken advantage of. Some of the common inspection scams can include hidden fees, disguising major problems with cosmetic fixes, and the inspector not completing the entire job.
Hire a Qualified Inspector
Before hiring a home inspector, you need to inquire about their background and experience. Real estate agents work alongside many real estate professionals, including home inspectors, and can recommend you to one or several individuals. While their pool of recommendations may be helpful, buyers should conduct their own research and make an educated decision. In most states, an inspector will be licensed and certified in the state that they operate in, so this is another key piece to look for when hiring the right professional.
4. Mortgage Loan Scam
After you make a big purchase, you are probably familiar with the phone calls that follow and real estate is no exception. You may receive a phone call from a “mortgage lender” that can lower your monthly payments and reduce your mortgage in exchange for a small fee and access to your bank account. Unfortunately, the moment you hand over your account numbers you will be in major trouble.
In order to avoid this scam and others of this nature, do not respond to unsolicited offers of loan modification and telling your bank account numbers to an unsuspecting party. When the time comes to refinance your mortgage, you can do so with a reputable lender or bank by meeting directly with them.
When it comes to the world of homeownership, it is an exciting and worthwhile investment. Buying a home is no easy task and especially for first-time homebuyers, it can be even more confusing. By being knowledgeable and paying attention to details, homebuyers can be successful in avoiding these common real estate scams.