In the world of real estate transactions, where big money is on the line, staying alert is crucial to avoid real estate scams. From fake rentals to wire fraud, scammers are always finding new ways to trick buyers, sellers, and renters. In today’s growing landscape of technology and AI, it is becoming increasingly easy to create documents that are hard to recognize as being forged.
According to Realtor.com, “the FBI’s 2023 Internet Crime Report tracked 9,521 complaints of cyber-related real estate and rental fraud last year, with losses totaling more than $145 million.” Compared to the roughly 4 million properties sold last year, the majority of transactions occur without incidence. However, the risks are there, so let’s break down our top 5 common scams and easy ways to protect yourself from them.
Rental Scams: Beware of Unrealistic Deals
Rental scams have become increasingly sophisticated, with fake advertisements luring in unsuspecting tenants with promises of unrealistically low rents and attractive property features. These scams often involve requests for wire transfers or upfront payments before the potential tenant has even viewed the property in person. To protect yourself, be wary of rental listings that seem too good to be true and always insist on viewing the property before making any payments. Avoid working with landlords or agents who pressure you to wire money sight unseen.
Scammers are constantly evolving, and they make use of the latest technology in order to make their “listing” look authentic. We are seeing more and more instances where a scammer will scope out vacant properties, then copy the photos and list it for rent on places like Facebook MarketPlace or Craigslist. They will then charge unsuspecting renters an application fee and background check, sometimes even going so far as getting them to sign a lease and hand over the first month’s rent and security deposit. The creep then goes off to repeat the process with new victims, leaving the poor person they scammed out of their money, and sometimes even a place to live.
There are a few things you can do to protect yourself from a rental scammer. If you are looking to rent, using an agent is the best way to ensure you are looking at properties that are legitimately available. If you choose to go about it on your own, do your research before making a call about a property. Most landlords are putting their properties on the MLS to maximize their potential tenant pool. If you see a property posted on Craigslist, check other rental sites to see if it appears on them as well. If you notice that the property is listed with an agent and not Nameless Poster, please alert the agent! Not only can they get you into the property to take a look, you may be saving an owner the nightmare of dealing with a scammer!
Wire Scams: Verify Before You Transfer
Real estate wire scams involve fraudulent individuals posing as legitimate title company/bank representatives, tricking victims into wiring money to fake accounts. These scams can occur during various stages of a real estate transaction, from earnest money deposits to closing payments. The payments are then bounced around from one off-shore bank to another, making them virtually impossible to trace.
To safeguard against wire fraud, always verify the legitimacy of any request for money transfer by carefully reading the wiring instructions sent to you by your title company. All requests should be made through a secure line of communication, and not via regular email. Never fulfill wire transfer requests solely based on email or phone communication.
Always verify any last minute changes directly with the title company. This is a good time for scammers to swoop in and strike. Everyone is trying to rush to the finish line, and they hope they won’t get caught trying to sneak in. Use the lines of communication you have already established with them and do not call any numbers provided with the request, and let your title company know that you have received a questionable request.
We recently heard about someone having their mortgage payoff wired to a fraudulent account. Long story short, the title company received a change in routing number at the very last minute, and failed to do their due diligence and verify with their client before making the change. Fortunately, the fault lies squarely on the shoulders of the title company, whose insurance will cover the damages, so the seller will not be out of pocket for any of the expense. It’s still just a hassle to have to deal with!
You will hear us say this over and over again – ALWAYS work with a reputable lender and title company! We cannot stress the importance of having a team of solid professionals on your side when either buying or selling a home. Do your research and make sure everyone you work with is above-board.
Deed/Title Fraud: Protect Your Rights
When you purchase your home, your title company will complete a search to make sure that no one else has an ownership interest in the property. Purchase title insurance to protect yourself from anyone making claims of property rights after you settle.
Scammers may fraudulently transfer property deeds and/or titles into their name and then take out mortgages or sell the property without the owner’s knowledge. Vacation homes, abandoned homes, and unoccupied homes are the most susceptible to this type of scam. Often the first sign of trouble is receiving a notice that water/tax/mortgage bills haven’t been paid. Keep a close eye on your finances, and make sure you don’t have any unexpected changes.
