Navigating 2024 Real Estate Scams: Practical Advice for Renters and Buyers

Real estate transactions often involve significant sums of money and can be a source of considerable stress due to the complexities and high stakes involved. In addition, the substantial financial commitments and emotional investments made by buyers, sellers, and even renters create an environment ripe for real estate fraud and scams. The FBI receives over 25,000 complaints concerning real estate fraud each year, estimated to result in about $1 billion in losses annually – states with the most reported cases include California, Florida, New York, Texas, and Illinois.

Verifying credentials and working with reputable professionals are essential steps to avoid the significant financial losses and emotional distress that typically come with being scammed. By understanding the various types of real estate fraud schemes and being able to identify signs of these scams, you can learn to better protect yourself and your assets from unscrupulous individuals looking to exploit the intricate process of real estate transactions.

Dangerous Real Estate Scams to Avoid

Listing Scams

Listing scams are a common form of real estate fraud that involves scammers creating fake property listings to deceive potential buyers or renters. They typically do this by advertising properties that are not for sale or rent, are misrepresented in terms of their price or condition, or do not even exist. Sometimes, the scammer may ask for personal information, advance payments, or deposits before allowing a property viewing or securing a deal, only to disappear once the request is met. Approximately 43.1% of American renters have either encountered or fallen victim to listing scams, with scammers often targeting home and rental listings on Craigslist and other similar platforms that lack proper monitoring.

Listing scams usually involve a bait-and-switch scheme where the buyer or renter is lured in through attractive photos and descriptions, only to be informed that the “advertised” home is no longer available. They are then shown other listings, which often turn out to be more expensive or of a lesser quality than what was initially advertised. Unfortunately, even though these bait-and-switch practices violate the FTC Act due to their deceptive nature, they can be challenging to prove.

How to Avoid Listing Scams

Verify the Listing: Always cross-check a property’s details on at least two different reputable real estate websites, and be wary of listings with advertised prices significantly lower than the market average.
Work with Reputable Professionals: Always use licensed professionals for your transactions. Be sure to verify the credentials of the real estate agents and brokers you decide to work with before committing to them. Check for licenses, professional affiliations, and reviews or testimonials from past clients; this helps ensure the transaction’s legitimacy.
Visit the Property: It is always a good idea to visit the property you intend to buy or rent in person before making any payments. Scammers usually avoid in-person meetings and will often come up with excuses to prevent viewings before asking for a down payment.
Confirm Property Ownership: Check the ownership of the property you are looking to buy or rent through official government websites and other reputable sources that offer access to public records. Confirm this against any information the real estate agent provides and look for reviews or complaints on the property owner (or landlord if you are renting).
Do Not Wire Money: Never wire money or send payment through untraceable methods. Reputable real estate agents typically utilize secure and traceable payment methods and often involve attorneys in these transactions. Nevertheless, ensure all agreements are in writing, thoroughly review the terms and conditions, and seek legal advice before signing any contracts.
Be Cautious with Your Personal Information: Do not share sensitive personal or financial information with an agent until you have thoroughly vetted them. Scammers may use this information for other fraudulent activities.
Watch Out for Red Flags: Be skeptical of listings that offer exceptionally low prices for high-value properties or listing photos with MLS watermarks. Unrealistically low deals are a glaring red flag for scams. Similarly, listing photos with an MLS watermark usually indicates that the image may have been copied without authorization, in turn suggesting that the listing isn’t authentic; authentic listings will always use an original photo rather than copies or stolen ones.
Trust Your Instincts: Always trust your gut feelings when performing real estate transactions and proceed with caution. If something feels off or seems too good to be true, it probably is.

Foreclosure Relief Fraud

Foreclosure relief fraud is a real estate scam that targets homeowners facing foreclosure or other related forms of financial distress by offering them supposed help to save their homes. The scammers may do this by claiming to have special relationships with lenders or posing as legitimate foreclosure prevention companies, government agencies, or legal providers and promising guaranteed results in exchange for upfront fees. In some cases, the homeowner may also be tricked into stopping mortgage payments or contacting their previous lenders and signing documents that transfer the ownership of their home to the scammer.

