No one likes a scam, and no one would go close to a deal if they knew it was a scam or a hoax. Unfortunately, scams and hoaxes have crossed the borders from the get rich quick schemes to the real estate industry. As hard as it is to believe, real estate hoaxes have become common and taking the necessary precautions is critical, so you don’t become a victim.
Finding a home is hectic, and it’s the worst to through all this only to be scammed at the end. If it happens, it’s a devastating experience emotionally, and it can drain you financially. Here are some of the common real estate hoaxes and scams going on today:
Lender bait and switch
This is a very familiar scheme, and unfortunately, many home buyers find themselves in this situation. What happens is that the buyer is offered a specific rate when they apply for a home loan. After this, when the transaction is close to getting closed, the buyer is then pressured to accept higher rates and charges than the initial ones to close the deal. The buyer may fear that they will lose the loan and they end up agreeing to the new terms and gets charged higher fees.
Here, fraudsters scrape a listing and repost it on a different site such as Craigslist and pretend to be the representative agent. Less experienced con artists are more straightforward and ask for a security deposit upfront, or sometimes they call it their broker fee. The more sophisticated scammers will request you wire the funds to a friend’s account to prove you can pay. The con artist then poses as the so-called friend, and you kiss your money goodbye.
Loan modification scams
These have become prevalent given that there has been a crisis where many Americans are facing foreclosures and some others are upside down on their existing mortgages. These usually start with a cold call requesting some upfront fees. It turns bad when the homeowner turns over the deed to their home under the disguise of being able to repurchase it in the future
It’s one of the most traditional schemes, and it occurs when a scammer uses the victim’s identity to refinance a property. The scammer then uses the identity to steal the equity.
This is a type of real estate fraud scheme that became popular in the early 2000s following the mortgage crisis. It basically involves a person or investor gaining title to another person’s home, then refinancing the home and taking out all the equity in the property.
What to do if you are scammed
Unfortunately there are many real estate scams these days. The best way to avoid a real estate scam is to involve a verified and trusted real estate agent when you are looking to buy or sell your home. If you are scammed, you can report the offender to the powers that be and you can try going to civil court to try to get you money back. However, you can avoid all this stress by consulting a real estate agent beforehand.