It can happen to anyone – here are 10 common real estate scams and ways to spot them

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While buying a new home can be exciting, there are hoaxes you need to be aware of.
While buying a new home can be exciting, there are hoaxes you need to be aware of.

Buying a new home, especially for the first time, can be nerve-wracking.

And with an increase in property fraud, you just never know who to trust. Is that listing online even real? Does the agent have bona fides? And what happens when the personal information you're handing over to make applications – your ID number, bank statements, proof of income – lands in the wrong hands?

Although there are many different scams, the most common scams involve fake realtors using real listings to make themselves appear more legitimate, scam artists offering rental properties whose real owners are unaware, and con men creating entire fake realtor sites and banking accounts.

Knowing how to identify these scams can help you avoid unnecessary loss and litigation.

Here are 10 common real estate scams.

1) Fake homeowners

By co-opting existing listings, clever scam artists follow the bids that property buyers put in on listings and then respond using the name and identity of the actual seller.

They usually ask to meet in person and leave real estate agents out of it under the premise of not wanting to pay an agent.

2) Identity theft

Experts believe that every two seconds someone’s identity is stolen. Studies show that more users are becoming victims to this crime despite public awareness projects.

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This is because, due to massive data dumps and the acceleration of e-commerce, access to your personal information is at an increased risk.

Basically, any document, printed or electronic, that contains any personal information about you puts you at risk of identity theft, so be careful who you share your personal and confidential data with.

3) Shady agents

We've all seen those beautiful holiday homes along the coast that seem empty all the time. Con artists like to locate properties like this to lure victims by creating listings online and posing as the property owners.

To sweeten the honey pot, they might say you can rent the property and move in immediately then fill out paperwork later. They push for immediate payment and insist you move in quickly rather than planning for a specific date.

4) Companies without reputation

Some con artists will even go as far as creating fake realtor companies. Similar to the con of making you believe they are an agent, they find abandoned properties and make them just presentable enough on the surface to be believable. 

They try to get you to commit without visiting the property personally. The most dedicated scammers may even establish fake agency websites and accounts.

Many realtors earn a commission from selling properties. These online frauds may not even aim for the money earned from selling or renting the property, but instead, ask that their commission is sent to a personal bank account. Once the money for suggesting the property to you and showing you around has been earned, they may keep up the fraud or quit with their earnings.

5) That 'off' feeling

Con artists operate on the basis of trying to win your trust. If they do, then the con is complete. But if you're sceptical they might go to desperate lengths to try convince you of their bona fides or panic and disappear.

That's why it's important to listen to your gut or internal sense of unease about a particular agent, property or transaction – even if everything feels above board. Property scams aren’t new, but information to prevent them is more accessible than ever. So ask for proper paperwork and check the credibility of other parties, whether they are homeowners, agents, or real estate companies without well-established reputations.

6) Intercepted emails

This involves scammers hacking into the email of people involved in the transactions, such as agents or lawyers, by tricking home buyers into transferring funds to them instead of the appropriate parties. They will often use a generic email address indicating that the funds should be wired to a specific account which will then vanish without a paper trail.

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Changes made regarding payment details must always be done by the seller in person if possible, or telephonically verifying the email, and not via email alone. Always double-check all the details from the email address it’s coming from to the actual banking details. 

Protect yourself by double-checking everything, verifying all emailed instructions that deal with the purchase, even if they're from trusted parties.

Any bank detail changes need to be accompanied by the required verification of the bank accounts in question.

7) Fraudsters posing as buyers

They will approach a seller privately and show keen interest in the property and put in an offer. After a few days, the supposed buyer will contact the seller asking for a document to be signed to help them get their home loan approved, which the seller then signs without reading too much of the document, only to discover later that a third party claims to have bought the home.

It will be found that the scam artist (the first buyer) had been marketing the home online as an agent by taking the photos off various websites, and has found a buyer who is also unaware that something is wrong and who might have paid a large deposit over to the supposed agent.

Make sure you check every detail when it comes to property sale transactions, remember documents can be falsified and email addresses cloned.

8) The bait-and-switch scheme

This occurs when a prospective buyer offers an ‘above market value’ price to a seller. The seller, impressed by the high offer, signs the contract, meanwhile the deceitful buyer has no intention to purchase the property. Once the seller signs the contract, the seller may only sell to that buyer for a specified time.

When that time ends, the fraudster asks to extend the contract a few weeks to work out closing details. The seller then agrees to the extension, blinded by the high offer.

In the meantime, the seller keeps paying taxes, maintenance, utilities and insurance, while the buyer comes back to the seller with an excuse as to why this price no longer works, and requests a reduction to below market value and threatens to cancel if their demand is not met. Stressed by time and ongoing costs, the seller agrees to the reduction.

9) Duplicated listings

‘Fake Agents’ copy legitimate rental listings and advertise these at a much cheaper price. Unfortunately, many people fall for these fake listings and wire money to the owners of these fake listings. When searching for a rental, do your research and make sure you are working with a reputable company or agent.

10) Fake rental agents

When you find a property you really like, you call the agent to arrange a viewing and they say they will meet you there. Later they call and say they won't be able to make it anymore, but no need to worry the landlord will be there to show you around, and the agent promises to negotiate a lower price with the landlord.

When you arrive at the house you find many other people interested in renting the same place. S you call the agent back to offer to pay a little bit more, and they agree to the new amount, saying all you have to do is transfer the money for the first two months to secure the place.

But on moving day, you find someone else living there and discover the agent was a con artist who just found the property online and reposted it with their own contact information.

These scamster purposely send several people at a time to view the property to generate a sense of urgency for potential renters.

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