Real estate and property scams are on the rise, with scammers using increasingly sophisticated techniques to target unsuspecting buyers, sellers, and renters. In 2024, there were over $396 million in reported losses from real estate and rental scams.
10 Types of Real Estate and Property Scams 2024
Here are 10 common types of real estate and property scams that you should be aware of:
1. Phantom Properties: Scammers create fake listings for properties that don’t exist, often using stolen or stock images. They may promise unrealistic prices or use urgency to pressure buyers into sending money without seeing the property in person. Be wary of properties that are listed at very low prices, especially in desirable neighborhoods. If you can’t find any information about the property online or if the seller is reluctant to provide you with a physical address, it’s likely a scam.
2. Fake Real Estate Agents: Scammers pose as legitimate real estate agents to gain the trust of buyers and sellers. They may use fake credentials or create fake websites to appear reputable. Once they have your trust, they may try to steal your money or personal information. To verify a real estate agent’s credentials, check with your state’s real estate commission or the National Association of REALTORS® (NAR).
3. Pre-Sale Scams: Scammers advertise properties that are supposedly under development or pre-construction. They may ask for deposits or other fees to reserve the property before it’s even built. However, there’s no guarantee that the property will ever be built, and you may lose your money. Before investing in a pre-construction property, do thorough research on the developer and their track record. Check for reviews and complaints from previous clients.
4. Remote Closing Scams: Scammers pressure buyers to close on a property remotely, often using fake notaries and documents. This makes it easier for them to steal your money and disappear without a trace. Never sign any documents without meeting with a licensed notary in person. If the seller insists on a remote closing, be very cautious and seek legal counsel.
5. Title Fraud: Scammers forge or steal title documents to claim ownership of a property. They may then sell the property to unsuspecting buyers or use it as collateral for a loan. To protect yourself from title fraud, always have a title search conducted before purchasing a property. A reputable title company will verify the property’s ownership and ensure there are no liens or other encumbrances.
6. Rental Scams: Scammers advertise fake or misrepresented rental properties to lure victims. They may ask for large deposits or rent payments in advance, often before the victim has even seen the property in person. To avoid rental scams, only rent from reputable landlords or property management companies. Avoid wire transfers or payments outside of a secure platform like a rental application portal.
7. Repair and Renovation Scams: Scammers posing as contractors or handymen may target homeowners with inflated repair or renovation estimates. They may also perform substandard work or disappear without completing the project. Before hiring a contractor, check their credentials and references. Get multiple estimates and review the contract carefully before signing.
8. Deed Flipping Scams: Scammers persuade homeowners to sell their properties at below-market prices, often using deceptive tactics or pressure tactics. They then resell the property for a profit, leaving the original homeowner with a financial loss. To avoid deed flipping scams, do not agree to sell your property if you have not received a fair market value offer. Consult with an experienced real estate agent or attorney for guidance.
9. Equity Theft Scams: Scammers target homeowners with equity theft scams, convincing them to take out loans against their properties using fraudulent documents or misrepresentations. They may also use deceptive tactics to convince homeowners to invest in fake property investments. To safeguard your equity, only take out loans from reputable lenders and never sign any documents without understanding the terms fully.
10. REO Property Scams: Scammers may target buyers interested in REO (Real Estate Owned) properties, which are homes that have been foreclosed on by lenders. They may offer unrealistic prices or pressure buyers to act quickly without verifying the property’s condition or ownership. When considering an REO property, do thorough research on the property’s history, condition, and ownership. Consult with a licensed real estate agent to ensure the property is legitimate and free of liens or other issues.
Remember, if something seems too good to be true, it probably is. Be cautious, do your research, and never rush into any real estate or property deals.
How to Protect Yourself from Real Estate and Property Scams
Here are 10 tips to protect yourself from real estate and property scams:
1. Do your research: Before you engage with any real estate or property deal, do your research to verify the seller’s or agent’s identity and credentials. Check the property’s title and zoning records to make sure there are no liens or other encumbrances.
2. Meet the seller or agent in person: If possible, meet the seller or agent in person to verify their identity and assess their credibility. Don’t feel pressured to rush into a deal.
3. Never wire money or make payments outside of escrow: Never wire money or make payments outside of escrow, even if the seller or agent insists. Escrow protects your money until the transaction is complete.
4. Use a reputable title company: When you’re ready to close on a property, use a reputable title company to handle the title search and escrow process. A reputable title company will protect your interests and ensure that the property is free of liens or other encumbrances.
5. Beware of urgency: Scammers often use urgency to pressure buyers or sellers into making decisions before they have time to think clearly. Don’t feel pressured to act quickly. Take your time to review all of the documentation and make sure you understand the terms of the deal.
6. Be suspicious of low prices or unrealistic offers: If a property is listed at a price that is significantly below market value, it may be a scam. Be wary of deals that seem too good to be true.
7. Get multiple appraisals: If you’re considering purchasing a property, get multiple appraisals from reputable appraisers. This will help you to ensure that you’re not overpaying for the property.
8. Use caution with online listings: Be cautious when using online listings to find properties. Scammers often create fake listings or use stolen photos to lure victims.
9. Avoid wiring money overseas: Never wire money overseas to purchase a property. This is a common tactic used by scammers to steal money.
10. Check with the Better Business Bureau: Before working with a real estate agent or title company, check their reputation with the Better Business Bureau. This can help you to avoid working with scammers or unethical businesses.
Here are some additional tips to help you protect yourself from real estate and property scams:
- Don’t give out personal information over the phone or email.
- Get a copy of every document before signing it.
- Read the fine print carefully before signing any contracts.
- If you think you’ve been scammed, report it to the FBI’s Internet Crime Complaint Center (IC3).
Report Real Estate and Property Scams
If you believe you have been the victim of a real estate or property scam, there are several places you can report it.
1. FBI’s Internet Crime Complaint Center (IC3)
The FBI’s IC3 is the best place to report Internet-related crimes, including real estate and property scams. You can file a complaint online at https://www.ic3.gov/Home/ComplaintChoice or by calling 1-877-IC3-HELP (423-5753).
2. National Association of REALTORS® (NAR)
The NAR is a professional trade organization for real estate agents and brokers. They have a website where you can report real estate scams: https://www.nar.realtor/technology-and-safety-alerts/be-alert-health-insurance-scam-targeting-nar-members
3. Federal Trade Commission (FTC)
The FTC is the government agency responsible for protecting consumers from fraud. You can report a real estate scam to the FTC online at https://consumercomplaints.fcc.gov/hc/en-us or by calling 1-877-FTC-HELP (382-4357).
4. State Real Estate Commission
Each state has a real estate commission that regulates the real estate industry. You can report a real estate scam to your state’s real estate commission. You can find a list of state real estate commissions at https://www.upnest.com/1/post/real-estate-commission-explained/.
5. Local Law Enforcement
If you believe you have been the victim of a real estate or property scam, you should also report it to your local law enforcement agency. They may be able to investigate the scam and take action against the scammers.