Yes, even in the era of the frequently used phrase, “Fake News,” there is such a real thing as “Fake Real Estate.” With well over 90% of real estate consumers using online services to help with their real estate needs ranging from home buying to loan modifications, nefarious characters are ever increasing their real estate marketing scams. There are the obvious red flags, but there are also inconspicuous tactics used to entice the vulnerable buyer or seller. Here are 5 common real estate scams that are, Fake Real Estate!
1. Transfer Funds
You may have come across this scam. It begins with you receiving an email and\or a mailing advertisement telling you how you can find your dream home at low market prices, but it requires you to send a payment to activate the ability to begin your search. Sometimes such emailing\mailing advertisements also highlight once you select your dream home (In a few easy steps of course), you will need to transfer money into an “escrow” account so the buying lifecycle can be expedited. It may seem attractive at first because home buying can be time-consuming, and a more simplistic approach can make your life easier. Avoid this at all costs! Never transfer any funds to an escrow account until you have met with the agent, gone thru the proper procedures, received a verbal, and written request from your agent, and proper wire instructions are provided. Do not put any money upfront!
2. Moving Companies
Many of our local moving companies such as Watford Moving, Professional Santa Clarita Movers, and AQMS among others possess a positive reputation. However, there are imposters to the moving companies we listed. Beware of the fraudulent moving companies! Believe it or not, this has become such a prevalent problem that it’s listed on a U.S. Department of Transportation site called, Protect Your Move. This is how they operate. You’re excited to move into your newly purchased home, and you don’t have a lot of time to research moving companies. You see a moving ad promoting cheap prices for a “guaranteed fixed price.” You choose their service. The problem is they hold your items hostage until you pay more than they quoted. They will add “unexpected” expenses to justify their increase. The best way to avoid this is once you have decided on a moving service, conduct due diligence. Also, have someone from the moving company review your items before they provide their estimate. Please, don’t forget to check out “Protect Your Move.”
3. Fake Agent, Broker, or Investor
Leading up to the recession of 2008, and post-2008, these con artist made a strong appearance. Offering the best loan (especially to those with questionable credit), offering to purchase your home, and offering back-end deals to flip your home. They’ve become bolder with the latest real estate craze of flipping homes. These scammers hold, in many instances, a valid real estate license and pitch to sell your home or they will buy it themselves. This is nothing more than a bait-and-switch gimmick. What occurs with this fake deal, is the agent will pressure the seller to agree to let the agent decide what the asking price should be. Once the agreement is made, the fake agent will drop the price of your home every 30 calendar days it remains in the open market. The goal is to sell your home significantly below market value. When the seller realizes they are in a heap of trouble, these fake agents will provide a canned response, “Let’s just list the home the standard (regular) way.” So how do you avoid these hucksters? Here are a few pointers to consider:
- Search the California Bureau of Real Estate to check the status of a license by using a name, address or license ID.
- Inquire if they live in the area you’re selling your home.
- Find out if they work with a team or alone.
- Ask them for their portfolio and references.
4. Loan Modification Agreements
If you are a current homeowner, then it’s almost certain you have received emails, and mailing advertisements on how you can receive a loan modification for pennies on the dollar type interest rates, with over-the-top features. These companies are notoriously known for phony forensic loan auditing, bait-and-switch ploys, and promises that the original lender defrauded you and they can sue them on your behalf. As with #1, don’t send any money, nor provide your documentation to such characters. Their primary purpose is to obtain your personal information. For any loan modification, it’s encouraged to meet with the loan agent in person, and research their company. Here’s a big red flag, if ever in doubt: the company has a P.O. box.
If you are looking for a reliable local lender check out Augusta Financial. They are the number one Lender in the Santa Clarita Valley. I have had first-hand experience with Mike Meena and his team. They provide thorough communication and walk you through every step of the process and will discuss what options best fit your needs. Remeber, it is free and at no obligation to you to talk to a lender and receive a pre-approval or second opinion.
5. Appraisal Fraud
This occurs when appraisers say your property is worth more than what it actually is worth. In this instance, the appraiser’s goal, along with the agent is to generate a false equity. So how do you detect this fake real estate tactic? Always be skeptical of appraisals dated prior to the sales contract, and your home’s worth compared to those in your neighborhood. Plus, when a 3rd party is participating in the transaction orders for the appraisal.
Hopefully, you never experience what others have when they have come across any of the fake real estate scams we just listed. Always d0 your due diligence, and don’t be afraid to ask questions, see their portfolio, and don’t ignore the red flags! Of course having a savvy real estate agent can help you reduce the chances of experiencing such scams. If you would like more information regarding the above, please contact me.