It's never fun to dig up dirt on our great industry, but the reality is that not everyone we meet has the same high standards that we do. Especially when the market gets too good or even too bad, people start looking for ways to gain an edge and/or simply stay alive. I'm sure that if you put 10 industry experts in the room they could quickly come up with 100 scams that they are aware of so let's kick it off with some of the more obvious schemes and see where it goes through additional comments and updates to this post. If you disagree with some of these being classified as scams, speak up!
1. Flipping Scheme (ALERT: matter of opinion). One of the worst scams to come out of the new millennium is referred to as the “flipping scheme” in which dilapidated homes are purchased at extremely low prices, fixed up a bit, then sold at outrageously high figures well over what the home is worth. There have been several criminal charges resulting from this scam, but it continues nonetheless. Hey several people into flipping are going to take offense to this, but if you do then this probably doesn't apply to you. However, this also takes the form of the many videos and courses that "taught" flipping techniques to people looking to make it big.
2. Obtaining loans through falsified information. Also called mortgage fraud, there were many low income families that fell victim to this fraud, obtaining loans through fictitious and falsified information that they were unaware of (someone else in the process made it happen), causing later foreclosures as the fraud was figured out. The result was millions in fraudulent loans and many families losing their homes.
3. False mortgage loan consolidation. The 2000’s brought about a great deal of scamming on the end of helping people get out of real estate debt. Scammers would pose like consolidation representatives and would seek out information about the victim promising to lessen their real estate debt and help them avoid foreclosure. Unfortunately, these people were sending their money to crooks, which then took off with the funds and allowed these people to lose their homes.
4. Real Estate Riches scam. As the real estate market was getting more and more difficult to maneuver in for those interested in a profession in the market, there were more and more programs introduced that promised to teach selling techniques to these people. Unfortunately, programs like Real Estate Riches charged huge fees, nearly $10,000 to the victim’s credit card, in turn handing over worthless information and a selling strategy that has never worked with outdated information and no help whatsoever.
5. Probate scam. One of the widest known real estate scams of the 2000’s came in the form of another instruction program for those wishing to begin selling real estate, with the probate classes offering the secrets to buying ultra-low and selling much higher. Unfortunately, this was another one of those pyramids that gets the bigwig rich and leaves you out in the cold.
6. Bad check from phony renters or buyers. A big part of real estate scamming went on over the internet during the 2000’s, making it much easier for these scams to be bought into. One such scam involved sellers posting their rental or for-sale homes online, receiving a reply from a fraudulent interested party who would then send a check that was written over the amount needed, and then asking for the remainder to be sent back. In the end, the check was bad and the home seller or renter ended up with a big loss.
7. “Send the money overseas” scam. Another reply scam of the internet during the 2000’s targeting real estate; this scam is the opposite of the scam against the seller, turning the tables on the buyer. Scammers would duplicate legitimate postings online for homes, getting those interested to send the money overseas, where they are said to be on some sort of trip or journey. In the end, the victim hasn’t even gotten in touch with the real owner of the home.
8. Mortgage loan modification scams. There were many unsuspecting victims of this scam in the 2000’s, as many people faced foreclosure on their homes. These companies were actually performing a service, but would charge extremely heinous fees just to start the application, leading to many law suits against these companies.
These 8 scams and schemes are really just the start but they represent something that we need to watch out for and call people out on whenever we can. This article was actually triggered by yet another story I read about someone showing up to a home they rented that wasn't for rent but actually for sale (of course the renter's deposit was gone for good).
Comments(2)