Home buying can be an exciting experience, especially for first-time homebuyers. You’ve wanted to own your own property for the longest time. Now that your dreams are finally coming true, you can’t wait to go house hunting and live a life as a new homeowner.
You already talked to at least three different lenders who are now offering you mortgage loans for your home purchase. You know what you want, have set ideal locations where your new home will be, and got the down payment covered. All that is lest is to find a house for sale that will fit your needs and requirements.
But before you invest, know that many homebuyers have already been victimized by scam artists. They lost their hard-earned cash after trusting the wrong people. Knowing what to do and what to avoid will help protect yourself against real estate scams.
What Are Real Estate Scams?
Real estate scams are fraudulent activities planned by scam artists to steal your money and precious data. According to the Federal Bureau of Investigation’s Internet Crime Complaint Center, more than 13,600 people became victims of real estate fraud. Knowing the common types of real estate scams will give you an idea of avoiding each one.
Loan Flipping Scam
Predatory lenders will look for homeowners wanting to refinance their mortgage. They usually lure unsuspecting homeowners into repeatedly refinancing their mortgage at a higher loan amount each time. This then puts the borrower in deeper debt until they already borrowed most from their home’s equity.
Escrow Wire Fraud
Some scammers would pretend to be the mortgage company you are working with. They will ask you to follow the wire instructions so you can send over your escrow funds to them. Once the transfer is successful, you will find it hard to retrieve your cash.
Foreclosure Relief Scam
Homeowners who now face foreclosure will receive information from a company that claims to help them stop the foreclosure. They usually ask for an upfront payment in exchange for a loan modification plan to stop the foreclosure. This puts homeowners at risk of losing their homes and their hard-earned money.
Home Inspection Scam
A home inspection is crucial before finalizing a home purchase. Scam artists now exploit buyers by acting like professional home inspectors. They help hide potential issues in the house, tempting you to buy the house more than the fair market value.
Some people would attempt to sell properties they don’t own. This could be someone who accepts the house as collateral. In the end, unsuspecting homebuyers will pay for the house and still lose their home for being a victim of a title scam.
Protecting Yourself Against Real Estate Scams
Luckily, there are many ways to protect yourself against real estate scams. Keep the following tips in mind so you won’t be a victim of real estate fraud.
Know the Red Flags
There are warning signs common to most real estate scams. Familiarizing yourself with the following will help you avoid such frauds from ruining your home buying experience.
- Unrealistic Guarantees
Sometimes, you will come across real estate deals that seem too good to be true. Trust your gut, ask questions, and choose to walk away if you still feel uncomfortable or if you are not convinced. Scammers will usually offer unrealistic guarantees in exchange for an upfront fee.
- Lack of Paperwork
Many scammers will try to acquire your financial information but can’t provide proof of the proper paperwork. You need to stay vigilant and read all documentation they send to you. If some are lacking and they are unwilling to give these to you, they could already be plotting something against you.
- Pressures You to Wire Money Asap
Scammers want their victims to wire funds to them directly right away. They will force you to make a down payment or lose the chance of buying the house. Know that in real estate, you need to wait for the seller to accept your offer before you need to pay down the deposit.
Transact Only with People You Trust
The pros can help you keep your personal information secure. It pays that you only trust licensed professionals when looking for houses and transacting with sellers. If someone reaches out and asks for information or money, verify their request by calling to see if they are the people you are talking to.
Avoid Last-minute Changes
Did you receive news that there are last-minute changes related to your home buying process? Are they suddenly asking for more money to hasten the process? Verify everything before making your next move to ensure no one is scamming you.
Real estate scams are out to get homebuyers and homeowners alike. You must keep your eyes open to avoid being their next victim. Listen to your gut feel, only talk to people you trust, and if you suspect someone being a fraudster, report them.