All Oliver Ellerbe wanted was a house for his aging parents. Now that they’re in the final stages of their lives, he wanted them to be closer. So as a good son, he did what’s right: he started searching for a home. However, things took a different turn. The search became a nightmare when he found out that the “supposed” agent he paid $150,000 to is a scammer. He lost all that money to fraud.
The worse part? Oliver Ellerbe isn’t the only one that has fallen into this trap. According to FBI reports, about $221M was lost in 2019 due to real estate fraud. The increase in these crime rates is quite alarming. Many people are now quite scared when it comes to getting a house. It’s no surprise if you’re scared as well.
There’s good news though. Forewarned is definitely forearmed. Knowing what you’re facing is half the battle. Below are common real estate scams that you can look out for. This should give you a headstart to separate fraud from what’s legit.
Wire Fraud
Don’t underestimate these fraudsters. They’ll do what it takes to deceive you. For instance, one of the ways unscrupulous criminals scam you is to create a fake housing website. At first glance, this website usually seems legit, like trustworthy websites. They even go a bit further by sending messages to your phone through emails or text messages.
Protecting yourself against this will take due diligence. Don’t be fooled by appearances. Take a closer look. With patience, you will begin to see some things that are off. To boot, ensure you call numbers placed on the website. Also, when a third party requests that you wire payments with specific instructions, something’s off. Get in touch with your agent/lender to confirm things.
Getting back your money if lost to wire fraud can be very hard. But with a competent real estate attorney, there’s hop. Things can be sorted out. If you don’t recover all of your money, you will most likely recover some if you act fast. A great attorney will offer counsel and assistance when it comes to retrieval.
In this regard, you should take a page from Aaron and Lindsey Fisher who nearly lost everything to wire fraud.
Loan Flipping
Another scamming method is through mortgage refinancing. The lender is a predator that constantly persuades you to refinance. They would often lend you more money every time. Over time, you will notice that the fees are getting higher.
After some more loans, the homeowner gets stuck. This is because you have been snared into taking out a re-loan with higher interests. And before you know it, you can’t afford to pay back as most of the house equity has been borrowed.
The majority of people who usually fall for this scam are seniors. They have no clue just how much home equity they have. It usually seems like the person is doing you a favor, but that’s not actually the case.
One clue that something is off is that lenders are always seeking you out. Even when you haven’t asked for their help. So work with reliable lenders, or better still, the bank. And even at that, make sure you ask for clarifications as to penalties and requested fees.
Rental Scams
Another thing that scammers do is to post property on legit sites. They post on social media pages as well to lure more people into the trap. Usually, they have photos of the property on their page. But the truth is it belongs to other listings. They simply steal pictures, post them as theirs and offer them at a cheaper price.
Many times, these people will request an upfront payment just for you to see the house. To make it less suspecting, they ask for a down payment that would serve as a deposit.
ApartmentList conducted a survey in 2018, and they found out that about 5.2 million renters have lost their money. And according to the survey, many of those renters were young.
To fight this scam, avoid online payments when you haven’t seen the property. Also, steer clear of people that ask for payment even before seeing the property.
Foreclosure Relief
People also get scammed when they get desperate to save their houses. This is when they can’t meet up with mortgage payments, and there’s a risk of foreclosure. These scammers find a way to get the list of people whose houses are in the pre-foreclosure stage. Then they approach those people and offer foreclosure relief.
They come up with lies like being able to save your home. They ask for upfront payments, and with that, they promise you they will reduce mortgage payments.
Just in case something like this happens to you, grab the phone. And simply call your mortgage lender. Certainly, this isn’t the time to be wishy-washy about it. Be brave. That way, you can rest easy. And at the end of the day, you keep your precious money along with the roof above your head.
