3 Common Real Estate Scams to Watch Out For in 2023
Scams are out there in full force, now more than ever. We do everything we can to protect ourselves just when we think we have a handle on it, something comes along that we haven't thought of before and we need to learn and prepare for that scam.
Scams are all too common in the real estate world but there are a few common ones that we see on a regular basis. Here are some of the three most common real estate scams to look out for.
#1. Also your home by it myself.
This is the classic bait-and-switch gimmick that many unethical real estate agents might use to get new clients. The whole idea is to get appointments and once they're in the door, it might be an easy sell. The real estate agent catches your attention with this type of gimmick, then they start to wrap in a bunch of stipulations that most homeowners won't agree to. This could mean a required asking price determined by the agent with drops in the price every 30 days or whatever time increment the agent requests. They also require you to buy a new home through the agency will only buy it if it is priced well below market value. That and adage is true, it seems too good to be true, it probably is. There's always some catch to this great scam.
#2. Intercepted wire transfers or fraudulent fund deposits.
This is a common one so it's important to so confident and comfortable with your real estate agent and your lender. Go with someone you trust, someone that has good references in referrals, or that has a positive record of good business ethics.
This scam works when you respond to an email request to send money for a down payment, earnest money deposit or some other account. Far too many people have lost thousands of dollars to fraudulent wire transfers.
This can also happen after you've closed on the property. It was a couple in Colorado that went to the local title company to sign the final paperwork. The problem was that this title company was not legitimate. They signed all the paperwork and started to pay, what they assumed was their mortgage payment. But instead, they started making payments to a scam artist. It wasn't until the foreclosure notice came that the couple started to really pay attention.
The problem is that most people don't understand all of the inner workings of a real estate transaction and can get easily distracted or convinced what they're doing is right. It's important to have all communication verbally as well as in writing and ask as many questions as possible. Title companies need to be licensed and verified with the state in which you're buying.
In other cases, title companies may neglect to use a secure, encrypted site to transfer funds and these funds can get intercepted along the way. The important thing is to use and establish a title company that is insured, verifying the use of encrypted sites to transfer money.
#3. Illegal Property Flipping
The way this scam works it's a scam artist purchase properties and resells them at inflated prices. It usually involves sketchy appraisals and inaccurate loan documents. The property is refinanced immediately after purchase for an inflated value. The home is been purchased at a higher price by barriers that are in on the duo and eventually falls into foreclosure.
The key is to look for properties that have had recent rapid refinancing as the seller has acquired the title shortly after possession of the property. It's also important to look for a property that was recently in a foreclosure being purchased at a much lower price than its sale price is the owner listed on the appraisal and title do not match the seller on the sales contract.
These can be tricky scams to identify so it's important to go with an experienced and seasoned real estate agent that is familiar with the real estate scams out there and help you overload falling into one of their traps and losing money.
For more information or to get in contact with reputable lenders and title companies on the Big Island, contact me today. Contact me for all Big Island real estate.