When you’re in the real estate business as a realtor or investor, you’ve got to educate yourself on the top real estate scams out there. Unfortunately, there are plenty of people who make a living scamming innocent men and women, and the real estate industry is a prime target.
Here are some of the top real estate scams that are making headlines. Learn about them so you can spot them and save yourself from being scammed.
- Fraudulent mortgage brokers
In one case, a woman went around pretending to be a mortgage broker. She was working with a buyer who was ready to close. She went ahead and called the title company and requested title work, stating that she wanted to close on the loan herself. She borrowed pens and notepads from the title company with their logo on them. Then, she went to the buyer and had her sign documents, took her cashier’s check, and told the buyer she was due a refund from the title company. The buyer, when she went to receive her refund from the title company, was in shock when they told her that the closer was a scam artist.
- Hacked Emails
There are some scammers that will hack the realtor’s email, watching and waiting for the perfect moment to swoop in and steal money. For example, let’s say the earnest money is being held by the title company. The scammer sends the title company an email from the realtor’s email that’s been hacked, saying that the sale has been cancelled. The scammer then gives instructions for the title company to wire the earnest money to a specific account, presumably the realtor’s account, but, it’s the scammer. It’s a good idea to call the title company yourself if you receive new instructions regarding where to send money or if you have any suspicions.
- Fake title companies
There was a couple in Colorado that wanted to pay off their current loan and refinance with a different bank. They went to a small, local title company, signed all the paperwork, and went home. What the couple didn’t know was that someone from Eastern Europe hijacked the wire transfer.
The couple kept making payments to the new lender and were surprised when they got a late payment notice from the original lender. They blew off the first couple of late payments, thinking the paperwork was late getting processed, but then were faced with notice of foreclosure. They were scammed by professional scammers, (some say the Mafia), and lost almost a million dollars.
The title company skipped town and the Colorado couple has had to endure so much stress and loss. This should prompt you to always use an established title company that is insured and speak with them about how they transfer money. Is their website encrypted? Can they offer proof?
Do your homework
When you do due diligence, many scams can be prevented. Look for the red flags and be careful when everything feels like it’s being rushed. You should have time to check things out and do your homework, and if a someone won’t allow that, perhaps you should move on.
Also, it’s very important to use a reputable title company that is insured, perhaps even buying both an owner’s and lender’s policy. Should you have questions or concerns, always take time to explore them. This way, you’re less likely to ever be scammed.