Scams involving real estate transactions are more common than you think.
When you’re trying to sell your home, there’s often a sense of pressure that comes with it. The urge to rush into things when you find an ideal buyer may be strong in an increasingly competitive real estate market. Sadly, scam artists are notorious for taking advantage of those eager sellers – so don’t let them take advantage of you.
Even when everything seems to be running smoothly, unscrupulous individuals are still hard at work looking for ways to exploit unsuspecting people for their money. These criminals become even more active and dangerous in moments of vulnerability or high stress.
As more and more people turn to expedient all-cash home-buying services, the danger of fraudulent schemes rises in tandem. Wire transfer scams could leave your hard-earned money disappearing into an unknown abyss if you’re not careful. With such a hefty sum of money at stake from the sale of a home, it’s no surprise that real estate scams are on the rise.
In this article, you’ll be guided through the most common house purchase scams and their cautionary signs so that you can make sure your money stays safe when selling a home. We will cover how to recognize each scam’s warning signs and tips for avoiding them altogether.
Spotting a House Buying Scam
If you start recognizing these red flags during any home-buying engagement, mainly if more than one shows up, it’s time to take your leave – and fast.
Lack of References
Trusted investors will always have a reputable network of agents, contractors, and sellers that can back up their claims. Suppose the investor can’t or won’t show you these references. In that case, they’re likely hoping to trick you.
No internet presence
For most of us, it’s nearly impossible to go through life without having some form of online presence – a social media profile or a website. If there is no traceable evidence about someone on the internet, this should raise colossal alarm bells.
A legitimate real estate investor will have a phone number and an online presence.
The offer is over the asking price
In specific markets, people pay more for houses than the list price; however, this does not mean buyers are excessively lavish and pay way over market value. Suppose an offer is substantially higher than fair market value, and there is no proof of funds. In that case, it might be a scammer making their move.
Be wary if you receive a request for a refund within two weeks of purchase – this could be a sign of an impending scam.
Even if it has been a short time, beware; some banks process checks multiple times before telling you it has bounced. There are many ways scammers can take advantage of your payment information and bank account details, so don’t let yourself become their target.
Sleazy sales tactics
Cash buyers typically bombard you with calls, emails, and texts to pressure you into making a rash decision and selling your house fast. It’s their goal to suppress your power of reason by flooding you with too much information before you can think it through.
Selling a home is an expensive transaction that includes safeguards to prevent fraud. If a prospective buyer displays overtly unprofessional behavior, such as verbal abuse or sending offensive emails, be wary – they might attempt to hassle you. Do not let their harassing tactics affect your decision-making skills.
A crucial aspect of legitimate real estate transactions is that money never travels directly between buyers and sellers. Instead, escrow accounts maintained by a broker or title agent hold the cash.
How to Avoid Being Scammed
In times of financial strain, like buying or refinancing a home, it’s essential to trust your instincts and stay alert. If warning bells are ringing in your head while dealing with someone, they might be trying to scam you. Don’t let yourself get taken advantage of; if something appears shady, then most likely it is.
Know Who You’re Negotiating With
When you hear a proposal that’s so incredible that it sounds too good to be true, resist the urge, and don’t get your hopes up immediately. Take the time to research further; read online reviews about the buyer, request testimonials from other customers they’ve dealt with in the past, and consult with your local Better Business Bureau before committing.
If you ever experience your real estate agent’s lack of performance or suspect any suspicious behavior, don’t hesitate to find a new one. Obtaining referrals from family and friends can be beneficial in this situation. Or else, you may read online reviews and confirm if the potential agent is duly licensed and affiliated with a reputable organization.
Protect yourself from potential scams by speaking directly to a real person. Don’t simply click on links or respond to emails – check in with the initial contact you received and get instructions straight from them. Request that they call you back for extra verification of details, too, so everything is clear about what’s asked of you.
Research House Buying Process
Do not blindly trust anyone regarding real estate transactions; ensure you only work with those who have earned your confidence. If someone contacts you without warning, take the time to check their credentials for authenticity. You should never succumb to pressure and pay for a service before it is provided, especially if the provider is pressuring you.
If you’re in the middle of selling a home and receive last-minute news, verify its authenticity before making any decisions. Acting carelessly or out of emotion could have drastic consequences that are difficult to undo.
