When you decide to buy a new home, one of the last things on your mind might be the fear of getting scammed. There is much to think about, and excitement is brewing. So who wants to think about something that is not likely to happen? Why worry?
Well, perhaps it is not productive to worry about real estate scams—but educating yourself about them so that you don’t get caught in some nefarious criminal’s snare is definitely worth the time. According to Federal Bureau of Investigation data, 11,300 people fell prey to real estate scams in 2018 alone. And these were only the people who reported scams. Many people are so embarrassed by losing tens of thousands of dollars to a scammer that they don’t report the crime. But of those reported in 2018, the financial losses totaled a whopping $149 million dollars. So before a scammer targets you, let us educate you on what to look for and what to avoid as you search for your new home or rental. Here are some common real estate scams to avoid.
A very common type of scam is escrow wire fraud. In this scam, fraudsters set up websites that look a lot like legitimate title companies’ and lenders’ actual websites. They work hard to make these fake websites look like the real deal. These criminals even use contact information that is remarkably similar to the authentic lender’s website. For instance, they may use the real company phone number but only chance one digit or transpose two digits. Or they use an email address that looks very similar to the real one. Unless you look very carefully, you will not notice the difference.
Once these scammers have their fake website in place, they begin emailing and texting unsuspecting people currently looking to purchase a home using the legitimate lending or title company. In the email or text, the scammers attempt to set up a wire transfer of escrow funds. Often, buyers trust these communications because they seem to be from the actual institution they are dealing with. So they wire the funds as instructed. But before they know what is happening, the fraudsters and their money are long gone. If this happens to you, it is almost impossible to retrieve your money or your dreams of buying a home.
How to Avoid Wire Fraud
You can protect yourself from this insidious scam by doing the following:
- Be wary: Be suspicious of any email or text purporting to change previously given instruction on wiring money.
- Verify: Never, ever click on links in emails or texts to make large real estate payments before you have spoken to a live person. Refer to your original documents to use a known company phone number to speak to someone and verify the wire instructions before wiring a single dollar.
- Confirm: Always confirm the escrow account number you are supposed to wire funds through.
- Double check: After you wire money, call your agent to verify that they received the funds.
Taking these precautions can seem tedious, but once the scammers have your money, there is very little chance of getting it back.
Fake Rental Listings
Rental scams typically involve lesser amounts of money, but they are alarmingly common and still leave you out thousands of dollars.
The way it works is that people with no connection to rental properties essentially steal information and photos from a legitimate listing, then publish the listing with their own contact information on Craigslist or social media pages. Once the scammers lure you into inquiring about the rental, they request an upfront payment to lock in a viewing of the rental. They typically say that if you rent the property, this becomes your rental deposit. This scam is particularly effective in competitive rental markets like New York City but can happen anywhere. After you make the deposit, your money disappears along with the scammers.
How to Protect Yourself
To protect yourself from rental scams, do the following:
- Confirm that you are working with a legitimate rental agent by asking for their license, taking a photo of it, and checking the real estate licensing department in your state;
- Insist on speaking with the property owner before signing anything or sending any money;
- Be very suspicious of anyone asking for upfront money to see a rental property; and
- Use a check to make a payment, never cash.
It is also wise to avoid electronic payments for rentals. Insist on making payments and deposits face to face.
Information about homes that are in foreclosure is accessible through public records. This means that fraudsters can easily get information on homeowners that are in trouble and in danger of losing their homes. These people are particularly desperate and easy prey. Scammers make the most of homeowner’s vulnerability and swoop in with grand promises of saving their homes and cutting their mortgage payments significantly.
This can seem like such a welcome relief that unsuspecting homeowners happily accept the news and embrace the friendly voice trying to help them. The fraudsters can even claim to be part of a governmental agency created to help homeowners struggling to make their payments. They ask for a large upfront fee to “save” the house from foreclosure. This money then disappears along with the scammers, and the homeowner is left in more dire straits than before.
How to Avoid
It is important to keep the lines of communication with your lender open. Often these scammers will tell you not to speak with your lender—this is always a big red flag. The scammers know that you really don’t want to speak with your lending agency because you are afraid that will hasten foreclosure. Please don’t listen to them. Working out a modification of your loan, a forbearance, or some other option with your lender is the best way to avoid foreclosure. You can also use a HUD-accredited housing counselor to assist you in reviewing your options.
We Can Help
These are just a few of the scams circulating today. The experienced attorneys at Bolan Law Group., are well-versed in Washington real estate issues. We are professionals who are savvy to the most recent scams. Our lawyers can help direct you and protect you from those whose sole ambition is to steal your hard-earned money. So call us directly or contact us online today for an initial consultation.