Housing Scams Are Rampant – Here’s How To Spot Them
(DailyDig.com) – Maneuvering the real estate market is tough enough without having to deal with fraudsters and fake rental ads looking to steal from you. Housing scams are common, and it’s worryingly easy for these scams to allure even the most brilliant people. So, how do you protect yourself from housing scams? The first step is to familiarize yourself with the common scams, including rental, foreclosure relief, and moving scams.
Here are four common housing scams to keep on your radar–and how to protect yourself from scammers.
Wire Frauds
Wire frauds are by far the most common housing scam. Real estate transactions involve moving lump sums of money from buyers to sellers, a procedure that, unfortunately, entices sophisticated fraud scammers.
A report by the National Association of Realtors indicates that over 13,000 people were victims of wire fraud in the rental and real estate sector in 2020, a total loss of more than $213 million. According to FBI data, that was an increase of about 380% since 2017.
Here’s how wire frauds operate: You receive a phone call, email, or text from a person presenting themselves as a trusted source, usually an escrow company, a seller, or a lender. Such fraudsters create fake websites that resemble an escrow or lending company you’re working with and then send fraudulent wiring instructions.
Protect Yourself from Wire Frauds
Before you send your money to any third party, confirm with your original documents from your lender and contact the phone numbers provided to verify. Also, avoid clicking on any foreign text and email links before verification.
Rental Scams
Rental scams often happen when either a potential tenant or a property owner misrepresents themselves. Fake ads and responses to rental ads can hurt the property owner and tenant, so understanding how rental listing scams operate is crucial.
A predator unrelated to a property or its owner puts up a fake listing or rental ad for advertisement. The fraudster asks for an upfront payment to hold as a deposit or let the prospective renter visit the property. Such scammers offer empty promises to take the renter’s money.
Protect Yourself from Rental Scams and Fake Listings
The Federal Trade Commission advises renters to learn about potential rental scams and be savvy when searching for a new rental house. Ensure you conduct thorough research and get all the transaction terms, conditions, and details in writing.
Foreclosure Relief Scams
Foreclosure occurs when a homeowner falls behind in mortgage payments and therefore authorizes the lender to repossess the property, a process that scammers often anticipate. In foreclosure relief scams, fraudsters pretend to be attorneys or lenders and target struggling homeowners by claiming to offer financial assistance. Common foreclosure relief scams include:
- Equity Skimming: A scammer presents themselves as a buyer and convinces you to sell your property and claim to pay off your mortgage.
- Phantom Help: A fraudster poses as a mortgage counselor and promises to negotiate a loan modification or offer lower interest rates.
- Bogus Legal Help: A fraudster claims to offer legal help but wants you to pay before receiving a modification.
Protect Yourself from Foreclosure Relief Scams
You can protect yourself from foreclosure relief scams by working directly with your lender to modify your existing loan. Alternatively, get reliable foreclosure counseling and help through the Making Home Affordable program offered by the government or consult a HUD-certified housing counselor near you.
Moving Scams
While most moving companies do quality work, few use fraudulent practices to scam consumers. For instance, some companies will bait and switch their initial quotes to rob you of your money. According to the Better Business Bureau, Americans report approximately 13,000 negative reviews and complaints about moving companies yearly.
How to Protect Yourself from Scam Movers
Ask your movers for their license number and check whether the company has any complaints. If you encounter moving scams, consider reporting them through the Better Business Bureau Scam Tracker. Understanding how moving scams work will help you spot the red flags early and protect yourself from dishonest movers.
Last but not least, always stay informed and vigilant. Real estate scams are here to stay, so familiarize yourself with them and prepare to deal with them. Even though housing scams can be scary, understanding what you need to look out for to identify scammers will help you protect yourself from them.
Copyright 2022, DailyDig.com
