Top 5 Real Estate Scams...& how to protect yourself!

Real estate scams are on the rise. According to the FBI's Internet Crime Statistics Unit, these scams are up over 60%! Given the amount of money at stake in real estate transactions, this is a pretty scary statistic. The bulk of these scams involve wire transfers, which are an essential part of the purchase and sale of homes. So what are these real estate scams, AND what can you do you do to protect yourself? 

1.) Rental Scams

According to Realtor.com, over 5 million renters each year become a victim of a rental scam. So what does this look like? Usually a scammer will post a rental housing ad online (such as those you see on Craiglist and Facebook).  These ads usually showcase a home for rent that seems "too good to be true"- a picture-esque house, a home in a much sought after area, or even a very low price point. In this tight rental housing market where renters can often feel desperate, they jump on these housing opportunities. The scam comes into play when the renters transfer money (such as first months down, or their deposit) to the person posting the housing ad. The home in the ad doesn't exist (or at least the scammer has no legal claim to rent it out) and the renter has now lost their funds. Don't fall victim to this scam! Always check out a a home and sign legal documents before the transfer of money. Remember---If it's too good to be true- it probably is! 

2.) Wire Scams

This is the number one scam in real estate transaction. Both buyers and sellers are at risk for this scam. So how does this scam work? Someone contacts you pretending to be your real estate agent and provides you with the wire transfer information and encourages you to wire the money immediately in order to protect the real estate transaction. Don't do it!! Your real estate agent will never contact you and be involved in the financial piece of the transaction. This is done through the title company. If you receive one of these emails, make sure to follow up with your Realtor and Title Company to double check information. 

3.) The Bait and Switch

Sean Martin is the Owner of Denver Real Estate Firm. He perfectly explains the bait and switch. “This is one of the most common scams I’m seeing, especially in large metropolitan areas,” Martin says. “The scam artist will advertise a property for sale or rent at an unbeatable price. When you call or email to inquire about the property, they will say it has already been sold or rented, but they have others that are just as good. They will try to get you to tour the other properties, which are usually overpriced or in poor condition.” This one is easy to avoid. Only work with a reputable real estate agent or property managing company when looking for a new home. 

4.) Faking Interest

This scam targets home buyers into trying to put in a higher asking price for fear of loosing the property. This often happens when a listing agent tells the buyers agent that there has been a frenzy of activity around the home when there hasn't, in hopes that the buyers will quickly submit an offer on the home. 

5.) A Lockout Clause 

“Home sellers in financial straits are a common target of this con,” says Robin Antill, director at Leisure Buildings. “A buyer, aka the con artist, who seems to be in a hurry to close the deal may pressure you into a contract with a hold clause that bans you from selling your home to anybody else. The con artist gambles that you will pay any amount to get the deal done quickly, and uses that knowledge to his advantage by asking for admin fees or even a drop in the agreed-upon price. ” This type of scam targets home owners who are in a desperate financial situation. If a buyer is impatient and demanding- RED FLAG! Also be sure to read any contract carefully. 

The best way to protect yourself from scams is to be aware that they are out there. If it seems too good to be true, it probably is!