No matter the industry, there are going to be unscrupulous individuals trying to take advantage of hard working consumers. And the world of real estate is unfortunately no different.
There are many scams out there to be aware of, but there are many ways you can protect yourself by being careful and diligent in your everyday interactions.
Just be aware that, whether you’re in the market to buy a home or if you just want to rent a property at the beach for a week, there are people out there who want nothing more than to cheat you out of your hard-earned money.
So you need to be careful, prudent and diligent and, when in doubt, ask a local Realtor for advice and/or guidance.
While this is certainly not a comprehensive list of possible scams out there today, these are some of the more frequent and a few things to watch out for:
This is where sellers agree to a big discount off the asking price of a home, provided you sign an agreement to purchase without calling for an inspection. You’ll find this almost exclusively in homes that are being sold by owner, as licensed Realtors adhere to a strict code of ethics and would lose their license if they were to engage in such a practice.
Most banks won’t allow it either, so there are protections in place in most cases.
- How The Scam Works. A homeowner, who is fully aware that there’s a major flaw that would be found upon inspection, offers to discount the property by a significant amount if you agree to purchase on site without having an inspector pay a visit.
- How You Can Protect Yourself. This one is simple – always, always, always use a licensed Realtor when buying a home. This is for your protection in many different situations, and is a good example of how a Realtor can help to protect your interests.
This is less common today than in years past, but it’s still worth mentioning here because it not only involves real estate fraud, but also identity theft. It can harm your credit and take you years to sort out with your creditors, as well as others who were harmed in the process.
- How The Scam Works. The scammer will pose as the homeowner and, using fabricated documents, take out a new mortgage on the property. They then take the cash, leave the area and the real homeowner is left on the hook for the balance of the mortgage.
- How You Can Protect Yourself. There are two things you can do to guard against this type of scam. First, be sure you have title insurance so you’re protected financially should something like this occur. Secondly, and most important, be sure to safeguard your personal information at all times. Take as many precautions as you deem necessary and don’t volunteer your personal information to anyone who you’re not 100 percent comfortable with.
Loan Modification Scams
The folks who engage in this activity are the very definition of predatory scammers. These include unsolicited calls from an agency, sketchy refinancing options and anything that involves upfront fees.
- How The Scam Works. Homeowners who are facing foreclosure are the main targets for these scammers, due to their dire situations. Solutions offered will often include alternatives to foreclosure, including reduced mortgage payments, advanced fees, requests for bank account information and guaranteed protection from foreclosure.
- How You Can Protect Yourself. There’s really only one good way to avoid this one, and that’s never to start the conversation. Hang up the phone, delete the emails, throw the direct mail in the garbage can. And never, ever, under any circumstances, sign on the dotted line. If you need real life solutions to a pending foreclosure, call a lawyer or a licensed Realtor for advice.
Rental of Empty Houses
You may have seen this one in the news. It’s a scam that’s usually carried out online and involves renting out a home that is temporarily sitting empty. It’s important to note that this is a scam that has two sets of victims – both the person attempting to rent the property and the actual homeowner, who usually has no clue that their home has been involved in a crime.
- How It Works. Scammers scour the neighborhood and find homes that are empty and then advertise those homes for rent online. Sometimes they even break in and change the locks, or might just look around for a spare key outside the home. Regardless of how they get the job done, this scam almost always ends with the homeowners returning to find unwelcome houseguests on their property.
- How You Can Protect Yourself. There are several steps you can take to ensure you don’t fall victim to these thieves. First, call a local real estate firm and ask if they know anything about the property. Even if they don’t, they might be able to direct you to someone who does. Secondly, do an Internet search on the property and see if you can find out through public records who owns the property. If that name differs from the person you’re dealing with, ask their relationship to the owner and then verify that relationship. Thirdly, if something still doesn’t feel right, trust your gut. You’ll likely be right many more times than you’re wrong in the long run.
Rental of Houses for Sale
This is another scam that is growing in popularity and is done much the same way as the previous one. There’s one big difference though – in this scam, houses that are listed for sale are targeted, but in most cases, the homeowner will not be returning anytime soon. They’ve already moved out of the area and the “discovery” usually comes when a real estate agent arrives to show the home to a potential buyer.
- How The Scam Works. Scammers scour area homes that are on the market, usually online via popular real estate portals, and then offer the home for rent at a much lower price than it’s worth. They justify this price by saying that the homeowner just wants to have some income for the property while waiting for a sale. The scammer will then have the renter sign fake documents before disappearing forever.
- How You Can Protect Yourself. A few ideas come to mind, but there’s one that should be 100 percent foolproof. Find the listing real estate brokerage and call their office, asking to speak to the listing agent or the person in charge. These people will definitely know if the homeowners are renting their property, as they’ve been hired to sell it. They will also know how to contact the owners so steps can be taken to prevent a similar scenario from playing out over and over again.
For questions about anything real estate related at the Delaware and Maryland beaches, call the Oldfather Group today at 302-260-2000 and speak to a member of the coastal region’s top selling real estate sales team.
We’d love to introduce ourselves and see how we can help.