It’s a scary world out there, and you’ve always got to be careful with who you trust. This especially stands true when it comes to big life decisions and changes like buying or selling real estate. Unfortunately, it’s not all Pinterest boards and picking out wallpaper. Oftentimes, people face quite unpleasant situations in the real estate market.
Because the number of real estate scams is nowhere near a decline, we’re here to spread awareness and tell you about some of the most common scams in this industry. We’ll help you recognize these scams and what to look out for.
You don’t want to be scammed out of your money or, even worse, your home, right? Then keep reading and learn more.
We Buy Houses Scams
The “We Buy Houses” sign is a common sight in many neighborhoods across the US. And while some legitimate investors out there genuinely want to help homeowners in need, there are also a lot of scammers looking to take advantage of unsuspecting sellers.
If you’re thinking about selling your home and you don’t know how to avoid (“we buy houses scams”), the first step is learning more about them. Here are some of the most common “We Buy Houses” scams to watch out for.
Taking Advantage of Your Financial Situation
Scammers often know exactly who to target – people who are struggling with finances. If you’ve been approached by a real estate investor who wants to buy your home and sell it back to you once you are in a better situation, don’t fall for it.
If you agree to this offer, there’s a high chance that the ”investor” will take out the equity from the house as soon as the title is in their name, leaving you with an even bigger problem. So, be extremely cautious before accepting any similar offers.
Cash Offer Emails
Have you ever received an email that sounded too good to be true? Remember, if it seems too good to be true – it probably is. If the sender is offering cash for your house, run! These emails are called ”phishing emails,” and they are very common real estate scams.
The point of these is not to actually buy your home for a good price. The sender is essentially looking to get your personal information – bank information, credit card numbers, passwords, etc. Their plan is to steal your money, essentially. So, if a similar email happens to appear in your inbox, go ahead and delete it.
Real Estate Wholesaling
The real estate wholesaling scam is probably one of the most common scams out there. It’s especially popular among new investors who are not familiar with the process and end up getting taken advantage of.
Here’s how it works – a wholesaler will find a property that is deeply discounted, usually because it’s in need of repairs. They will then approach the owner and offer to buy the property for a low price, usually below market value.
Though this practice isn’t illegal, many wholesalers use pretty unscrupulous tactics to trick the seller into agreeing to a low price. If the owner decides to sell, the wholesaler finds an investor to buy the property from them at a higher price.
So, if you’re approached by a wholesaler who seems to be offering a great deal, make sure to do your research before agreeing to anything. You don’t want to get lowballed!
Requesting Money Before Closing Day
If you’re in contact with a buyer who is showing signs of unusual or suspicious behavior, be wary. Are they asking you to pay the deposit for fees upfront? That is not a usual practice, so make sure you’re triple checking the buyer and their intentions before agreeing to anything. You’re not supposed to pay anything before closing day, so keep that in mind.
Generally speaking, if the buyer is being pushy and trying to rush you, it’s not a good sign, so consider it a red flag.
Lock-Out Agreement Scam
The lock-out agreement scam is one of the most common scams aimed at sellers. This is how it works – the buyer convinces the seller to sign a lock-out clause (also called an exclusivity agreement) that essentially prevents the seller from selling the property to anyone else during a certain period of time, usually 30-60 days.
The buyer then tries to get the seller to agree to a lower price or processing fees. They are counting on the seller being in desperate need of cash, which gives them room to manipulate the situation. The problem is that if the buyer backs out of the deal for any reason, the seller is stuck with the property and can’t sell it to anyone else.
So, if you’re thinking about signing a lock-out clause, make sure you understand the risks involved first.
Scammers are not only attacking home sellers; there are quite a few rental scams that are pretty common. For example, a rental scam you might run into is a fake listing.
Rental scammers frequently use images from other postings in their Craigslist or social media rental ads to entice renters. Of course, these con artists are completely unrelated to the listing. They will demand a deposit or an up-front payment before allowing you to view the property. And as they aren’t the owner of the property, once they get the money, you’ll never hear from them again. So, you’ll be out of money and a place to live.
Unfortunately, these scams are pretty common, and people often fall for them. Keep your eyes wide open for this type of shady offer.
Do Your Research and Trust Your Gut
Bottom line – be careful when dealing with real estate. There are a lot of scams out there, and it’s easy to get taken advantage of if you’re not careful. If something sounds too good to be true, it most likely is. Do your research, ask around, and trust your gut instinct. With a little bit of knowledge and caution, you can avoid becoming a victim of real estate fraud.