Real Estate Scams & How To Avoid Them!

Top Real Estate Scams to Watch Out for in 2024 (And How to Avoid Them)

The real estate market is constantly evolving, and while there are exciting opportunities, there are also a growing number of scams targeting home buyers, sellers, and investors. As technology advances and the housing market continues to be competitive, scammers are finding new ways to exploit unsuspecting individuals.

In 2024, it’s crucial to stay informed and vigilant to avoid falling victim to real estate scams. Below are some of the top scams to be aware of and tips on how to avoid them.

1. Wire Fraud Scam

The Scam:
Wire fraud is one of the most dangerous real estate scams, and it’s on the rise. Scammers hack into the email accounts of real estate agents, lenders, or title companies and monitor the transaction process. At the last moment, they send an email that looks legitimate, instructing the buyer to wire the closing funds to a fraudulent account.

How to Avoid It:

Never rely solely on email for wiring instructions. Always verify the details in person or over the phone using a trusted number.
Confirm with your real estate agent or title company before wiring any money.
Be wary of last-minute changes to payment instructions or a sense of urgency in emails.

2. Title Fraud (Deed Theft)

The Scam:
Title fraud occurs when a scammer fraudulently transfers the ownership of a property into their own name. They may use forged documents to obtain loans against the property or sell the home to an unsuspecting buyer. The original homeowner may not know their property has been stolen until they receive notices of foreclosure or find out their home has been sold.

How to Avoid It:

Regularly monitor your property’s deed and ownership status with your local government office or use a title monitoring service.
Purchase title insurance to protect yourself in the event of title fraud.
Be cautious of unsolicited offers to buy your home or any unfamiliar documents requiring your signature.

3. Rental Scams

The Scam:
In rental scams, fraudsters pose as landlords or property managers to collect rent deposits and personal information from potential tenants. They may advertise a rental property that they don’t own or have no right to rent, and after collecting payments, they disappear, leaving the tenant with no home and no money.

How to Avoid It:

Always verify the identity of the landlord or property management company before making any payments.
Avoid paying with cash or wire transfers. Use secure payment methods like checks or credit cards.
Be cautious of rental listings with prices that seem too good to be true.
Visit the property in person before signing any contracts or making a deposit.

4. Fake Real Estate Investment Opportunities

The Scam:
Scammers often target real estate investors with fraudulent investment opportunities. These scams promise high returns for little risk and usually involve fake properties, phantom developments, or Ponzi schemes. Once investors hand over their money, the scammer disappears or the “investment” turns out to be worthless.

How to Avoid It:

Do thorough research on the investment and the individuals or companies involved.
Verify the legitimacy of the property and its ownership with a trusted real estate professional or title company.
Be wary of investment offers that guarantee unusually high returns or require immediate decisions.
Consult with a financial advisor before committing to any large investments.

5. Foreclosure Relief Scams

The Scam:
In foreclosure relief scams, con artists target homeowners who are struggling to keep up with mortgage payments. These scammers promise to help negotiate with lenders or stop foreclosure in exchange for upfront fees. However, after collecting the money, they do nothing to help and often leave the homeowner in a worse financial situation.

How to Avoid It:

Never pay an upfront fee for foreclosure assistance. In the U.S., it’s illegal for companies to collect fees before providing loan modification or foreclosure relief services.
Work with a HUD-approved housing counselor or directly with your mortgage lender if you’re facing foreclosure.
Be wary of unsolicited offers to “save” your home from foreclosure.

6. Bait-and-Switch Scam

The Scam:
In this classic scam, a buyer or investor is lured in by a seemingly great deal on a property. However, when it comes time to sign the contract, the terms are changed, or the property is switched to one that is far less valuable. This scam can also occur in financing, where a lender offers favorable loan terms upfront, but the final terms are much worse.

How to Avoid It:

Always review contracts thoroughly before signing and get legal advice if needed.
Work with a reputable real estate agent, lawyer, or lender.
Be skeptical of deals that seem too good to be true, especially if the terms change unexpectedly.

7. Fake Mortgage Lenders

The Scam:
Fake mortgage lenders prey on borrowers who are looking for financing to purchase a home or refinance their existing mortgage. They may offer loans with unrealistically low interest rates or fees, only to take your money through fake application fees, closing costs, or even steal your identity.

How to Avoid It:

Verify the legitimacy of the mortgage lender by checking with the Better Business Bureau or the Nationwide Multistate Licensing System (NMLS).
Be cautious of lenders who pressure you into signing quickly or ask for fees upfront.
Always compare loan offers from multiple reputable lenders.

8. Escrow Scams

The Scam:
Escrow scams happen when a scammer impersonates the escrow company handling your real estate transaction. They provide false instructions for wiring closing funds or collecting a deposit and then vanish once the money has been sent.

How to Avoid It:

Always verify wiring instructions with the escrow officer or title company using a trusted phone number.
Be suspicious of any last-minute changes to the escrow process or payment instructions.
Work only with licensed and reputable escrow and title companies.

9. Fraudulent Moving Companies

The Scam:
After a home purchase, some buyers fall victim to fraudulent moving companies. These scams involve moving companies that offer low quotes but then increase the price drastically once your belongings are loaded, or they may hold your items hostage until you pay inflated fees.

How to Avoid It:

Research moving companies thoroughly, checking online reviews and verifying their licensing with the Federal Motor Carrier Safety Administration (FMCSA).
Get written estimates from multiple moving companies and ensure they provide a binding estimate.
Avoid companies that demand large deposits upfront.

10. Home Improvement Scams

The Scam:
Home improvement scams occur when unscrupulous contractors target homeowners, especially those selling their homes, and offer to do repair work at a low cost. They may take a deposit or payment in full and then either do subpar work or disappear without completing the job.

How to Avoid It:

Always get multiple quotes for home improvement work and verify the contractor’s credentials.
Don’t pay the full amount upfront; instead, set up a payment schedule based on project milestones.
Use a contract that outlines the scope of work, materials, costs, and deadlines.

Conclusion: Stay Informed and Vigilant

With real estate scams evolving in 2024, it’s more important than ever to stay informed and vigilant. Whether you’re buying, selling, or investing, working with reputable professionals and verifying information can protect you from fraud. Always trust your instincts and consult experts when something feels off.

If you have any concerns about potential scams or need advice during a real estate transaction, reach out to a trusted real estate agent, attorney, or financial advisor who can help guide you through the process safely.