Watch out for These Real Estate Scams
Home values are finally on the rise, according to the Zillow Home Value Index—they reached a national average of $162,100 in August, up from the national average of $152,00 a year ago. Sadly, real estate scams are flourishing as well, fueled in part by the anonymity scam artists find online. Before you jump into an improving market, be wary of these real estate scams:
The Phantom Listing
According to NeighborWorks America, 35,000 consumers made complaints of rental property or real estate fraud since 2009, including 6,000 in the first half of 2013.
One of the most common scams is the phantom rental scam, where a scam artist rents you a property that either doesn’t exist or is not really for rent. The scam artist will hijack a real listing from a property website like Craigslist or Zillow and insert their contact information. Or, he or she creates a completely phony listing. Then the scammer reposts the listing on another site in hopes of renting to unsuspecting tenants. When it comes time to occupy the property, the would-be renter finds out the rental isn’t real.
The phony landlord communicates by email or text only, makes excuses for not meeting you in person and insists on receiving the rental down payment up front. They also offer to mail the keys once they receive your deposit.
To avoid this scam, never rent a property without first meeting your landlord. Also, never sign any document solely over the Internet; always do it in person.
Recent foreclosure statistics posted by the FDIC show that every quarter, 250,000 homes go into foreclosure. Scam artists have found a way to prey on them.
The scam artist poses as an investor or foreclosure specialist offering a service to get the homeowner out of foreclosure. He or she asks for an upfront fee for services and tells the property owners to sign their deed over. The scam artist also tells the homeowners to make monthly payments to him (or her), not the bank. The scammer often takes a second mortgage on the property, pockets it all and skips town.
This scam is often the result of phishing, which is when a scam artist poses online as an authority to get sensitive financial information from an unsuspecting person. Often, these con artists use your information to set up credit cards or other accounts. Never pay any upfront fees to foreclosure specialists or investors, and do not sign any paperwork before an attorney properly reviews it. Never give out sensitive information over email or the phone, either.
Another brutal scam is the phony loan audit. An auditor offers to go over your mortgage documents, usually for an advanced fee, in hopes of finding an instance where your lender is not complying with financing laws.
The con artist then takes ownership of the home by tricking the owner into signing it over to them. Or, he’ll take ownership and rent the home back to the owner with the option to buy it back later. They take your payments and leave you in a lurch with the bank.
Never pay any fees for consulting or foreclosure reviews, and always consult a lawyer before signing any loan or title documents.
Guest blogger, MaryLou Nielson, is a
real estate agent and mother
of two from Georgia.