How to Avoid The Most Common Real Estate Scams

How to Avoid The Most Common Real Estate Scams

It's happened to all of us at some point. We're looking for a new house or apartment, and we come across a fantastic deal that seems too good to be true. Unfortunately, in real estate, this is often the case. There are all sorts of scams out there waiting to take advantage of unsuspecting buyers and investors. Here are just a few of the most common ones.

1. The bait and switch

One of the most common scams wherein scammer will advertise a property at an unbeatable price to lure in potential buyers in this scheme. Once the buyers are interested, the scammer will reveal that the property is unavailable and try to sell them a different, more expensive property.

2. Equity stripping

Equity stripping is a type of real estate scam in which the owner of a property takes out a series of loans against the equity in the property, leaving the borrower with little or no equity. 

3. Title washing

In the title washing scam, the scammer will find a property with a clear title but is in disrepair. Then will make some cosmetic repairs and put the property up for sale at an inflated price. 

4. Property flipping

Property flipping is a  scam wherein the scammer will buy a property, at a low price, and then make some cosmetic improvements. They will then list the property for sale at a much higher price, often using false or exaggerated claims about its condition. 

5. Rent to own schemes

In these scams, fraudsters will advertise a property for rent, often at an inflated price, and then require the tenants to sign a lease with an option to buy the property. These leases typically contain clauses that make it very difficult for the tenant to purchase the property, such as high prices or unrealistic down payment requirements which end up paying much more than they had rented the property from the beginning.

6. Phantom listings

Phantom listing is a scam wherein a scammer will list a property for sale at a low price, and then disappear once they have collected a deposit from an unsuspecting buyer.

7. The rental scam

The scammer will list a property for rent, usually at a meager price, and when potential tenants contact them, they will request a security deposit and the first month's rent in advance only to find that the scammer does not own the property and that they have no legal right to live there.

8. Foreclosure rescue scams

In this scam, a con artist will pose as a real estate investor or foreclosure specialist and offer to "rescue" homeowners facing foreclosure. The scammer will ask for a hefty upfront fee but will do little or nothing to help the homeowner. In some cases, a scammer may abandon the property after taking the fee, leaving the homeowner in an even worse situation. 

9. The "short sale" scam

In this scheme, a fraudster will list a property for sale significantly lower than its market value. to attract buyers, who are then pressured to make an offer immediately. The fraudster often claims that the property is in danger of being foreclosed and needs to sell quickly. 

10. The "title loan" scam

A title loan scam promised a loan for a certain amount of money, but the buyer has to put up their house or car as collateral. The problem is that the loan amount is usually far less than the collateral value, with exorbitant interest rates and fees so if a buyer can't pay back the loan, they could lose their home or vehicle.

 As with any investment, it's essential to be aware of the risks involved to make informed decisions. If you have any questions or concerns about a property deal, please do not hesitate to contact us for further assistance. We want to help you protect your hard-earned money and ensure that you don't become a victim of one of these common real estate scams.