What Are the Most Dangerous Real Estate Scams in 2022?

April 18, 2022

Finding yourself in a real estate market is stressful enough without having to think about the scammers lurking around and targeting trusting and inexperienced people. Whether you are buying, selling, or renting, you could fall victim to real estate scams if you are not careful. The first thing to do to avoid these situations is to be informed of the possibilities.

Working with a real estate professional could save you some trouble, but it still doesn’t mean that you are safe. To help you maneuver through the market safely we laid out some of the most frequent and dangerous scams and ways to protect yourself.

The Concept of Wholesale in Real Estate

While most common real estate scams usually involve some illegal activity, wholesale is a legal strategy. Wholesale is the business of selling some goods in large quantities and at low prices, so what does this mean when put in the real estate scams context?

Let’s paint a picture: For whatever reason, you need to sell your house, and you need to do it fast. You see a ‘’We buy houses’’ sign and contact the person behind the caption. That person is a wholesaler, with a legit business, and they indeed want to buy your house. They are working for an investor who wants to buy cheap properties and a wholesaler promised them just that.

Here is the catch, this is a real estate fraud only if that person uses manipulation, pressuring, and lying to get you, as a property owner, to sell for an outright devalued price. So, if for example, your home’s worth is $500,000, they will get you to sell for $350,000 - and then sell it to an investor for $400,000.

This puts 50k in the wholesaler’s pocket just for manipulating you into devaluing your property.

Escrow Wire Fraud

Protect your hard-earned money from scams involving wire transfers. Oftentimes, scammers impersonate an escrow company or a real estate agent and send requests for a wire transfer to a homebuyer. Those accounts are fake, the sent escrow funds are stolen, and it is really hard to get them back.

They use sophisticated software that disguises them as a company you are working with, that is why it can be hard to spot them. The best thing to do is to double and triple-check before you send any money someone’s way.

Another thing to remember is that impersonators are relying on your trust and unawareness. They assume that you will not spell-check their email address, which will most likely be slightly different than the one they are trying to impersonate.

Loan-Flippers

Loan-flippers are lenders that make money off of unwary homeowners, by convincing them to refinance their mortgages. If your mortgage payments have gotten too much for your family budget it could be a good idea to refinance, but only under certain circumstances.

Do not fall into the trap of repeated refinancing, because what you are doing is just filling the pockets of predatory lenders who prey on gullible borrowers. They will make money by promising you smaller monthly payments but charging you high fees and points on every transaction.

These situations are often happening to the seniors, who are targeted by landline marketing. They are calling frequently and promising a significant decrease in your monthly mortgage payment. Beware of the aggressive insisting that you need help with your monthly payment, especially if someone is approaching you first.

Foreclosure Scams

Scammers prey on homeowners who are approaching a foreclosure process, because of their despair and vulnerability. If you missed a few mortgage payments you might be entering pre-foreclosure and this piece of information is public record. Fraudsters use that information to contact you via telephone, email address, or even home address, and offer you help.

They usually promise to reduce your mortgage payment, so you avoid losing your property, but instead charge large upfront fees and leave you in a worse condition. They usually present themselves as government affiliates and suggest that they can offer some government assistant programs. This real estate fraud costs homeowners hundreds of dollars and a lot of stress.

Home Inspection Impersonators

Scammers found a sneaky way to insert themselves into every real estate transaction and process. Impersonating a home inspector is just another way for fraudsters to earn a quick buck, but it can cost you hundreds or even thousands of dollars.

Whether you are selling or buying a house, you will most likely need to do a property check-up. Sellers often decide to hire an inspector, so they could do quick repairs on the house, to make it more appealing to the buyer. Buyers need to check the house's real value, and if it is a fixer-upper or a property that does not need any later investment.

The unqualified provider presents themselves as a legitimate inspector and does not do the job properly. This creates more costs in the future, all because you hired someone who doesn’t know what they are doing. The best advice is to check the inspector’s credentials and to work with recommended providers.

Bait-and-Switch Mortgage

Bait-and-switch is one of the oldest tricks in the scammer’s book. This is because it works. There is no scam more frequent in the real estate industry than a bait-and-switch mortgage loan.

It is not uncommon to search for a lender online, and if you do that remember not to believe everything you see - if something is too good to be true, it probably is. They advertise their service at a fair price, but they do not disclose additional fees until you sign the closing documents. People end up paying hundreds of dollars more than what they planned.

Online Rental Fraud

Ever since the pandemic struck the world, the real estate industry has seen more scams than ever. This is partly because many deals are closed online, without seeing the property and doing the proper inspections. This is true for homeowners, as much as it is true for renters. Rental scams are on the rise on websites such as Craigslist and Facebook Marketplace.

Many scammers lurk around on online platforms where people list and search for rental properties. They put fake listings and ask for the down payment, then disappear with your money. They put fake pictures and present the ridiculously poor rental property as luxurious apartments. The least you can do is to Google reverse image search when you see a photo that seems too good to be true.

How to Protect Yourself?

The first thing you should do (and if you got to this part of the article - you have already done it) is to inform and educate yourself about the different kinds of real estate scams out there. Be careful and picky about who you work with.

Selling, buying, refinancing, or renting - all are important and costly real estate transactions and you want them done without unnecessary stress. Double-check everything, read the fine script to the letter before you sign anything, and report any shady actions to the authorities.

 

Leave a Reply

Thomas P
I believe in making the impossible possible because there’s no fun in giving up. Travel, design, fashion and current trends in the field of industrial construction are topics that I enjoy writing about.

LEGAL

Welcome to Urban Splatter, the blog about eccentric luxury real estate and celebrity houses for the inquisitive fans interested in lifestyle and design. Also find the latest architecture, construction, home improvement and travel posts.

SHOPPING

Affiliates
© 2022 UrbanSplatter.com, All Rights Reserved.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram