Purchasing a property is counted as the most significant milestone achieved in a person’s life. However, just like any other industry, the real estate market has always been competitive; there is always an inclination to act quickly when you find a house of your ambitions. Although woefully, fraudsters obtain the advantage of this kind of situation where they trick potential property buyers into paying 2x for the property’s current worth or the one that does not even exist by fudging the terms of the deal.
A Real Estate scam is a deceptive practice that obtains lies, misrepresentation, or illegal techniques to exploit unsuspecting or novice homeowners or buyers. Scammers often or mainly target those desperate victims eager to sell and buy new houses and those who might have recently inherited property.
Meanwhile, Real Estate scams are also relentless, and they can happen anywhere, majorly scammers use particularly common in areas where housing prices are high, and demand is low. Therefore, one should be extra vigilant if considering buying or selling property in a room with a tight housing market.
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How does a Real Estate Scam work?
A Real estate scam procures several methods to steal your money, personal and fiscal information, and even your property designation. As purchasing a house involves a long process, including a lease, paperwork, NOC, and many other things (maybe a one-time opportunity), scammers take advantage of this interval and perform various schemes to defraud you.
In a real estate scam, scammers initially play out or impersonate a real estate agent, lender, or title company by generating counterfeit listings and targeting you via unsolicited emails, text messages, and even a phone call offering too good to be accurate mortgage rates of the property. Fraudsters communicate with high-pressure sales techniques to create a sense of urgency and are encouraged to act quickly, or they might lose the deal, which will be further offered to other homebuyers.
However, after you get convinced by their tactics, they demand advance or entire payment of the property via wire transfer or through different online payment processors. The main reason behind procuring payment via wire transfer and other online payment processors is you don’t have to meet the person face to face. Once the payment has been processed, it is impossible to turn around or reverse the amount delivered.
Who are the ones that are majorly targeted in a real estate scam?
Although several homebuyers are targeted by scammers on a daily basis but mentioned below are some of the most common categories that are constantly being targeted:
- Title fraud – in this practice, scammers often try to steal the title to the property of the current house owner by forging documents or by performing different fraudulent activities. Further, they may sell the property to an unsuspecting genuine or innocent buyer.
- Real estate scams aiming at home buyers – Generally, a genuine property deal occurs face to face where the homebuyer provides a token amount in a greenback. However, alternatively, Fraudsters obstruct wire transfers for down payments while creating fraudulent or misleading listings and procuring a trick that would-be homeowners into paying deposits on “invisible” listings through a payment processor, which most probably doesn’t allow reversal of any transaction on their interface.
- Numerous investment schemes – In this process, scammers try to lure people into investing in fake real estate developments or other fraudulent investment opportunities. They promise high returns with little risk, but the investments are often bogus or the property mentioned doesn’t exist in reality.
- Mortgage and other scams targeting persuasive homeowners -this is the most commonly targeted bracket; from mortgage wire fraud to reverse mortgages, these schemes are designed to trick homeowners into giving significant payments to scammers without acquiring a physical glimpse of that particular property if that exists.
How to protect yourself from a Real Estate Scam?
Obtaining a magnifying offer while searching or opting for a property can be slightly suspicious, albeit to procure yourself from a Real estate scam; stated below are some specific preventive measures one should observe while purchasing or selling property.
- Before signing any dotted agreement of buying or selling a possession with the homeowner or buyer, consider the offer with the legal advisory of the industry. With the help of a legal advisor, you can ensure that the government approvals on the agreement are legitimate or not.
- Before investing or buying a property, carry out a background check of the place and the homeowner of that particular property. Check whether the following source from whom are purchasing the property doesn’t have any earlier or ongoing cases related to the house or if the property is legally or unlawfully constructed.
- Consider seeking references from personally proclaimed individuals who have been in this field for a long time. Scammers defraud innocent and novice home buyers by providing fraudulent schemes that sound terrific. Although seeking personal guidance is an excellent way of segregating ‘wheat out of the husk.’
- At all times, consolidate bank-approved projects because chances of performing frauds are relatively low since banks execute background checks and due diligence of the house owner before settling the deal.
- If you are obtaining a property or land through a builder, ensure that there is a delay clause in the agreement, including timeframes of the construction stage, along with a copy of the approval of the verified plan. Refrain from acknowledging if this particular clause isn’t stated.
One can say that Real Estate Scam is a grimy bucket in a crystal clear sea. The transactions carried out in the real estate industry were lucrative earlier and also currently. However, when it comes to neglecting any scam, obtaining knowledge about it is competency. You can protect yourself from these frauds by being aware of the potential schemes. Moreover, if you are thinking of buying or selling a property, consult with real estate experts and professionals, as they can help you to navigate the process by safeguarding it.