The FBI declared that nearly 1 billion dollars were diverted from real estate purchases transactions and wired to criminally controlled accounts in the fiscal year of 2017.
This number is massively higher than the $19 million the FBI counted in the fiscal year 2016. Real estate scams are becoming more and more popular in Massachusetts, and are specifically targeted at people during a vulnerable time.
After spending days or months searching for a home, many homeowners are exhausted, delirious, and simply want to close as soon as possible. This makes us great targets for scammers. We generally know how to take precautions when it comes to online scammers by changing our passwords, never opening links from unknown senders and upgrading your computer security system, real estate scams are an entirely different ball game in which many people don’t know how to play.
So, if you’re looking for your next home, be sure to familiarize yourself with these common real estate scams and do everything you can to avoid being the next victim.
Wire Fraud of Settlement Funds
When you are in the final stages of closing on a home, things move quickly. And it is easy for scammers to do home buyers out of their settlement monies.
Once a hacker has identified a title companies email they can glean certain details of your upcoming real estate closing. The hacker will then send an email requesting the settlement funds to be wired to a bank account immediately.
But your money is actually wired into the hacker’s account and not the title companies account. The tricky part is it makes sense and unsuspecting buyers wire the money.
Always voice verify the request with the person who is supposedly requesting the funds, to make sure the money is going to where and who it is supposed to go to.
You Place a Deposit on a Home or Rental That Isn’t Real
Have you ever said, “this is too good to be true?” Well, sometimes it’s because it is. Real estate is now in a digital age, with 44 percent of people looking for properties online first.
However, this allows scammers to take advantage of the easily manipulative Internet. In this scam, you’ll see a beautiful home online, either for sale or for rent.. It’ll be the perfect home in a nice neighborhood, with a huge backyard, and with an amazing price tag. However, this home may not even exist.
Scammers borrow the address and photos from vacant homes listed for sale and create their own fake ad. Usually when you contact these scammers, they’ll respond saying they’re out of the country and can only communicate via email. Sometimes they’ll even call you to make it seem legitimate. In the end, they’ll ask you to send a deposit or some amount of money that will hold the house for you until the owner can come back from being overseas. However, you’ll never see the home or your money again. Rental scams on Craigslist can make up almost 50% of rental listings.
To avoid being suckered into this scam, you need to do a lot of research before falling in love with your dream home. You can copy and paste the listed photos into a Reverse Google Image Search and see where else the picture has been posted. You can also do a simple search of the address and see if it is listed on any other sides. In general, you should never give any amount of money to anyone prior to seeing the inside of a home.
The Sneaky Seminar Scam
During the housing crisis, seminar scams became extremely popular among criminals trying to make some extra money. In this scheme, the scammer advertises a seminar in which potential home buyers can come and learn all the ins and outs of buying a home or saving money.
Some of these tips will actually be valid and factual tips that will reel in the victims and make them trust the criminal. At the end of the class, the scammer will then offer investment properties that are only available for a short amount of time or additional classes that will cost thousands of dollars. In the first option, home buyers will not be able to view the property or receive as much information as they normally would simply because the scammer says it is a “hot property” that will be sold soon.
The victim will then buy the property and either receive a home that is extremely flawed and beyond repair, or never receive a home at all.
Then, in the second scheme, scammers will never follow through on their additional classes and potential buyers will be out of thousands of dollars that could have been used to buy their next home.
To avoid this trap, you need to do as much research as possible on the seminar and expert that is leading the training. You should only sign up if you can find legitimate reviews from previous customers or any certifications from legitimate authority sources. Find out all you can about a class or program before you invest money in it.
Protect Your Move
So, you’ve found your perfect home and are ready to move in. You’ve avoided all the upfront real estate scams, but you’re not entirely safe.
Moving is a huge hassle and many people hire a moving company. However, sometimes you decide to go with the cheapest option rather than the one with the most credentials. Unfortunately for some homeowners, scammers are also posing as moving companies and will hold your belonging hostage until you pay more than the original quoted price or simply keep all your things and you’ll never hear from them again.
The US Department of Transportation warns people about this common scam and says that the best prevention is to do your research on each moving company before you make your decision. You should make sure that the mover is registered and insured and get your estimate in writing. This will give you evidence should you need to involve the lawyers or justice system.
The Manipulative Reverse Mortgage Scam
Reverse mortgages were created to help senior citizens but have become a tool for criminals and scammers to take advantage of them. The FBI has identified two forms of reverse mortgage schemes that are designed to steal money from home-owning seniors: equity theft and foreclosure rescue. During an equity scam, the scammer will buy a home that is in foreclosure, distressed, or abandoned. Then, they will pose as a real estate agent and sell the home to a senior citizen who takes out a reverse mortgage after 60 days of occupying the home.
After the transaction is complete, the scammer will then pocket the proceeds of the loan. In the second scheme, the scammer will find seniors who are at risk of losing their home to foreclosure. He or she will advise the homeowner to obtain a reverse mortgage to save the property. However, the scammer will then say that the senior does not qualify and should instead take out a traditional mortgage. At this point, the home and its equity will all be transferred to the scammer.
According to the Wall Street Journal, most reverse mortgage scammers are generally people that you know. These tend to be financial advisors, friends, or even a trusted family member. However, to avoid being scammed, the FBI suggests never to respond to unsolicited advertisements and be suspicious of anyone claiming that you can own a home without a down payment. You should also always seek out advice from accredited reverse mortgage advisor and never take advice from friends or family members without doing the proper research to back up their claims.
Scammers like to take advantage of people that are either vulnerable or in extremely happy places in their life. Therefore, real estate scams are becoming increasingly popular over the last couple of years. If you’re in the market for a new home, be sure to do all your research and protect yourself from these money-crushing schemes.
Scam the Scammers: Four Common Real Estate Scams You Need to Know is a guest post written by Cassie Steele for Kevin Vitali of EXIT Group One Real Estate.
If you would like to sell your home or buy a new home give me a call at 978-360-0422 and let’s get the process started.
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