Home sale frauds are on the rise amid an inventory shortage in the housing market, putting many at risk of purchasing land that is not on sale.
At least 77% of real estate professionals said they have seen an increase in the the number of seller impersonation fraud attempts within the last six months. During that period, 54% said they experienced seller impersonation fraud attempts, per Yahoo Finance, citing data from CertifID.
If you're planning to invest in a property, here are five of the most common real estate scams to watch out for to avoid falling victim to fraud.
Wire Fraud
There are many different types of wire fraud related to real estate, including escrow wire fraud and mortgage wire fraud. Typically, fraudsters contact their targets through an email, phone call, or text message purporting to be from a real estate firm or mortgage escrow company. The message will contain instructions on where to wire your escrow or mortgage funds.
Scammers involved in wire fraud tend to set up websites to make them appear like a legitimate company. They also use spoofing tactics to make phone numbers, websites, and email addresses. In most cases, one number or letter is off.
As a home buyer, researching and understanding the process of closing a purchase will help protect you from falling victim to wire fraud. You can also call your real estate agent to confirm wire transfer requests before sending money.
Foreclosure Relief Scam
In a foreclosure relief scam, fraudsters reach out to individuals on the brink of having their properties foreclosed with a promise to stop the foreclosure or modify the loan if the homeowners pay upfront for the service.
To avoid foreclosure and falling victim to this real estate scam, only work with your loan servicer to modify your existing loan or enlist the help of a HUD-accredited housing counselor.
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Home Inspection Scam
Home inspections are vital to the process of buying and selling a home. Home inspections help buyers ensure they are paying the fair market value for the property. In this type of scam, unqualified home inspectors perform the inspection and hide potential problems that could prevent the home from being sold.
Rental Scam
In a rental scam, fraudsters post fake listings on Craiglist or social media with the aim of luring unsuspecting renters. The scammers will ask for an upfront payment in exchange for letting victims see the property or hold it as a deposit. Other times, scammers will post low-quality rentals at a high price point. In reality, they are not connected to the property or its owner.
Title Scam
Title fraud occurs when scammers transfer the ownership of a property without the owner's knowledge. Typically, fraudsters transfer the title to another person or borrow money using the property as collateral.
A title scam often targets owners who don't personally oversee their rental properties or vacation properties. It can be very expensive to fix and may result in the real owner losing their home as a result.
If you've noticed that your bills are missing or your credit score has taken a hit, you may have been a victim of title fraud.
