Top Agent Magazine Shares 5 Most Common Real Estate Scams

Buying a home is one of the most expensive purchases you will ever make, so it’s unsurprising that emotions are involved, and stress tends to be high. It’s a vulnerable time where you are trusting others to help you make the best decisions possible.

Fraudsters see this as an opportunity to sneak their way into your life, taking advantage of those who may be less informed about the real estate process and using that confusion to take money. While there are a variety of real estate schemes, Top Agent Magazine reveals the five most common ones below, so you can be on the lookout next time you’re in the market to buy or sell.

1. Real Estate Mortgage Scam

There are three typical scenarios when a scammer will attempt to conduct a mortgage scam. One is when a homeowner is attempting to get a home equity loan. A seedy lender may do what is termed equity stripping, where they encourage the homeowner to borrow more than they can repay, and/or implement high or increasing interest rates that the borrower can’t maintain. Their intention is for the borrower to stop making payments so they can proceed with foreclosing the property and taking ownership of it. Typically, victims of this scam are already struggling to make their mortgage payments.

Another type of mortgage scam is loan flipping, where lenders convince homeowners to refinance their mortgage many times, and each time they charge them high fees. There is also the bait-and-switch, where lenders advertise lower interest rates, and increase them when it’s time for the borrower to sign off on the loan.

2. Wire Fraud Scam

With most correspondence about buying, selling, or refinancing happening through email or phone, fraudsters have figured out a way to possibly intercept wire transfers during escrow. By posing as your real estate agent, title company, or bank representative, scammers provide false information in an attempt to have you wire funds to their account. This will look like an email or phone call from someone involved in your transaction. Pay close attention to the emails and phone numbers of those you are working with and only respond to those you’ve vetted as real, trusted resources.

3. Foreclosure Relief Fraud

Those who are struggling to make their mortgage payments are most at risk of falling for a foreclosure relief scam, where fraudsters offer to negotiate with lenders to improve loan terms, or purchase the home from the homeowner.

While there are legitimate people who may buy a home from someone who is about to foreclose, the scammers are in it for quick cash. They will ask for fees to conduct their ‘services,’ or collect personal info from you in an attempt to steal your identity.

4. Home Inspection Scam

When the time comes to do a home inspection on your new property, be aware that illegitimate inspectors exist, and they are out to wreak havoc on your purchase. Once hired, they will come up with expensive ‘repairs’ that need to be done, even fabricating defects or hazards such as water damage or bad wiring, offering to fix the issues at exorbitant prices.

On the flip side, you could be referred to a fraudulent home inspector by your real estate agent, who will actually pretend that the inspected home is in tip-top shape, even if it’s not. This is an attempt to get you to purchase the property, so the real estate agent can close the deal. All the more reason to work only with the best real estate agent in your area.

5. Mover Scams

What should be one of the happiest days turns into one of the worst if you hire a fraudulent moving company. This happens when a moving company provides an estimate of the cost to move you to your new home, but then changes the price once they already have your items in transit. By getting you to trust them, they gain access to your possessions, and use that as leverage for demanding you pay them more money.

Protect yourself by asking for the moving company to conduct an on-site inspection, documentation of the quoted price, and proof of their company registration and insurance. If they arrive at your home in an unmarked or clearly rented moving truck, you should think twice about working with them.

Top Agent Magazine hopes that by understanding these common scams, you can better safeguard yourself against schemes that threaten your investment. Always ensure thorough verification of all parties involved in your real estate dealings and stay informed about the processes. Remember, the key to a secure and successful property transaction lies in being proactive, cautious, and well-informed. Contact Top Agent Magazine if you come across a real estate scam.

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