How to Avoid Foreclosure Relief Scams

Research and Verify: Thoroughly research any individual or company offering foreclosure relief services before working with them. Verify their credentials, confirm that they are licensed and registered to operate in your state, look up reviews, and check for complaints with the Better Business Bureau or other similar consumer protection platforms.
Communicate with Your Lender: Reach out to your mortgage lender directly to discuss your situation and explore available options. This direct communication with lenders ensures you are following the correct process. You can also consider seeking assistance from HUD-approved housing counseling agencies; these agencies provide free or low-cost counseling services to homeowners on matters ranging from foreclosure avoidance to reverse mortgages.
Avoid Upfront Fees: Legitimate foreclosure relief services do not typically request upfront fees. Always be wary of any person (or company) that asks for payment upfront before providing services.
Be Wary of Guarantees: Be skeptical of anyone promising specific results, such as stopping your foreclosure or modifying your loan; legit operators do not promise specific outcomes in foreclosure situations.
Review Documents: In addition to getting all promises or agreements made by a foreclosure relief service in writing, it is crucial to review these documents carefully before signing. Do not sign anything that you do not fully understand.
Avoid Hasty Decisions: Always take your time to consider your options before making any decisions. Scammers often create a sense of urgency to push their targets into taking hasty actions and will typically downplay the importance of seeking advice or second opinions from trusted sources.

Deed and Title Fraud

Deed and title fraud involves transferring or tampering with property ownership documents without the rightful owner’s knowledge or consent. This unauthorized transfer of property ownership is illegal and considered a severe crime due to its impact on property rights and the integrity of real estate transactions. Deed and title fraud potentially strips individuals of their homes and investments, leading to substantial financial losses for the rightful owners and potential legal battles to reclaim their property.

There are currently no national statistics tracking home title theft. However, according to the FBI’s 2023 Internet Crime Report, 9,521 complaints of cyber-related real estate and rental fraud occurred, and losses resulting from these matters were estimated to exceed $145 million.

Some signs that may indicate that your home is the target of a deed and title scam include:

Receiving mail meant for unknown individuals but addressed to your property
Receiving collection notices or bills for accounts that you didn’t open or notices of overdue property taxes
Getting unsolicited offers for your property for amounts way above its market price
Getting calls from debt collectors over debts that you do not owe
Receiving notifications about missed mortgage or utility payments you were unaware of
Discovering documents related to property transactions that you did not sign or authorize
Suddenly finding out that your home has either been leased or sold

How to Avoid Deed and Title Fraud

Regularly Check Property Records: Periodically review your property records at the local recorder’s office to ensure that your title is still in your name, and no unauthorized changes have been made. Regular monitoring can help detect fraudulent activity involving your property early.
Monitor Credit Reports: Monitoring your credit can help detect identity theft, which is usually the first step to deed and title fraud. Watch for suspicious activity and place a fraud alert or credit freeze if necessary.
Monitor Your Mail and Notices: Keep track of important documents like your deed and mortgage statement, and look out for unexpected mail or notices related to your property.
Purchase Title Insurance: Consider getting title insurance; this protects homeowners against potential fraud by providing coverage for financial losses due to title defects.
Consider Home Title Monitoring Services: You should also sign up for a home title monitoring service that actively monitors your home title and property records and provides real-time alerts about any changes or filings related to your property.
Protect Your Personal Information: Scammers typically require personal and financial information to commit deed and title fraud. As such, you should be careful with this information – only give it out if you are sure of who you are dealing with, and properly dispose of any unwanted documents that may contain sensitive details, like bank statements and bills.
Report Suspicious Activity: Immediately report any suspicious changes or activities related to your property to local authorities and your local recorder’s office.

Wire Fraud

Wire fraud, also known as “mortgage fraud” or “mortgage wire fraud,” is real estate fraud involving tricking individuals into sending down payments or closing costs to the scammer’s account. Mortgage wire fraud typically involves using phishing techniques to create fake emails, phone numbers, websites, and property listings to impersonate a legitimate real estate professional and gain the victim’s trust. Other common tactics that scammers use include employing high-pressure sales techniques and offering fraudulent mortgage services with unrealistic promises of guaranteed results.

Wire fraud is unethical and illegal, and falling victim to these schemes usually results in severe financial losses, potential legal repercussions, and damage to your creditworthiness. Thankfully, you can identify a potential mortgage wire fraud through several signs, such as last-minute closing changes or a sudden insistence on a down payment. Other signs of wire fraud include requests for upfront payments before services are rendered, unusually low fees or interest rates far below market standards, and offers that seem too good to be true, such as guaranteed approval regardless of credit history or financial status.

How to Avoid Wire Fraud

Use Reputable Services: Consider using well-known real estate and mortgage services; you can also seek referrals to reputable services from trusted sources.
Verify Professional Credentials: To avoid scams, ensure the legitimacy of the real estate or mortgage professionals you intend to work with. Always check licenses and read reviews on these professionals before committing to them.
Do Your Own Research: Independently verify property listings to confirm the authenticity of offers by visiting the property in person and cross-checking with multiple trusted sources.
Avoid Upfront Payments: Be cautious of services requiring payment before any work is done; more often than not, this is a clear sign of scammers.
Understand Your Closing Process: Familiarize yourself with the closing process before any money is due. Discuss with your real estate agent, inquire about valid payment methods, and speak directly with your lender about wiring money.
Be Cautious with Wiring Instructions: Always contact your real estate or mortgage agent via phone to verify any wiring instructions you receive; never solely rely on email instructions, as they can be intercepted or falsified.
Watch for Last-Minute Changes: Scammers often create confusion and urgency to trick you into wiring money to an unauthorized party. Be cautious of anyone urging immediate action or money transfers, especially if the request comes via email.
Report Suspicious Behavior: Always notify local authorities and regulatory bodies about suspicious activities. Doing this also helps prevent others from falling victim to the scam.

