There are three particular real estate scams that you need to avoid. Here is how they work and how you can avoid them.
Unfortunately, doing business safely in the real estate world isn’t as easy it should be. Here are three prominent real estate scams that you need to be aware of and how you can protect yourself against them:
1. The mortgage closing scam. This particular scam is spreading across the country. It has become so prevalent that the FBI estimates it has led to over $1 billion in stolen or diverted funds in 2017 alone. Through my personal title and escrow representatives, I’ve heard of over 10 instances of this scam happening in our marketplace within the last six months.
It starts when hackers gain access to a real estate agent’s email account. Then, when it’s time to close a particular deal, the hackers, posing as the real estate agent, send instructions to the homebuyer on where to wire the money. It is only after the buyer has sent thousands of dollars to that specific account it is revealed that it’s not the account of the actual title and escrow company.
When purchasing a home, only wire money to accounts that can be verified over the phone or through a secure email account. You know an account is secure if you have to provide a password to access it.
2. Fake title and escrow company representatives.
This scam is similar to the first one, but in this case, the scammers will impersonate the title and escrow company instead of the real estate agent. At the time of closing, they will contact the buyer, either by email or over the phone, and tell them the wire destination has been changed. Again, the buyer ends up wiring money to the wrong account.
When it comes to avoiding this scam, you should know that title and escrow companies’ wiring instructions never change. They’ll never send you erroneous wiring instructions and then have to correct themselves. Their wiring instructions will always be correct, and if you have any questions about them, call the title and escrow company and verify the account number over the phone.
3. The bait-and-switch. This scam doesn’t come from an outside party—it comes from the buyer and targets sellers. If a property has been sitting on the market for a while, a buyer might come along and make an offer that is well above the listed price. Finally, they say they won’t buy the house unless the seller lowers the price by a significant amount. Of course, by that time the seller has likely already purchased a new home and moved, so they really need to get that first home sold.
To prevent this from happening to you, it’s incumbent on your agent to qualify any buyers that are interested in your home.
In any case, you should always work with a trustworthy real estate agent and title and escrow company. If at any point you think things look fishy in your transaction, pick up the phone and call these people.
If you have any other questions or real estate needs, don’t hesitate to reach out to me. I’d be glad to help.