Real Estate Scams to Avoid

By MICHAEL EDLEN | Special to the Palisadian-Post

Real estate and mortgage fraud are not things of the past, as some believe. Scams abound at all levels of the real estate market, ranging from contractors who overcharge for work insufficiently done to foreclosure fraud experts who prey on people who are behind on their house payments. Protecting oneself is mostly exercising common sense, healthy skepticism, doing research and staying aware of people who have dishonest intent.

A recent study identified eight of the most common types of real estate and mortgage fraud in 2016: identity theft, Craigslist rental fraud, wire fraud, occupancy fraud, title theft, bait and switch loans, money laundering purchases and falsified loan applications. Here are some thoughts to help avoid being a victim of some of these and other scams.

Identity theft can lead to title fraud, allowing the scammer to transfer the property to his name and then take out a new loan against the property, leaving the real owner on the hook for future payments until the fraud is cleared up. Fraudsters are more likely to target homes owned by seniors who have no loans on their property and likely to be less aware of identity theft.

Wire fraud has become popular this year, with the scammer getting email addresses of parties to a transaction and then sending a buyer or lessee a phony but authentic-looking instruction for where to wire funds by a certain date. If the recipient does not verify with the escrow holder or other intended receiver via phone that the wire instructions are valid, their funds may disappear into someone else’s hands.

Foreclosure rescue fraud criminals take advantage of property owners who find themselves in a cash crunch, short of funds to cover loan or other payment needs. Often the criminal offers a loan to consolidate all loans and cover all expenses in exchange for upfront fees and an agreement to transfer the property title. Of course, the criminal then keeps all the payments made by the owner, ignores taxes and bills, and then remortgages the property and disappears with the money.

Home improvement scams are possibly the most common way that unscrupulous people take advantage of homeowners. These people make unsolicited offers and deals that are too good to be true, and they count on enough owners not being alert enough to do any due diligence.

Some examples are offers to seal or repave a driveway, a roofer who proposes a low cost by using extra materials left from a previous job or a home security salesman who uses high-pressure tactics to entice an owner to install an elaborate system.

While anyone may fall prey to one of these or various other scams, the groups most targeted by such scammers are usually the elderly or homeowners either in or close to being in foreclosure. At the very least, the homeowner would do well to always keep in mind that if something seems almost too good to be true, then it probably is not true.

If one receives such a proposal or solution that even slightly raises a concern or question, it is wise to ask for their contact information and let them know you’ll get back to them soon. Then follow up and ask someone to check that individual or company out on the internet to see if there are any reviews or negative reports that raise a red flag.

If they are legitimate and the offer is still appealing after thinking about it for a while, you can then follow through with it. If the sales person uses an approach with urgency or other high-pressure tactic, that alone ought to set off an internal alarm of awareness that prompts you to hesitate quite a bit.

Michael Edlen has been a leading agent in Pacific Palisades for 20-plus years. He provides counseling services to local owners, investors, etc. regarding which design elements and features may be most profitable to include in projects. He can be reached at 310-230-7373 or michael@michaeledlen.com.