Real Estate Investment Scams & How To Avoid Them

Whether you are buying or selling real estate, there are a certain number of real estate investment scams that both buyers and sellers alike should be made aware of. While there is no telling exactly how many scams are out there, several warning signs will help to safeguard both your money and your property.

One of the most obvious, but often overlooked, real estate investment scams is the rush approach. In this type of situation, either the buyer or seller could be the victim of a fast facade. If you are the buyer, be wary of a seller who tries to rush you through the purchase process.

The same is true if you are the seller who may be in a hurry to sell due to financial distress and come into contact with a questionable buyer.

The best way to avoid any problems is to refrain from signing anything that you have not read thoroughly or do not completely understand. In addition, make sure that all agreements are in writing and not strictly verbal.

According to the U.S. Department of Housing and Urban Development (HUD), equity skimming is just one of the numerous real estate investment scams to be watchful of.

If you are struggling financially and someone claiming to be a buyer approaches you with an offer to pay off your mortgage and/or present you with a certain amount of money once the property is sold, be aware that you could be the victim of a scam.

In this scenario, the buyer may recommend that you move out and deed the property to them. After that, the buyer may simply collect rent on the property and never pay the mortgage, which forces the original lender to foreclose.

When you invest in real estate, it is often difficult to know who to buy from. This is especially true if you are an investor who likes to find a bargain anywhere in the United States.

Real estate investment scams are often well disguised, especially on the internet. If you are shopping for real estate online, you must be very wise and mindful of your decision with where to shop.

Neither credit cards nor PayPal offer buyer protection relating to real estate, so you cannot afford to be sluggish with your research.

As a buyer, you should check out the seller’s reputation with the Better Business Bureau, get an agreement in writing before any money exchanges hands and always perform a search to confirm that the seller owns the property free and clear of any liens, judgements or other incumbencies.

As a final thought to avoiding real estate investment scams, always avoid any seller who refuses to answer your questions directly. These may include the condition of the property, the status of the deed, whether or not all taxes are paid and current or whether or not any liens have been placed on the property.

As a buyer, you are required to perform due diligence, but if someone is reluctant to respond to your questions, it’s a good indication that they have something to hide.

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