Whether you are buying, selling or renting a property, real estate transactions can be among the most stressful events in your life. Add to it the epidemic of real estate scams on the news constantly and it is no wonder why! In addition to explanations of four of today’s most common real estate scams, we have also compiled some tips to avoid falling victim to them.
Avoid These Real Estate Scams
Would-be scammers are more sophisticated than ever. Some of these scams are so sophisticated, even the savviest among us might be potential targets. Before engaging in any real estate transaction, keep these stories and tips in the back of your mind:
Fraudulent requests for wire transfers
With the increasingly digital nature of real estate, thieves are finding more and more opportunities to defraud people of huge sums of money. By compromising computer systems of any party to the transaction — a realtor, bank, etc, — a criminal can impersonate them in an email. They’ll often send the buyer instructions to wire down payment and closing money. Some of the emails are so convincing that in one case, a skeptical buyer called her realtor to be sure that the change in wire transfer instructions from her title company was accurate. The realtor “simply apologized for the hassle.”
While that particular story is from a woman in San Antonio, it could happen anywhere. Phoenix homebuyers should be vigilant. Verify everything by phone if you need to. Be extra suspicious of last-minute changes to your instructions. And ask about more secure options for payment like providing a cashier’s check instead of online payments. The hassle is a small price to pay when you consider the headache (and heartache) that would follow falling victim to this type of scam — especially if you are on the brink of buying your dream home.
Fraud rental properties
You’ve found it. It is the perfect rental property, there in that ad on Craigslist. And the rent is so reasonable as to seem like it can’t be true. When you eagerly call to inquire, the scammer (AKA supposed listing agent or potential landlord) makes up excuses for not being able to give you a full tour (“I’m out of town!”). Seems plausible.
They might even invite you to take a look around the outside of the property until they are able to let you in to give it a full once over. But to take the ad off of Craigslist, they really need you to send them a security deposit. It is a great listing and there are sure to be plenty of others interested. You can’t miss this opportunity! Maybe the person on the other end of the phone decides to cut you a deal and give you dibs in exchange for half of the deposit. Once you have sent the money, you will never hear from them again.
In all likelihood, the scammer may not even own the property. They probably just scraped photos of it from another existing or expired listing for the property. If they happened to know that it is vacant at the time, all the better. Who would stop you from walking the exterior?
This is, sadly, a fairly common scam. So how should you avoid it? One way is to browse for listings on more credible sites. Most homes are listed on the MLS, which is the main real estate listing database licensed realtors have access to. Further, professional property management companies may not always be able to make same-day appointments with you, but they should not have listings on the market without staff available to show the property for long stretches of time. You should also check the county assessor’s website to verify who owns the property in question.
Lastly, think about whether or not any listing is worth dealing with the type of landlord who would expect you to pay for a place you have not even stepped foot into. Even if it turns out that the whole thing is not a scam, what other weird demands might they have of you once you are stuck in a lease? But do not let a fancy office building or tons of listings fool you, either …
Do you really own your home?
If you live in the Phoenix area, you may have already heard about this particular scam. Francisco Aguirre, the owner of multiple real estate companies, has admitted to swindling 40 different families who thought that they were purchasing their homes from one of his companies, Montecristo Properties LLC. Unbeknown to the families, Aguirre instead took out hard money loans against their properties and pocketed the “down payment” and “mortgage” payments the unwitting victims sent to his office on a monthly basis. That is, until their homes fell into foreclosure and Aguirre was the target of court action taken by Arizona’s attorney general.
To keep something like this from happening to you, educate yourself before buying a home. That way you will know what the documents (like your deed) should look like. Partner with a realtor you like and trust. And take note of how eager your realtor is to answer any questions you may have regarding any aspect of your real estate transaction.
“If I can’t sell your home, I’ll buy it myself!”
You have likely heard a realtor make this promise in more than one advertisement. But here’s the thing: this is just a tactic to get new clients. The realtor in question will likely add a ton of stipulations like mandatory price drops on your property. They might dictate shockingly low asking prices. You might unwittingly agree to purchase your new home with them and not realize it until they’ve sucked you in.
Always partner with a realtor who is upfront and honest about what you can expect when listing a property. A realtor should be forthright with advice about things like listing prices. But you should never feel forced into a situation you are uncomfortable with. This is especially true with an investment as big and important as real estate. Keep in mind that a realtor selling your home should not entitle them to become your buyer’s agent too. That is a privilege that should be earned by a realtor who provides an outstanding home listing experience for you.
Think you might have a real estate scam on your hands? Want a second opinion? Want to partner with a legitimate, reputable real estate agency from the beginning? Whatever the circumstance, give us a call.