Real estate fraud is a very real concern when buying a house. Many people get caught up in the joy of being homeowners, which affects their judgment. Without the right due diligence, you may find yourself deprived of a lot of money without any property to show for it.
Fortunately, you can avoid real estate fraud with the right information. Here are a few common scams to watch out for so you can rest assured that your investment is sound right from the start.
When involved in a real estate transaction, money will be placed into a third-party escrow account until the transaction is complete. In some cases, you may be contacted by the escrow company and asked to transfer funds remotely. In reality, the company contacting you is not legitimate and has established a fake email address and website. Once you send the funds, they are usually gone forever.
Real estate scams can even impact current homeowners who have experienced financial trouble. Because foreclosure information is included in public records, scammers look for homeowners to target. From there, they provide offers claiming that they can help the person retain ownership of their home for a fee. They may even ask that you do not contact the financial institution that provided your loan and instead make payments directly to them.
Loan flipping scams
Loan flipping scams also target existing homeowners. Refinancing your home makes sense when you are privy to a lower interest rate, as you may be able to save money on mortgage payments. However, some lenders entice homeowners with refinancing only to profit from the transaction. In this case, you may end up paying higher interest with the new loans, which can lead to you losing your home.