Buyers and Sellers Beware: Signs of Real Estate Scams to Be Aware of
Savvy scammers are always on the lookout for a way to swindle money from unsuspecting victims, and the real estate industry is by no means off limits. Of course, the overwhelming majority of buyers, sellers, agents, landlords, and others involved in real estate transactions are honest, but there are a few bad apples out there who spoil the bushel.
Considering how much money is being played with in a real estate transaction, it’s critical to get educated on the normal steps in the process in order to be able to spot a scam in the works.
Luckily, there are plenty of warning signs that will present themselves that will give you the opportunity to take yourself out of harm’s way before you get scammed. Here are some red flags to watch out for so you don’t get scammed, which typically come about when you’re not being represented by a real estate agent.
Investors Using Questionable Marketing
You’ve probably seen them before: signs plastered to anything stable, like a light post or mailbox, that say something along the lines of, “We Buy Houses.” Legitimate, professional real estate agents or investors are not in the business of advertising their listings illegally or in poor taste. If the type of marketing that you see when it comes to real estate is free, it’s highly possible that it isn’t legitimate.
Foreign Buyers Promising to Pay All Cash Without Seeing the Property
While it’s common for foreign investors to buy into the US real estate market, they usually do so with the help of an agent representing them on home soil. Details about the property will most likely be provided, including photos of the interior and exterior, and all the financials will be handling legitimately through a financial institution or an accredited attorney.
You should already have your back up when it comes to dealing with foreign buyers, especially with money laundering being a real issue. But a buyer from out of the country offering to buy your home in cash on the spot without asking much about the property is a red flag. Most people who are spending big bucks to buy a property will want to see it, or at least have their local agent pay a visit. Scammers won’t, and likely won’t even ask any questions about the property.
Buyers Giving Too Much Information
Most people would be hesitant and careful about providing sensitive information about themselves, especially financial information. For this reason, you should be very skeptical of a supposed buyer who is offering up detailed information even when they’re not being asked for it. This is especially true if all this info is being shared via email.
Many times scammers will take a snapshot of various types of financial records, such as a bank statement, and email to potential victims. They’ll also list a host of contact information, including phone numbers, email addresses, mailing addresses, and so forth. Providing all this information makes them look like they’re the real deal. And they’ve got nothing to lose, because all that info isn’t even real, anyway.
Overly Eager Buyers
Many times legitimate buyers will fall in love with a home and decide to pounce on it before anyone else can. Such scenarios are common, and totally legit. But scammers who either call or email you expressing their interest in buying your home, and are overly zealous about snagging it should be handled with extreme caution. If they seem way too excited about sending a down payment or deposit to their lawyer without even haggling the purchase price, you’d be well advised to quash the transaction before it even starts.
Scammers Claiming to be Agents Who Are Owed Commissions
Some scammers try to haggle commission money out of sellers, even when no real estate agent has even entered the picture yet. Many con artists will attend an open house and gather up the seller’s contact information. Once they’ve got it, they’ll contact the seller pretending to be a real estate agent for a supposed interested party, and will try negotiating a price on behalf of their ‘clients’, including the commission.
You don’t have a business relationship with this individual, nor do you have a signed contract outlining the fact that this person is representing you as your agent in the transaction. Nor is there any contract being presented to you detailing the fact that this person is representing the buyer, as well as the commission structure. The moment you are told that you need to pay commission fees before a sale has even been made, you should hang up the phone.
The scammer may even go so far as to threaten to sue you for a “finder’s fee” for bringing a supposed interested buyer your way. No evidence has been provided that there actually is a real bonafide buyer, nor has any transaction even been made. This is where all communication with this individual must cease.
Requests to Wire Money
Anytime you hear the words “wire money” come up in a conversation with someone you don’t know, run. The majority of scams involve funds that have been wired. Scammers will come up with a host of compelling reasons why money would need to be sent tough a wire transfer rather than through a bank or lawyer.
Scams like these can happen whether you’re on the buying or selling end. If you’re selling, scammers will wire you their deposit, then request some of it back because they “accidentally” overpaid. In this case, you’ll send the money, and never hear from them again. If you’re buying, the supposed “seller” may ask you to wire the deposit money to them because they either don’t live in the country or are currently unavailable to receive the money any other way. Regardless, wire transfers have no place in a real estate transaction.
Scammers are everywhere, and they typically present themselves as legitimate professionals who know how to put on a good act. When it comes to money matters, always err on the side of caution, especially if your gut tells you something isn’t quite right.