Keep Your Information Safe
Guarding your financial information and banking accounts is of utmost importance. Staying aware is the best recourse when safeguarding yourself against con artists.
To protect yourself, only provide personal and financial details to people you trust. Additionally, be wary of emails or links that request such information – they could potentially lead to a scam.
Types of House Buying Scams to Look Out For
Be on guard for phony or deceptive buyers looking to exploit your home sale. These scams may take various forms, but their motives are always nefarious and malicious.
Cash Offer On House Scam
Be vigilant of the overly eager buyer. Showing enthusiasm for your home is one thing. A prospective buyer appears too keen on remitting earnest money or submitting a sizeable down payment without seeing the property in person. In that case, that should serve as an indication of potential fraudulence.
We Pay Cash For Houses Scam
Homeowners in dire situations are prime targets for scammers who promise a quick sale for cash. The homeowner is convinced to sign over the deed before receiving their mortgage payout, thus giving control of the property to the scammer. these home buying companies use high-pressure sales tactics.
Unfortunately, this leaves you without rights to your own home yet still liable for paying the mortgage – an unfortunate but real consequence of falling victim to this deception.
Watch for cheap-looking signs on telephone poles with phrases like:
- we buy houses
- we buy houses for cash
- cash for homes
- cash home buyers
- sell your home for fast cash
- we buy homes
They promise to buy your house as-is and sight unseen but are often looking to scam you. There are legitimate cash buyers and iBuyers; you need to do due diligence and find reputable companies to work with.
Wire Transfer Scam
You receive a request from somebody wishing to purchase your home without seeing it. The potential buyers provide you with financial documents, contact information, and the name of their lender. They may suggest that you employ the services of a real estate attorney – everything seems reliable.
Subsequently, you’re sent a cashier’s check for tens of thousands of dollars which is more than the agreed-upon amount. The trickster buyer requests you to wire them back the surplus, and soon after, your bank notifies you that their check was counterfeit.
Foreclosure Help Scam
Homeowners struggling to make mortgage payments should be aware of foreclosure scams that target those in need. Promising the homeowner a loan modification or foreclosure prevention, these scammers request payment upfront before doing any work. Then they leave the distressed homeowner with an even more significant financial burden and no assistance.
Deed Forgery Scam
Property fraud is a common scam that targets homeowners with significant home equity. Here’s how it works: scammers present phony deeds of the property to a notary, record the deed at the county recorder and then take out a loan against your home for their financial gain.
Visualize placing your house for sale, finding a customer, going all the way to closing, and then learning that somebody else has lodged a claim on your property through a forged deed.
What to do if You’re Scammed When Selling Your House
Unfortunately, the lack of complaints filed by real estate and rental scam victims allows these scammers to keep preying on unknowing homeowners, homebuyers, and renters. Shame often keeps people from speaking out about their experiences, making it difficult for authorities to clamp down on this continuing problem.
Better Business Bureau
In addition, filing a complaint with the BBB’s Scam Tracker allows you to alert others about possible fraudulent activities.
If fraud has impacted you, simply filing a complaint may not be enough to protect yourself, especially if you’ve shared your personal information.
IdentityTheft.gov is the federal government’s secure online platform that assists people concerned about their identity due to someone else accessing it without permission.
State Consumer Protection Offices
If you’re looking for a better chance to relay your experience to someone local, you can also reach out to your state’s consumer protection agency.
Federal Trade Commission (FTC)
If you think you are the target of a scam, it is essential to take steps and alert authorities. Start by filing an online report with the Federal Trade Commission (FTC).
Your information will be added to their database, accessed by local, state, and federal law enforcement agencies striving to protect consumers from fraud or misuse.
Home sellers should remain vigilant to avoid other types of scams. Even though we have outlined some of the common ones here, if you ever sense something is off during your dealings with a buyer, trust your intuition and take action immediately. Trustworthy buyers won’t use pushy tactics that pressure you into signing on the dotted line.
Taking advantage of unsuspecting homeowners, scammers recognize that many individuals only experience buying and selling a home once or twice in their lifetime. Thus, they don’t have the experience to identify scams.
To protect yourself from these fraudsters, arm yourself with all the information about these red flags, so you know how to identify potential scams.