Homeowners can protect themselves by monitoring their property titles regularly and promptly reporting any suspicious activity to the authorities. Check your credit report on an annual basis, at the very least, looking for any actions taken in your name that you did not initiate. Ask your title company for resources you can use to monitor the status of your title and deed. Again, title insurance will offer you some protection against these issues, but it is always best to stay vigilant and catch any issues early.
Squatters – Harder to Remove Than Bedbugs
If you have a house for sale and it is vacant, make sure you are stopping by frequently to check on the property. Make sure your sign and lockbox are in place and there is no evidence of someone entering without an appointment. Just driving by is not enough! Check that all doors and windows remain securely locked and there is no evidence that they have been tampered with. Having security cameras in place, motion sensor outdoor lights, and lights on timers inside can help deter potential squatters.
If the house is staged, make sure things are as you left them. We once showed a house and noticed that some of the table settings were knocked over, and when we went upstairs, the bedding was also askew. Then we went into the basement and saw that the back door was kicked in. That sure got us out of the house fast and on the phone with the listing agent and police!
Besides breaking in to steal items and building materials (think copper pipes and aluminum wiring), folks also break in to have a place to party, and/or to live. We recently got a call from an inspector who entered a vacant property and came across a man in the basement just hanging out and smoking pot. The inspector was able to talk the man into leaving, then promptly secured the door that had been broken open.
This was a lucky break, since squatters do have rights under the law in Maryland. Fortunately they need to occupy the property for 21 years before they can file to gain legal ownership, but once they get in, they are hard to get out. You may have heard the term “cash for keys” where the owner will pay the squatter a couple thousand bucks to vacate the property. The legal route to take is to send them a written notice to vacate, then file a lawsuit to evict. This can become a long and drawn out process, so time is of the essence!
One other tip for selling vacant properties is to monitor FSBO sites, as well as Craigslist and FB MarketPlace. Scammers can create fake listings on these sites, then try to “sell” or “rent” the property. Once someone moves in, you could find yourself in the situation of having a squatter; they may feel they have a right to live in the home, since they signed documents and made a payment.
Home Improvement Scams: We All Have One of These Stories
Fraudulent contractors may offer home improvement services at low prices, only to perform shoddy work or disappear after receiving payment. Make sure you reach out to several different contractors and obtain quotes and time frames from all of them; their bids should all be fairly similar. Those that come in too high or too low can be excluded, and you can do a deeper investigation into your remaining options.
Homeowners should research contractors thoroughly, check references, ask for their MHIC number and check that it is active, and obtain written contracts detailing the scope of work and payment terms. Don’t just take their word for it! Ask to speak to former clients, then make the calls. Ask them about the contractor’s professionalism, and quality of work. You can also do a check on the Better Business Bureau to see if they have an A+ rating.
Once you select your contractor, carefully read over any contract or agreement before you sign. Make sure all terms and conditions are to your liking. Most legit companies will ask for a downpayment, partial payments throughout the course of the project (depending on how long it is), then the balance at the end. Be wary of anyone who asks for the entire sum upfront!
Even though they are the professionals, you will still want to oversee the project and hold them to their deadlines and budgets. Make sure the materials they are using are what you asked for and that they haven’t subbed out cheaper materials. Speak up if things aren’t being done to your liking!
Final Word
Staying informed, conducting thorough due diligence, and seeking professional guidance are crucial in safeguarding your real estate transactions against scams. Trust your instincts, be cautious of overly tempting deals, and prioritize the security of your financial interests.
Having a trusted partner like Mr. Lister Realty can significantly enhance your real estate journey. With integrity and expertise, Mr. Lister Realty provides valuable insights and strategies to safeguard your interests throughout your entire journey of homeownership – from buying, to living in the property, to selling it when the time comes. With our assistance, you can navigate the complexities of real estate transactions with confidence, knowing that your financial well-being is in capable hands.