Thursday, September 22, 2022 / by Steve Ticknor
As long as money has changed hands for real estate, there have been con men ready to take advantage. In the late 1800s, George C Parker "sold" the Brooklyn Bridge (among other landmarks)...several times. In 1925, Charles Ponzi promised outrageous returns in a short amount of time for investors in what turned out to be Florida swampland. Thus, the origin of the "Ponzi scheme" was born. Unfortunately, real estate scams continue today. And the scammers get more and more creative as technology changes. Whether you rent, own, buy or sell a piece of property, beware of these common scams so you do not fall victim to them.
Watch Out for These Real Estate Scams
You may have heard the saying "if it's too good to be true, it probably is". That seems especially true with rental properties. As rents rise, so do rental scams. If you see ads for a nice property in a great neighborhood priced well below the going rental rate, beware. Or if the "landlord" requests a deposit before you even go to see it or makes excuses as to why they cannot meet you in person, watch out. Always get a lease agreement in writing signed by yourself and the owner or property management company spelling out the terms, dates, and agreed price. Perform your due diligence by researching the owner, property management company, and address itself before handing over any of your hard-earned money. USA.gov offers great tips on how to spot, avoid, and report rental real estate scams.
We have seen a rise in wire scams as well in the last couple of years. Usually, a scammer poses as someone from your agent's office and either emails you from a hacked/fictitious business account or calls you to give you information on where to wire money pertaining to your real estate transaction (earnest money deposit, closing costs, etc). They provide you with a fake bank account and you lose thousands of dollars. If you receive a call or email, speak to your agent directly to verify whether this is a genuine request or not.
The Ole Bait and Switch
You see an ad for a home for sale or rent for an unbelievably low amount. You call the number listed in the ad. The person says "oh, I'm sorry. Somebody already bought/rented that property. It is no longer available. But, I happen to have this property you might be interested in." Research the agent's reputation and experience as well as the reputation of the brokerage they work for before deciding whether to work with them or not.
Overhyping Interest in the Property
Real estate agents are natural salespeople. That is how we make our living, after all. But beware of agents who overly hype up buyer interest in the property they represent...especially if it sat on the market for a while. Do not feel pressured to overbid for a property because the seller's agent says the property has seen "so much traffic" lately. Listen to your experienced Lake Havasu REALTOR® when putting together a reasonable offer.
Finally, home sellers need to watch out for real estate scams involving a lockout clause. If you need to sell your Havasu home because you are in a financial pickle, you may find yourself in the clutches of a scammer asking for this. In this scenario, the "buyer" puts extra pressure on the seller to make a deal happen right now and demands that the seller not try to sell to anyone else by instilling a lockout clause in the sales contract. By doing this, the buyer believes that the seller will cave in to the buyer's demands for a much lower sale price and/or other financial incentives. Always read the entire contract before signing. If you have a question, ask your agent to clarify it for you.
Originally posted on our Lake Havasu real estate blog here: https://www.sunstonerp.com/watch-out-for-these-real-estate-scams/.