Scam artists have probably been around as long as humans have – and their basic bag of tricks hasn’t changed. Now though, the Internet is crating ways to put new spins on those old tricks to reach even more potential marks — and the turmoil in the housing market makes real estate a prime hunting ground for scammers of all kinds. We’ve been reporting for a while about real estate cons to watch for – here’s a rundown of the top five, and what to do to avoid becoming a victim.
All stages of a real estate transaction offer opportunities for scams, and the very complexity of the process opens the door for one of the grayest areas. Third parties, calling themselves brokers, real estate attorneys, financial managers or other appropriate sounding titles, offer to help find the best mortgages, locate buyers, and assist with title searches or any other aspect of completing a house deal – for a fee, of course.
Although some are legitimate, many aren’t – and in most cases their services aren’t really required anyway. If you choose to use these services, investigate credentials thoroughly – and be wary of demands for up-front payment.
Sites like eBay and Craigslist can be a great place to find a good property deal offered buyer to seller. But these marketplace sites also attract scammers, who pull legitimate home listings off online real estate sites and repost them, posing as the seller. They may ask for a deposit or down payment to “hold’ the property until the potential buyer can inspect it, then vanish after “selling the property as mammy times as they can. Again, be wary of any requests for upfront money.
After the housing collapse, panicked homeowners in danger of losing their homes looked for any help they could find to stay afloat. As the government and private lenders rolled out refinancing programs to help them, con artists moved in too, offering to broker refinancing deals and find refinancing options for an upfront fee that vanished when they did. But government sponsored refinancing programs are free and consumer advocates offer assistance at no charge if needed.
Help! I Must Flee
The Nigerian money transfer scheme is, as we’ve reported before, alive and well in the housing market – and getting surprisingly good results. Again, using the marketplace sites, scammers contact sellers posting legitimate properties with a story of desperate need to buy the property to get a family to safety or safeguard life savings in jeopardy. The scammer asks the target to front money for the deal until they cash a large check –which bounces higher than a rubber ball. Ignore these demands –and contact consumer protection agencies if they continue.
Short Sale Scams
Short sales – selling a home for less than the mortgage is worth – mark a desperate homeowner. Scammers often step in to “broker” the sale for a fee or a share of the difference between the sale and the mortgage amount. Some even help sellers rough up the property, rendering it less desirable for a cheaper sale.
Scams aren’t new – but current circumstances mean some new variations on their schemes. Now is a good time to invest in property – but it’s also a good time to take Jason Hartman’s advice to stay educated, informed and in control. (Top image: Flickr/CatieRhodes)
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