Any fraud or scam that takes place on deals based on property is called a real estate frauds. As per FBI reports, there are approximately 13,600 cases where people have been cajoled into real estate scams in a single year.
There are multiple ways through which real estate frauds take place. Amongst them all, mortgage scams are the most common one where fake lenders or loan brokers encourage misinformation to gain profit from real borrowers. Moreover, there are situations where the details in the home loan application form is irrelevant which is again counted as a mortgage fraud.
7 Real Estate Frauds You Should Know About
Real estate investments are the most expensive and crucial investment a person can make. Therefore, one needs good market research and recognition while borrowing or lending money to the borrower. Check out the major types of real estate scams you must be aware of.
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Wire Real Estate Scam
This means when the scammer pretends to be a real estate agent and fools you with a wire fraud asking you to submit a closing amount routing to a fraudulent account. This sounds terrifying because it is even hard to track such accounts where fraud money is collected. In fact, the email address or the registered phone number is also not reflected due to high-secured software used by the scammer.
There are plenty of variations in wire frauds bracket such as mortgage wire fraud, escrow wire fraud, etc. Once you are tricked, there is no way out through which you can get your hard-earned money back. It is advisable to all the new or unknown home buyers to confirm the wire transfer request before making payments. Along with this, you should also take care of all the steps that are performed while processing the closing cost before you decide to buy a new home.
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Foreclosure Relief Real Estate Scams
Homebuyers who are at their home’s foreclosed processing are the target of this fraud segment. Here, a fake company may approach you pretending to help with loan modification or foreclosure discontinuity with an upfront payment. This does not end with making money by fraudulent activity by the scammer, it also risks the house ownership of the victim. The lesson to learn here is no payment should be made to a third party without verification. It is only your agency who can make the changes and no other can be approached to help you out while buying a house and that too, in an incomplete process.
It is always good to perform due diligence regarding the agent or its company who claims to help you with their services. In the world of the Internet, it is easy to make a fake website to trick hence researching about any such companies before-hand is vital.
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Loan-Flipping Scam
With its name you must have had an idea what it is all about. Actually, it refers to the scammers who target such homebuyers who have to recur the refinance for their home. In the process, the scammer will impose points on transactions along with heavy charges. Eventually, the victim will possess unaffordable loans with the restricted equity under the victim’s home ownership.
In this, senior citizens are mostly the prime target as they have the utmost properties in their names. Including this, it is easy for them to trick as they are less aware of such things and quickly get influenced to agree with the demands. To avoid such real estate scams in your case, try to connect with only such money lenders who are known and trustworthy. It is significant in many aspects that the lender you are reaching to has a credible existence.
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Commercial Real Estate Fraud
This type of real estate scams has different phases that cannot be rectified easily. It can be done through a forged signature or document to divert the objective. Such scammers have the intention to misappropriate the finance that has been indulged in the deal. Such mistakes often take place because of the homebuyer who does not ensure the documents to be correct and available.
The basic need of such activity prevention is ensuring all the activities you are performing, either a signature or an approval for your payment the receipt and followed by proofs are given to you. Along with this, consult a lawyer who can tell you a difference between the fake and real documentation and safeguard you before loss.
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Home Inspection Scam
Home inspection is the basic process that takes place while selling and buying the property to reveal the real market value. Although, this verification process also may end up being a real estate fraud. The agent who is dealing with you tends to hide the real price and the issues with the property. This eventually takes a higher amount that is not in your awareness than the expected cost from the buyer. In case of sellers, the profit margin is said to be higher but gains a less amount due to the fraudulent individual.
Hence, to avoid such situations you may always reach out to your agent. Interrogation can help you the best to find suspicious activities. Along with this, try to contact other real estate agencies to make sure the amount you are investing or gaining matches to the same or not. In this regard, no other things may help but the surety from your side that can save you from such scammers.
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Rental Scam
Rental apartments or houses are common these days. You may have seen that even in rental purposes some frauds are taking place which are unrealistic but avoidable if rectified on time. So primarily, the scammer displays a list of properties on rent which even do not have an existence. Or else, the existing properties will be offered to the borrower at a higher price but a bad quality.
In fact, they are so expert in fooling people that if you do not pay attention, there will be no flaws seen. Hence, keep a check through checking the image property with the MLS watermark. Also, do not pay before visiting the site or researching the market price from other sources. Including this, always verify the documentation made for the rental agreement. Make sure the owner and their personal verification is credible. Do not sign on any papers without reading it. Keep the locality in check to understand whether the property is worth the money or not.
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Title Real Estate Scams
The title real estate fraud is the involuntary action of transferring ownership to others without acknowledgement. This means your signature with agreement is genuinely present that says that you have given up the ownership to the other entitled person. Although, you have no sense of it till the time the reality is exposed. This type of fraud is usually done when the other person is close enough to you and knows your whereabouts well.
The best way could be safeguarding yourself by making a habit of not giving a signature without paying for it a read. Keep a check on your bills and credit scores that can be a hint of the upcoming trouble on your property. This is the easiest way to trick somebody and hence, some random agent who may ask for your attested papers or so, you must not agree to do so.
How Can One Suspect the Fraudulent?
It is said that while making a huge investment we should always keep our senses open and look at the chances that may create risk.
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- Lack of Documentation: If there is not enough documentation or paper work done, stop the deal there itself cause that may risk your ownership or borrowings henceforth.
- Processing in Hurry: Time is must and investment plans always demand enough thinking and research one may offer to their clients. If your agent wants you to process and complete the wholesome speedly, hold on there and suspect.
- No Verification Time Given: Verification should always be done before payment is made. If your agent is against the verification process, do not shake hands for cracking the deal together.
- No Internet Presence: It is normal that each company must have a website portal from where all the information can be verified. In fact, the other client experiences can also be acknowledged. But if your agency does not offer you such a thing, it is suspicious.
- Too Good to be True: The unreal offerings of your agent may be the first thing you should initiate interrogating. It is impossible that a company is giving you more than what is possible. Hence, this trait is enough to break the deal right then and there.
- Wire Money Approach: Wire money approach is a negative thing if asked from your agent’s side. If they are asking you to pay the closure amount through wire approach, question them and demand your convenience.
End Thoughts
Amidst such a big world with varieties of services and growing industries, it becomes hard to make a difference between what is real and unreal. Hence, it is important that you educate yourself well before entering into such a deal. Of course, to be wise and strong is the need of today’s decade and you should be tricked on matters which give you no second chance.
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Frequently Asked Questions (FAQs)
Yes, a scammer may sell a house without an existence.They may even take your money by providing you all the papers. Along with this, you may also be fooled about the ownership which never registered on your name.
There are several instances where people have lost their huge amount of money and left choiceless and helpless due to real estate scams. Hence, it is suggested that homebuyers or tenants must check their agents credibility before paying the closure amount. Can a scammer sell your house?
Is it easy to get tricked by Real-estate frauds?
