5 Real Estate Scams to Watch Out For

5 Real Estate Scams to Watch Out For

While buying, selling, or refinancing a property there will be lots of information, paperwork, communication, and transaction. In case the process is overwhelming and unfortunately, there are individuals who would try to take advantage of the situation in real estate transactions. Below are a few common real estate scams that should be avoided.

Wire Fraud

The most common real estate scam is wire fraud,  particularly in relation to escrow. These scams are mostly in the form of communication, by means of phone calls or email, from a person claiming to be the representative of your escrow or title company. They will provide the instructions to take advantage of you and wire the money. Wire scammers are more skilled in their tactics, even by creating a fake website mirroring the company’s website and email address that you are working with to make them seem legitimate. It is recommended not to click any links that are not sure and confirm with the Loan officer to confirm any information is accurate. It is recommended to refer to the contact information that is provided earlier by the title company.

Foreclosure Relief

Foreclosures are the public records that scammers would take advantage of people who are in danger of losing their homes. These scammers would offer a mortgage for a large upfront payment. Once the scammers received the upfront money they would disappear. It is recommended that if you are facing foreclosure, it is best to contact the loan services to discuss the option. It is best to know that the person you seeking is professional and genuine.

Loan Flipping

Loan flipping is a process in which a person often purporting to be a lender convinces a borrower to repeatedly refinance their mortgage and tacking on exuberant points and fees for each transaction which would lead to borrowing more payments than the last time and the borrower’s equity would greatly decrease. It is recommended to refinance the home only after certain research is done with the help of a trusted mortgage advisor. A professional lender won’t recommend you choose any option that you are unsure about.

Predatory Lending

There are numerous forms of predatory lending, but there are a few key things to keep in mind were exceptionally high rates, excessive or hidden fees and penalties, loan flipping, a lack of a credit check, loan packing, and balloon payments.

The borrowers who were at risk with low credit scores, lack of cash, low income, and elderly were targeted by these lenders. If you are a first-time buyer, it is hard to predict what abnormality is coming from the lender. The best way to tackle this problem is by getting recommendations from friends and family who have gone through the mortgage progress before. Cross-checking the lender and the loan officers whether are licensed is a must.   

Moving Company Scams

When it’s time to move, you may seek the help of professional movers. Be wary of companies that quote prices far lower than competitors, especially if they offer a non-written estimate without seeing your home and belongings. Predatory movers may suddenly charge much more than what you were initially quoted and even demand additional money before releasing your personal property. Much like with lenders, you should do your due diligence in evaluating the merit of moving companies before hiring them in order to avoid losing your money and even your possessions.

How to prevent Scams?

If you believe you have identified or fallen victim to a scam, you can and should report it in order to hold the fraudsters accountable and hopefully prevent others from being scammed. The FTC has an online fraud report tool and the Better Business Bureau offers its “Scam Tracker” where you can not only report scams but also do research to ensure the individual or company you are working with is not fraudulent.

A great way to minimize your risk of being scammed is to work with legitimate professionals right from the outset of the mortgage process

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