Buying a new home or renting a new space can be a beautiful but stressful experience for your client, especially right now, and fraud can only exacerbate that anxiety. Here are the most popular types of scams to watch out for.
Buying or renting real estate can be a fun experience for most buyers and renters. Unfortunately, some scammers use these moments to steal or scam.
According to the FBI Internet Crime Complaints Center13,638 people in the United States were victims of real estate / rental fraud in 2020 – a 16.7 percent increase over 2019. Collectively, these people have lost over $ 213 million due to these scams.
Find out about the five most popular scams below to save time, money and sanity for the buyer and yourself.
1. Mortgage Transfer Fraud
According to CoreLogic Mortgage Fraud Trends ReportIn the second quarter of 2020, it is estimated that one in 164 mortgage applications showed signs of fraud. Mortgage transfer scam is when a hacker, posing as a real estate agent, convinces a buyer to transfer closing costs to a fraudulent account.
“Fraudsters using mortgage bank transfers can try to hijack legitimate email accounts or send phishing emails to a buyer posing as a side to the deal,” said Richard Mews, real estate investor, landlord and developer. Sell with Richard, the email says.
“Never make payments until you have read everything in the small print and followed the instructions in the escrow package provided by your title company,” said Mike Thompson, CEO Hyperland, explains to potential buyers. Make sure that all transactions sent to customers are discussed and agreed upon in advance.
2. Bait and switch
Another common real estate scam is bait and substitution. “Once the contract is negotiated and signed, the ‘buyer’ will come back and tell the seller that he needs to cut the price sharply because of ‘excuses A and B,’” says Mark Mots, real estate investor at Mark is buying houses, explained in an email.
But the scam does not end there. The seller agrees to the price cut, but the “buyer” comes back with another need to cut the price three to five days before closing, usually paying the buyer a paltry 40 percent of market value. To prevent this from happening, advise your clients not to succumb to these “buyers” and their absurd demands.
3. Fake listing
According to interview according to the list of apartments, in 2018, about 43 percent of online shoppers found that “they thought the listing was fake.” The criminals list the rent, acting as agents who list seemingly legitimate properties with attractive prices. Having received a hard-wired and unusually high deposit, they quickly disappear along with the property.
“Find the owner of the record on the county website and make sure it matches who you are dealing with,” said Daniel Cabrera, owner of a real estate company. Sell my house quickly, explained in the email. “If you work with an agent, he must be able to confirm who he contracted to offer the property.”
As an agent, make sure your online ads are as legal as possible, but difficult to copy.
4. Fee for holding or deposit first
According to the list of apartments 2018 interviewMore than 5 million people have lost money due to rental fraud. This scam is common with rentals and costs potential tenants a lot of money. The agent will ask for a seat retention fee, but these paid fees do not apply where they should be.
“The realtor is asking for a commission, but the money is not going into the buyer’s deposit or building the house,” said Tyler Forte, co-founder and CEO. Felix Home, said in an email. This is a scam and contradicts the Realtor. Moral Code…
5. Hidden home defects
Some real estate agents are in a rush to sell certain properties, especially if they are severely damaged, such as termite or mold. The agent sometimes hides this damage in order to hide it so that the buyer can deal with it himself.
In this hot, fast-paced market, there is a need refuse checks in general – a big risk. But to help Your customers are avoiding this scam, do a background check.
As of 2019 report According to Repair Pricer, home buyers are given 17 to three days to hire a home inspector, conduct an inspection, and make a decision. “Get a referral from a trusted surveyor and hire one to inspect the property,” Thompson said.
Buying a new home or renting a new space can be a beautiful yet stressful experience for your client, and fraud can only exacerbate that anxiety. The best rules to remember to avoid them is to notice the red flags and remember that if it seems wrong, it probably isn’t.
Jason D. Green is an international real estate consultant in Greene Luxury Group | ONE Sotheby’s International Realty in South Florida. Contact him at Facebook or Instagram…