Watch out for Real Estate Scams
You’re finally ready to take the steps toward buying or selling a home. Congratulations, you just became a right target for real estate fraud and real estate scams! I’m going to give you three common real estate scams that affect millions of first time homebuyers every year so you know how to spot it each and every time. Whether you’re a homeowner, you know people that are looking at buying a home, a first time homebuyer, or even the seasoned homebuyer…
Knowing these three common real estate scams are the difference between keeping your hard earned money or losing it to would be fraudsters. Let’s make sure that we keep your money where it belongs. Now, you might be wondering, why you might be susceptible to real estate fraud at this point of buying a home?
Well, especially if you’re a first time homebuyer, the reason is simple – because they know that you’re excited and that you’re inexperienced. The pro tip here is going to be working with trusted real estate advisors and licensed, bonded and insured people, to make sure that you’re working with the right professional every step of the way – whether it’s going through the home buying process or, once you become a homeowner, keeping that in mind as you use contractors inside your home. Doing so, will ensure that you know how to spot real estate scams. Working with a trusted real estate advisor will teach you how to spot ‘em each and every time so that you’re not a target.
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1. Real Estate Wire Fraud
The first real estate scam is wire fraud. It’s one of the most common and one of the most prevalent. Once you go into contract, you’re going to be asked to wire money into the escrow account at least twice. Once for your money deposit and once for your cash to close. This will be your down payment and your wire closing costs. That’s everything that’s needed to close on your new home. So here’s the thing, you’re probably going to be asked by your real estate advisor, escrow agent, or mortgage advisor to wire your money into the escrow account via the transaction coordinator. Of course you’ll be happy to do that because it’s part of the process.
But hold up, because it’s really important that you understand what wire fraud is and the steps that you can take to make sure that you’re securing your money and not losing it. If somebody hacks one of those networks, whether it’s your escrow officer’s network or your real estate advisors network. Guess what could happen? They could pick off those wiring instructions, change around those numbers, and send out a fraudulent set of wiring instructions. If that happens, and you wire that money, it’s gone. So there’s a couple of really quick things that you can do and that you should know about.
Make sure that whomever your trusted real estate professionals are, that they have a secure server and secure site. That’s number one. This will help encrypt their emails and website and make sure that everything is secure in the process. The second thing as it pertains specifically to wiring money into the escrow account is to always make sure that you’re calling the escrow officer or the escrow officer assistant and asking them to repeat the numbers back to you.
You don’t want to volunteer the numbers to them. If it’s a fraudulent email that came in from a hacker and you call them, they’re just going to say yeah, that’s the number. Ask that person on the opposite end of the phone what the number is. You know the name of the escrow officer and the escrow officer assistant. Perfect – It’s okay to go ahead and make that wire transfer. Always verify that information with the escrow officer; always.
2. Unlicensed Real Estate Agents
The second real estate scam is hiring somebody that might not have a license. You want to make sure that you’re always hiring people with licenses. First of all, you can have peace of mind that if you’re working with a trusted real estate advisor, that in each and every state in the United States, it is a requirement that we, as trusted real estate advisors, have a license. All real estate agents have them. All mortgage lenders have them. But, here’s the thing…
Sometimes people like to get crazy on Craigslist and act like they’re a real estate agent that will offer you a phenomenal deal. If it sounds too good to be true it probably is. Just like wiring your earnest money deposit and verifying with an escrow officer that everything’s on the up and up is critically important, it’s also important to verify that everyone has a license.
You might be wondering how prevalent can that really be? Well, let’s say that you have somebody that’s pretending to be a real estate licensee, and they say, “Hey, just wire this money into this trust account. We’ll go ahead and make sure it goes where it needs to be.” This can be really, really bad. That tarnishes the reputation of actual real estate agents. It goes back to the importance of finding the right trusted real estate advisor to work with. Do they have a website, a social media presence? Are they listed on USDRE? The USDRE only allows licensed real agents and brokers to have a profile.
Always check past sales performance and make sure that you have the right agent that you’re comfortable with working with. Now fortunately, there’s some things that you can do to protect yourself even further. What you want is your agent’s license number. When you have your agent’s license number, you can go on to your local real estate division or your state’s website. Punch in their license number and populate out whether they have any compliance issues or whether they have any infractions. Having that information up front is going to help you tremendously!
3. Solicitations for Money
The third real estate scam, and this one’s a doozy, is paying for something that you’re going to get for free anyway. Right after you close on your home, you’re going to get all kinds of official looking things that say recorded deed notice. And they’re going to look legit. They’re going to look professional. They’re even going to look like it’s coming from your county. Some of these scammers are really creative. You may get something that looks official and says, “Pay us $86 and we’ll send you a copy of your deed.” The reason this is a scam is because you’re going to get a copy of your deed for free once the county records it.
It could take a little time to get it from the government but you will get it and it will be free. On the flip side of that, your trusted real estate advisor should always be keeping that information so that they can also give it to you; so that you can at least have proof of the sale and proof of the recommendation. As you’re waiting for your bonafide deed to come in from the county, don’t be susceptible to scams.
These are three of the biggest real estate scams affect millions of first time homebuyers each and every year. There are others including contractors that make false claims or don’t have their licenses and even people that rent a home for a short period and start showing it to “potential buyers”; taking a low offer and accepting your down payment for a home that’s not even theirs. The most important thing is to be aware and not afraid to ask questions. If someone throughout the process tries to give you grief about your concerns, don’t work with them.
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