Unfortunately, no matter how good you are at reading someone’s character or how tech-savvy you are, no one is immune from being the target of a real estate scam.
And while you think you’ll be able to spot a scam immediately, scammers have evolved using technology to create sophisticated deceptions that take advantage of your trust and play on your emotions so you won’t recognize a scam even when it’s staring you in the face.
In 2018, the FBI’s Internet Crime Complaint Center reported that 11,300 people were victims of real estate or rental fraud, resulting in losses of more than $149 million. While not super encouraging, the first step to prevent a scammer from walking away with thousands of your dollars is to be aware of the latest real estate scams out there.
Real estate scams can be especially insidious as the average person isn’t an expert in the home buying or selling process as there’s numerous legal details, complicated paperwork, and countless ways to negotiate fees and costs — more often than not, you need to put your trust, and finances, in the hands of a third party.
To help protect yourself and your hard-earned money, here are six real estate scams that need to be on your radar.
6 Real Estate Scams You Need to Know
1. Escrow Wire Fraud
Your first scam is escrow wire fraud, where an imposter masquerades as either your lender, your real estate agent, or someone from your escrow company providing you specific email instructions on where and how to wire your earnest money deposit, down payment, or closing costs into the escrow account.
Only, of course, once you follow the wiring directions, your money doesn’t go to the legitimate escrow account, it goes to the scammers account guaranteeing you’ll never see that money again. This can be devastating.
Before you wire any money, call your real estate agent, lender, and the escrow company to verify first, that they asked you to wire money, and second, that the instructions are valid. If everything seems above board, you can wire the payment, though be sure to ask for verification of the payment transfer.
2. Duped by Duplicated Listings
In this popular scam, swindlers will illegally steal listings and photos from legitimate housing websites, then repost these listings on another site like Craigslist at a much cheaper price using their contact information.
Seeing the low price, excited buyers will contact the scammer who is posing as the listing agent. Then, the scammer will ask for an upfront fee claiming it’s a required deposit to either hold the property or for you to even see the property.
Once you transfer the deposit, you’ll find you won’t be able to get a hold of that listing agent and your money is gone forever.
3. Fake Real Estate Lawyers
The fake real estate lawyer con is a relatively newer and rarer scam making it more difficult to spot. In this scenario, a scammer will pose as the seller’s real estate lawyer requesting you send the closing costs to a particular account actually controlled by them.
Start asking questions if you’re asked to send funds to a new or different account than previously instructed. Luckily, you can easily verify the lawyer’s identity by reaching out to the seller to authenticate the lawyer’s identity and information.
4. Title Fraud
Title fraud is truly a doozie — it involves both identity theft and stealing your money. How fun. To commit title fraud the scammer will create and forge fake documents to make it appear like they’re the property owner.
Once the property title is in their name, the scammer will then take out a new mortgage on your home, collect the cash and bail, leaving you responsible for paying off the new mortgage. To protect yourself from this possibility, take out title insurance as a safeguard.
5. The Unlicensed Realtor
Even if a realtor appears to know what they’re doing, an agent without a license or even an expired license is a huge red flag. One of the most common scams you’ll find with an unlicensed realtor is when you submit an earnest money deposit when you make an offer on a home.
What should happen is your earnest money deposit goes into either the broker’s trust account or into escrow, however, with a shady realtor your money will never make it into those accounts. Instead, the realtor will deposit your money into their own private account.
To ensure you’re working with a legitimate real estate agent, ask to see their license number, follow up with their broker, read reviews, and ask the agent for references.
6. Loan Fraud
Last but not least is loan fraud. Loan fraud scammers will come into play once you’ve finally purchased and closed on your new home. Scammers will parade as a “mortgage agency” offering you too-good-to-be-true deals on your mortgage.
For only a small upfront fee these scammers will provide incredible discounts on your monthly mortgage payments and loan rates. Naturally, once you pay the initial fee, you’ll find it difficult to contact or find the fake mortgage agency.
To prevent loan fraud, don’t accept any terms or offers from unsolicited mortgage agencies. Never hand over any bank account information or send funds unless you reach out first, do extensive background research, and know you are dealing with a reputable source like an established bank or lender.
Work With an Experienced and Legitimate Clever Partner Agent
To avoid falling victim to one of these real estate scams, work with a top-rated, experienced Clever Partner Agent who will be your advocate throughout the entire buying process and lend expert advice on how to purchase your home at a great price while protecting your identity and finances.
All Partner Agents come from major reputable brands and regional brokerages like Keller Williams, RE/MAX, and Century 21 so you know you’re working with a trusted agent.
With Clever, you’re also eligible for more savings with our Home Buyer Rebate program (in 40 states) where you’ll receive $1,000 on homes over $150,000 or up to 1% on homes over $500,000 that you can use towards closing costs. Reach out to Clever to connect with a local, experienced Partner Agent.