As a real estate buyer or seller, if you’ve done your homework and you’re prepared you may feel there’s no way you could be the target of a scam. Even the most proactive and prepared sellers and buyers can fall victim to certain scams, however.
Buying or selling a home is one of the biggest transactions you might ever make in your life, so it makes sense to be vigilant and on-guard throughout the process.
What are some common scams to be aware of?
Escrow Wire Fraud
When you’re buying or selling a home, you will likely work with an escrow company. Scammers who pose as a representative from the company may fraudulently contact you and give you instructions on where to wire funds, however.
With escrow wire fraud, the criminals might create a website that looks very similar to the site of the company you’re working with. There are other “spoofing” techniques scammers can use, as is the case with other phishing attacks. For example, they might create phone numbers or emails that are very similar to those of the actual escrow company you’re working with, but perhaps with one letter or number difference.
If you’re the victim of one of these scams, the criminals can then take the funds out of the account you wired it to, and there are limited options to recover those funds.
To avoid this, go through the original documents your lender gave you and only contact those phone numbers or email addresses. Don’t click links or email addresses you receive, or send money online until you verify.
Another scam that’s becoming more common occurs when someone posing as a landlord advertises a property for rent. They’ll create a lease and receive a down payment from a renter. They’ll then give them keys, but the problem is they don’t own the home.
The renter is the primary victim in this situation as they’ve lost their deposit and perhaps other fees, but it can be extremely difficult for a homeowner to go through the steps to get them out.
Moving Company Ransom
An increasingly common scam occurs when a company acts as a moving company. They’ll move your items, but then they might hold the items hostage until you pay them above what the company originally quoted you. This happens more than you might think, particularly when people might be in a hurry to move and they don’t do a lot of research on a company and instead go with the cheapest option.
A good way to avoid this is to hire a company that charges by the hour. You can also do something else—hire hourly movers and then rent your own truck that you drive.
Bait and Switch
A bait and switch scheme when a buyer comes to a seller and offers something higher than market value. Of course, as a seller, you would be excited to say yes to such a deal.
However, the buyer is not planning to purchase the home at that price.
The seller may sign the contract and the buyer will likely then ask for an extended period to do their due diligence. During this time, the seller has to keep up the costs of home and they also emotionally feel as if they’ve sold it.
Then, a buyer will come to the seller with an excuse as to why their above-market value price isn’t going to work anymore, and they’ll request a reduction that ends up being below market value. Sometimes the seller will agree because of how long this whole thing has gone on.
A few ways to avoid this include requesting proof of funds when you sign a contract and not allowing lengthy extensions or reductions.
If an extension or price reduction is based on a certain condition according to the buyer, then have a professional verify the truth of this.
If you want someone to work with you and be on your side at all times, contact Effective Agents and work with a top-selling realtor.® You can find the perfect realtor® to ensure the process goes smoothly for you.