Property scams are a frequent occurrence, with unsuspecting buyers losing thousands of dollars to false offers or tricksters.
If you’re looking to secure a property that is within your budget, it pays to know the various tactics which fraudsters use in order to lure victims into their traps. In this post, we’ll provide some key advice on how you can spot and avoid potential property scams.
So that you don’t fall victim yourself. Keep reading for the top tips on spotting and avoiding property scam!
Types of Scam in property
Ponzi Scheme
In a Ponzi scheme, investors are promised high returns with little or no risk. The operator of the scheme uses money from new investors to pay returns to earlier investors, giving the appearance that the investment is profitable.
Eventually, the scheme collapses when there is not enough money to pay all of the investors.
Advance Fee Fraud
In advance fee fraud, victims are promised a large sum of money if they pay an upfront fee, which is typically a percentage of the total amount. The victim pays the fee, but never receives the promised money.
Property Flipping
Property flipping scams involve convincing victims to buy properties that are in poor condition and then selling them at an inflated price after making superficial repairs. The victims often end up losing money on the deal, as they are unable to sell the property for as much as they paid for it.
Rent-to-Own Scams
Rent-to-own scams involve renting a property from a landlord who does not actually own the property. The landlord may collect rent for several months before disappearing, leaving the tenant responsible for any damage to the property.
In some cases, the landlord may also sell the property to another party without informing the tenant, leaving them homeless.
Mortgage Fraud
Mortgage fraud occurs when someone knowingly misleads a lender in order to obtain a loan that they would not otherwise qualify for.
This can be done by providing false information on a loan application, such as overstating income or assets.
Mortgage fraud can also involve identity theft, in which someone uses another person’s personal information to apply for a loan in their name.
Equity Skimming
Equity skimming scams involve convincing homeowners who are facing foreclosure to sign over their deed to the scammer in exchange for promises of continued occupancy of the property and/or payment of back mortgage payments owed.
The scammer then collects rental income from tenants while failing to make mortgage payments, eventually leading to foreclosure on the property.
Foreclosure Rescue Scams
Foreclosure rescue scams target homeowners who are facing foreclosure and promise to help them keep their home if they sign over ownership of the property to the scammer. The scammer may then rent out the property or sell it without making any effort to help the homeowner stay in their home
Avoid of Property Scam
Do your research
When you’re looking for a property to buy, it’s important to do your research and make sure you’re getting the best deal possible.
There are a number of online resources that can help you compare prices and find properties that fit your budget and needs.
Additionally, it’s a good idea to talk to friends or family who have purchased property in the past to get their opinion on the best way to avoid scams.
Get everything in writing
Once you’ve found a property you’re interested in, it’s important to get everything in writing before you make any payments.
This includes the purchase price, any repairs that need to be made, and the date of possession. Having everything in writing will help to protect you if there are any problems with the property later on.
Hire a reputable real estate agent
If you’re not comfortable doing your own research, you can hire a reputable real estate agent to help you find a property.
A good agent will be familiar with the area and will be able to provide you with information on different properties that are available.
Additionally, a good agent will be able to negotiate on your behalf and help you get the best price possible.
Get a home inspection
Before you finalize the purchase of a property, it’s important to get a home inspection from a qualified inspector.
An inspection will identify any potential problems with the property that could end up costing you money in the future.
Additionally, an inspection can give you peace of mind knowing that the property is in good condition before you make such a large purchase.
Use caution when dealing with strangers
It’s important to use caution when dealing with strangers, especially if they’re offering deals that seem too good to be true.
If someone offers to sell you a property for significantly below market value, it’s likely that they’re trying to scam you. Additionally, if someone asks for money upfront before they’ll show you a property, they’re probably not legitimate.
It’s always best to err on the side of caution and deal only with people who you know and trust
Don’t sign anything without reading it first
Before you sign any contract or transfer any money, it’s important to read through all of the documentation carefully and make sure you understand everything that is being said.
If there is anything in the contract that you’re not happy with, don’t be afraid to ask for it to be changed or clarified before you sign anything.
Get independent advice
If you have any concerns about whether a property is legitimate or not, it’s always best to seek independent advice from someone who knows about these things before proceeding any further.
This could be from a friend or family member who has experience in buying property, or from a professional such as a solicitor or conveyancer