A downfall of living in this digital age is the rapidly growing possibility of being scammed online. New homeowners are frequently becoming victims. So, we have compiled a list of the most popular scams used on new homeowners. This list will also be a guide on how to avoid them. Our research performed can be found though the sources listed below.
First let’s discuss the difference between a scam and a fraud.
A scam is a fraudulent scheme, usually involving a business transaction or money while a fraud is a much broader category. Frauds are federal crimes and are defined as a deliberate act (or failure to act) with the intention of obtaining an unauthorized benefit, either for oneself or for the institution, by using deception or false suggestions or suppression of truth or other unethical means, which are believed and relied upon by others.
Wire fraud: So, you just bought a home and it’s time to make the first big payment. You receive an email from your agent with all of the correct information telling you the bank for your payment has changed, you follow the instructions and make the payment. Next thing you know, your money is gone, and the actual bank is calling waiting on your payment. What happened? This is wire fraud. All of the information about your purchase is online, scammers can learn your agent’s information, the address of the home, and the price. They have the ability to create a very realistic email that looks like it is from your agent to trick you into sending them your money. This is a devastating blow to anyone it affects. How can you avoid this? The first step is always to read the fine print provided by your mortgage company. It should say exactly what bank you will be sending the money to and it does not change. Check and double check the email, make sure the email address is the same as previous emails, and any documents sent contains an official letterhead. Finally, call your agent or lender to ensure all of the information on the email is correct before sending any money. You can never be too careful when dealing with your money. You need to check, double check, and triple check that you are sending the money to the correct place.
Fake out: Fake out is when someone reaches out saying they have a house available that isn’t on the market yet, so you can’t see it, but it is going to be sold quickly and you need to buy now. They showed you images online and you have the address so you can drive past, but not go inside. Everything seems perfect, so you decide to go for it, only to find out the house was never actually for sale and the scammer just took your money. This happens a lot in real estate, especially if the market is ho. But if you are not able to go inside, get a tour, and schedule an inspection, be very wary. All trained and experienced real estate agents know that buying a home takes time and there is a process you must go through before signing any paperwork.
Cover up: Cover up is when you are pressured to move the process along quickly. The owner is in a big hurry to get the property off their hands, so they paid to have the inspections done for you, everything appears to be in great condition, so you go for it. A week after you move in you realize there is major water damage and mold everywhere. It was covered up by a few coats of paint. Now the cost of the repairs is more than what you paid for the house. You can avoid this by never letting anyone rush the process for you. Always hire your own trusted inspector to check the house. Your agent should have a thorough list of trusted specialists to inspect anything you may have issues with.
Foreclosure: You find a great home, for a great price, it is being sold “as is.” You’ve been looking for a fixer upper as a new hobby, so you decide to buy it. A month after you move in, the bank starts calling you to claim the property. You must move out, the house has been foreclosed on, and the previous owner took your money and ran; leaving you to deal with the consequences. You can avoid this situation by doing your research and having a good agent. Agents will do the research for you on properties you are interested in. They will check the county records and ensure there are not any notices that have been filed on the property.
Moving: You found some movers online, paid upfront, and you are all packed and ready to start fresh in your new home. The movers never show up. You’ve just been scammed. How can you avoid this? Never pay upfront, always get a written estimate, and never sign a blank contract. Your agent should have a list of insured and reliable movers to provide to you. Make sure you have someone from the company come by and give you an estimate based on the amount of time they think it will take, number of rooms, and the number of movers they will need. Never pay them up front, always pay after the work is done.
Loans: After you purchase your home, you start receiving unsolicited calls about lowering your rates. Unfortunately, unsolicited calls like this are usually scams. They convince you to start paying them, but they are not actually paying your mortgage for you. If you want to refinance, always deal with a bank directly and talk to your agent about different options you may qualify for.
The number one and most important tip for avoiding scams when buying your first home or moving to a new home is having a Real Estate Agent. Agents are trained and know exactly what to do and when to do it. They can help answer any questions, recommend reliable companies, and are your advocate during every step in the process. Finding a good agent is easy, but you want to do your research. Check online for reviews, look at their social media to learn more about them, and see if they would be a good fit with you. Look up the brokerage they work for and make sure it has good reviews also. Another good option is to ask your friends and neighbors who they worked with. Finding the right agent is the only way to ensure your home buying or selling experience is as seamless as possible. Check out our blog, “What to look for in A Real Estate Agent” to start your search the right way.
Research Performed
Do’s and Dont’s of Housing Scams