Real Estate is a billion dollar industry, and that’s no surprise when you consider the value of what’s being sold. Because of all the money changing hands, it's a tempting arena for criminals to take advantage of unsuspecting home buyers and sellers. Criminals capitalize on the fact that you may already be overwhelmed and too busy to be on the lookout for scams, making it even easier for them to take your money. What kind of scams should you be on the lookout for? Fraud prevention expert and real estate agents shed light on scams going on right now.
BUYERS: Hackers Steal Your Down Payment
Robert Siciliano, fraud prevention expert with IDTheftSecurity.com exposes this clever scam.
“A hacker could fool you into thinking he’s your agent and trick you into sending him money, which you’ll never get back. It’s so bad the FTC even sent an alert warning consumers that real estate agents email accounts are getting hacked.”, says Siciliano.
“Let’s say your realtor’s name is Bill Baker. Bill Baker’s e-mail account gets hacked. The hacker observes Baker’s correspondences with his clients—including you. Ahhh, the hacker sees you have an upcoming closing. The hacker, posing as Bill Baker, sends you an e-mail, complete with instructions on where to wire your closing funds. You follow these instructions. But there’s one last step: kissing your money goodbye, as it will disappear into an untraceable abyss overseas. This scam can also target your escrow agent.”
How can you protect yourself from this clever scam? Never send sensitive financial information via email. If you must use email for sensitive email, use encrypted email. Get instructions for sending the money over the phone. If you do receive an email regarding sending money, confirm the email by phone, and get verification of the transfer ASAP. By talking over the phone, you can more easily verify the identity of the people you're dealing with.
SELLERS: Bait and Switch Scheme
This scam happens when a prospective buyer makes a very high offer on a home. The home seller is blown away by the offer and accepts it. The problem is that the buyer never had any intention of paying that price.
Lucas Machado, President of House Heroes explains: “Once the seller signs the contract, the seller may only sell to that buyer for a specified time (weeks to even months) for the buyer’s purported due diligence. When that time ends, the fraudster asks to extend the contract a few weeks to work out closing details. Sounding reasonable, the seller agrees to the extension blinded by the high offer.”
During that time, as the seller, you keep paying taxes and other home maintenance costs, and you develop and emotional commitment to sell your home to this particular buyer. Then the buyer comes back with an excuse why they don’t want to pay the higher price. They try to manipulate you to sell for below the market value, or they’ll cancel.
How can you avoid this scam? Always confirm a potential buyer has the money when you execute the contract. Set expectations early on and don’t grant unreasonable extensions or reductions.
Don’t let clever scammers take your money. Make sure you use caution and work with your agent to make sure your home buying or selling experience goes smoothly. And check back on our blog on Active rain and on our main website for more real estate advice each week.