A Real estate
scam targets people buying or selling a house, refinancing their mortgage,
or considering investing in real estate.
Real estate is where the money is, so it is going to attract the scammers as
well. Its easier to make $250,000 on one real estate deal then scam
thousands of people out of $50.
History shows real estate scams have proven to be a reliable source of
income for many criminals.
The number of suspected fraudulent real estate
loan transactions has increased 500% in the past 3 years.
According to the FBI, 80% of all mortgage fraud involves a real estate
insider [agent, appraiser, mortgage broker, loan originator, or banker].
Types of Real Estate Scam
The main types of real estate scam include:
Craigslist Scam. A genuine person posts a classified ad for rental accommodation. The scammer responds, usually in poor English, from a country overseas. They ask for a bit of detail about the property and then usually advise they want to make arrangements with a furniture company to supply the home with furniture as they have limited time. The scammer then sends a check to cover the security and a couple of months rent, and also by mistake sends the amount for the furniture. You are then asked to bank the check and send the amount for the furniture either back to the scammer, or to the furniture company [another scammer or person who will send it to the scammer]. The original check is a fake and if you send the overpayment to the scammer, you will lose it
Home Improvement Scam. Contractors selling their services tell homeowners that they can get their home improvements financed through a lender that they work with. This is commonly used when the home owner says that they are unable to afford the improvements. A finance plan is drawn up and the home owner pressured to sign quickly before they lose the opportunity. What is not clearly shown is that the loan has high interest rates. Oftentimes, as well as having to pay off a high interest loan, the home improvements are very poorly carried out
Home Improvement Scam Variation. In this variation, seniors are targeted and forced into signing documents with high interest, with the scammer knowing that they are unable to repay the debt. As a result, their home is taken by the creditor and is left homeless
False Deeds. This scam involves forged deeds and is the most common type of real estate fraud. The scammers use a false deed to get a loan secured against the property, and then disappear with the money, and leave the owner with a risk of foreclosure by the bank. Sometimes the false deeds are used to sell the property, particularly if the property is vacant, or unused for a lot of the year
Real Deeds. The deed can either be stolen, or simply taken from the owner. A common way is for the scammer to get some type of authorization, such as a signature, as well as the deed. Then the scammer can do whatever they want without any real risk of being caught. This is a popular scam with seniors where a nurse or family member force them into this situation
Home Equity Stripping. In this scam, a lender will say it is ok to exaggerate your wealth or income in order to receive a large loan that you can't afford, and then they strip you of it. This allows them to take your home
Real Estate Scam Tips
Be suspicious of investments promising high returns with little or no risk
There are no get-rich-quick schemes except for the scammers
Don't be pressured into making decisions involving money or investments without getting independent financial advice first
Don't open unsolicited email [spam] - just delete them. Don't unsubscribe to them
Family and friends may try to involve you in a scam without realizing it is a scam so you should always seek independent advice
Never sign anything you haven't thoroughly read and had your attorney review first
Keep important documents such as your deed in a safe deposit box
Read the facts and figures at the IRS site covering a real estate scam
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