Real Estate Investment Scams

Real estate investment scams often occur through seminars promoting “exclusive” investment opportunities that promise substantial returns with minimal risk. These seminars are designed to lure attendees into bogus real estate investment schemes by presenting misleading success stories of past investors who supposedly achieved significant profits and offering limited-time deals to create a sense of urgency.

These seminars are typically conducted by individuals or organizations lacking proper credentials or a verifiable track record in the real estate industry. A major red flag to watch for is a guarantee of high returns with little to no risk – this is not only unrealistic but also a sign of fraud. High-pressure sales tactics, such as insistence on immediate commitments or payments, are another clear warning sign – the scammers will typically ask for large upfront fees or personal information under the guise of these being necessary for accessing the investment opportunities.

How to Detect Real Estate Investment Scams

Properly Research Speakers and Seminars: Thoroughly research a seminar’s organizers, presenters, and the companies involved before attending. Verifying credentials and backgrounds and checking reviews and complaints can reveal potential scams.
Do Not Fall for High-Pressure Tactics: Be cautious of seminar presenters who pressure you to make quick decisions, such as insisting you sign up or invest a considerable amount immediately. Individuals and companies offering legitimate opportunities will typically allow time for due diligence.
Verify Claims: Approach real estate investment seminars critically and with a questioning attitude. Be skeptical of claims about high returns with little to no risk, and do not be swayed by emotional stories or high-energy presentations. Always verify all stories or claims made at the seminar with independent sources.
Seek Independent Advice: Before investing in any opportunities presented at a real estate investment seminar, consult with a trusted financial advisor or real estate professional not affiliated with the seminar. They can provide a balanced perspective and help you evaluate the legitimacy of the investment opportunities.

Victim of a Real Estate Scam? Here’s What to Do

Prompt and decisive actions are crucial in situations involving real estate scammers. If you have fallen victim to real estate fraud, you can take control of the situation, seek justice, and minimize the impact of the scam on your financial and personal well-being by doing the following:

Notify Your Financial Institutions: Secure your accounts by contacting your bank, lender, and any other financial institutions involved as soon as you discover the scam. Inform these financial institutions of the situation and request that they monitor your accounts for suspicious activity; they may also be able to help in reversing unauthorized charges, where applicable.
Document Evidence: Gather all relevant documents related to the scam. These may include, but are not limited to, emails, contracts, receipts, and transcripts of communications with the scammers. Detailed records will be essential for reporting and seeking restitution.
Report to the Authorities: Report the scam to local law enforcement and file a complaint with your state’s real estate regulatory agency. You can also escalate the matter to other relevant agencies, such as the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), the Better Business Bureau (BBB), and the Internet Crime Complaint Center (IC3).
Seek Legal Advice: Consult a real estate attorney to understand your legal rights and options. These professionals can guide you through the process of recovering your losses and possibly pursuing legal action against the scammers.
Monitor Your Credit: Get a copy of your credit report and monitor it for any unusual activity. You should also consider placing a fraud alert or credit freeze on your credit reports to prevent identity theft or any further damage/losses.
Inform Relevant Real Estate Associations: If a licensed or registered real estate professional is involved in the scam, report them to the relevant professional association for necessary disciplinary action.
Seek Support: In addition to the financial losses typically associated with falling victim to a scam, there is also an emotional toll. You might find it helpful to join support groups or forums where you can share your story and get advice from others who have been through similar situations.

The Bottom Line

Real estate scams are a serious issue, with significant financial losses ranging from thousands to millions of dollars. Victims of real estate fraud can also suffer emotional distress, underscoring the severe impact of these schemes. As such, before committing to real estate transactions, ensure that you:

Prioritize thorough research and verify all real estate professionals and offers
Be cautious of deals that seem too good to be true and avoid upfront fees
Take prompt action if you fall victim to a scam by contacting your financial institutions, reporting to authorities, and seeking legal advice.

By staying informed and vigilant, you can avoid real estate fraud schemes and protect your investments.

Photo by David McBee: https://www.pexels.com/photo/high-angle-shot-of-suburban-neighborhood-1546168/