From title fraud to fake investment seminars and home Improvement scams, there are several things to watch out for. Here are some of the most common ones.
Scams and fraud investments exist just about everywhere these days, from the emails which claim to be from a long lost relative of a prince to the larger-scale Wall Street investment scams. In the world of real estate, there are scams that every buyer needs to be aware of. Protecting yourself from these scams can require more vigilance than you would think. Here are five real estate scams and how to spot them.
Title Company Fraud
Title fraud is possibly the one with the worst consequences. The scam starts with identity theft, the scammer poses as the real property owner and using forged documents transfers the property to his name and even gets a mortgage on the house. After he secures a mortgage, the scammer flees with the cash leaving the real owner pay for future payments. These types of scammers tend to prefer homes that don’t have existing mortgages and people who are less likely to know about identity theft. Homeowners who rent out their homes or have no mortgage on it are more likely to become targets of this fraud. The best way to be protected from this scam is to take insurance that provides coverage against title fraud through title insurance.
Spotting this fraud can be difficult, but the protection of personal data is critical in preventing such scams. Homeowners should take extra precaution while protecting their documents and identity-related paperwork and possibly look into title insurance.
Remember that identity theft is not something that can only be committed by strangers. There have been instances where spouses have mortgaged the property without telling their spouse. It could also be a lawyer or notary who is committing the crime of absconding with the funds.
Foreclosure and home-equity fraud
This type of real estate fraud usually takes advantage of a property owner who is short on the mortgage; there are two common ways scammers exploit a home owner’s need for cash. In a foreclosure fraud, the owner of the property is approached by a scammer who offers a loan to cover the mortgage. This is the real-estate version of the email scam. Scammer claim to charge an initial fee for processing the loan and later make the owners sign an agreement to transfer the property title. The scammer then remortgages the house and makes away with the money, the property owner is still left with his original mortgage, but now he has no home. This is one of the most popular types of mortgage fraud.
Online property rental and sales scams
Where most online property advertisements are real, there are scammers there too. They advertise the property at low rates in online sites such as Craigslist and then demand the payment for the rental either online or at another place. The scam is that the property does not belong to them in reality; they are merely impersonating the owner and claiming to rent out the house. When the renters arrive at the property, they realise they were being duped all along. The best to spot a scam is to remember that if something looks too good to be true, it probably is. Another tip is to rely on the more sought after real estate rental websites.
Property investment seminars and courses
Attending seminars and courses on property investment can be a great way to learn more, but here too, you could get scammed. While these are not as bad as the other scams we have talked about, these scams could make you spend substantial amounts of money without providing a quality return on your investment.
While many good real estate experts could have enjoyable quality seminars, it is better to err on the side of caution while picking a workshop to attend, especially if you are paying a steep charge. Try to stay away from seminars that suggest you make high-risk investments.
Home Improvement Scams
These are lower-end scams but bad nonetheless. These scammers claim they can work for cheap rates because they have material leftover from a previous job. An easy way to spot a home improvement scams is the high-pressure sales tactics they use.
The best way to stay away from being scammed is to not pay in cash for home repairs upfront and always to hire someone who has a recommendation from a friend or neighbour.