Real Estate Scams – Stay Safe!
Tags: Real Estate Scams – Stay Safe!
Con artists are everywhere, and the Real Estate industry is certainly not immune. Whether it’s contractors who take your money and run or rental scams on online classified sites like Kijiji, everyone needs to arm themselves with knowledge on how to steer clear of such frauds. So how can you protect yourself? Well let’s take a look at some of the different types of scam that are out there.
1. Online Classified Ad Scams
One of the most common type of scams, it basically involves the posting of a rental property (or sale property) by someone posing as the landlord or Realtor. They will usually copy the property information off legit sites like realtor.ca or MLS. The scammer will then respond to inquiries from prospective tenants and make up excuses as to why they cannot meet the prospect at the property and instead will convince the victim to meet at an off-site location to exchange keys, sign a tenancy contract and collect rental deposits. Be smart and always see the property before handing over any of your hard earned money.
2. Home Improvement Scams
One of the biggest scams is the “rogue door-to-door contractor” scam. If you’re anything like me, then you have entertained the people who come to the door asking if you want your lawn irrigated or your driveway sealed. The legit ones won’t ask you for money upfront but instead will accept payment upon completion (because let’s face it, they know where you live). Many fraudulent contractors will use high pressure sales tactics or offer one-time deals in order to entice customers. Then they take the money and run.
It is up to you to do your due diligence. Generally, for the hiring of any contractor, I advise to check references and ensure that the company or person is reputable. A great place to start is the Better Business Bureau. Personally, I look to friends and family for contractor references. Or even call a local Realty Brokerage and ask if they have a contractor on their preferred vendor list. We have a few that are awesome!
3. Property Investment Seminar Scams
There are many legitimate speakers and seminars that provide useful information, but there are also those that exist primarily to take money from unsuspecting victims.
It is advantageous for prospective investors to practice caution when it comes to seminars that offer investor education. Seminar content, as well as cost, can vary significantly. Some may be free, while others could cost thousands of dollars. And while some provide nothing more than what you would garner with a simple internet search, that doesn’t make it a scam. A rip-off, yes, but not a scam. A scam generally involves legal wrongdoing, misrepresentation or fraud.
Some red flags to look out for are:- Guaranteed High Returns with No Risk - Sorry, but this just doesn’t exist! Don’t fall for it. Ever.- “Don’t Miss This Opportunity, Get In Now!” This tactic is used to pressure you into making a quick decision and attempt to exploit your fear of missing a great opportunity.- Tax Free Off-Shore Investment Opportunities – Legally, you can’t avoid paying taxes so if something is said to be tax free, generally it’s not legit.
Again, it is always best to do your due diligence and be wary of any high pressure sales tactics and committing money to expensive courses or investments.
4. Title Fraud.
Extremely rare but extremely devastating, Title Fraud begins with identity theft of the property owner. Once the homeowner’s identity is compromised, the thief falsifies documents and re-mortgages the property. Once the mortgage is secured, the thief absconds with the cash and leaves the owner saddled with the new debt.
However, in even rarer circumstances, sometimes the scammer isn’t a stranger and the fraud comes from within, as in a spouse or business partner. For example, one spouse may mortgage a property for their sole benefit by using an accomplice to impersonate their spouse.
To protect against title fraud, among other things, a home owner can purchase title Insurance. It is also advisable to protect your personal data in order to be proactive against identity theft.
5. Foreclosure Fraud.
Foreclosure fraud occurs when a property owner who is having difficulty making mortgage payments is approached by a con artist offering a loan to cover expenses and/or consolidate debts, in exchange for upfront fees and an agreement to transfer the title of the property. Once this is done, the con artist will keep all the payments made by the owner and neglect to pay the bills and taxes. The con artist then remortgages the property and disappears with the money, leaving the now-former property owner not only without the home, but still in debt.
You may think “this could never happen to me” and only the gullible are prey for scammers. But you just have to look at the story of Bernie Madoff to see that con artists can appear legit and trick even the best and brightest. Be proactive, arm yourself with knowledge and if you ever don’t feel right about something, trust your gut. There is a reason why there’s a saying “If it’s too good to be true, it probably is”.
Written By: Julie Parrott