Real Estate Fraud: What It Is and How To Stay Safe
It seems like anywhere there’s money to be made, fraudsters are always waiting to take advantage. In 2022 alone, the FBI reported over 11,000 real estate and rental fraud cases, resulting in more than $350 million in losses. Whether buying, selling, or renting, you may be at risk of real estate fraud. Imagine investing your savings into what seems like the perfect property only to realize it was all a charade- the title was forged, or the terms were manipulated. Anyone’s worst nightmare! However, understanding real estate fraud and knowing how to protect yourself can prevent you from being a victim.
What Is Real Estate Fraud?
Real estate fraud refers to illegal practices meant to deceive people or businesses for financial gain in real estate transactions. Fraudsters often target buyers, sellers, lenders, and even renters. Essentially, real estate fraud involves tricking someone into making financial decisions that benefit the fraudster at the victim’s expense.
Types of Real Estate Fraud
Real estate fraud can take various forms, each with its tactics and consequences. Below are some of the most common types of real estate fraud you should be aware of:
- Mortgage Fraud
Mortgage fraud occurs when one provides false information during a mortgage application to secure a loan that would otherwise not be approved. This kind of fraud typically involves inflating income, falsifying employment records, or misrepresenting the value of a property. Both buyers and professionals like brokers or appraisers can be involved in this kind of scam, resulting in long-term financial consequences for individuals and institutions.
- Title Fraud
Title or deed fraud happens when someone illegally transfers property ownership without the owner’s awareness or approval. This happens by forging documents to transfer property ownership to themselves or a co-conspirator, then selling or mortgaging it. Victims often don’t realize they’ve been defrauded until they receive a foreclosure notice or attempt to sell their property. Title fraud can take years to resolve, causing unnecessary emotional and financial strain to the rightful owner.
- Rental Scams
Rental scams often happen when fraudsters pose as landlords or property managers, tricking renters into paying deposits or rent for properties that either don’t exist or aren’t available for rent. You’ll find most of these scams in online listings with fraudsters using urgency and high-pressure tactics to convince potential tenants to act quickly.
- Foreclosure Fraud
Foreclosure fraud targets homeowners on the verge of losing their homes. Fraudsters often pretend to be foreclosure relief services, offering to help homeowners avoid foreclosure at a fee. However, these “reliefs” usually involve excessive fees for services never provided or convincing a homeowner to sign over their property deed. Before one realizes what happened, they are homeless and still in debt.
How To Stay Safe
The best way to protect yourself from real estate fraud is to stay vigilant and informed. Here are some tips to help you avoid falling victim to these scams:
- Verify property listings, and don’t be afraid to ask for official documents
- Use traceable payment methods like bank transfers and checks
- Look for the red flags, like someone pressuring you to act quickly or a deal that appears too good to be true
- Do your research to avoid falling victim
- Work with trusted real estate professionals.
Contact Us for Legal Help
If you suspect you’re the victim of real estate fraud, contact our Knoxville real estate litigation attorney at Reynolds, Atkins, Brezina & Stewart, PLLC, today for guidance on reclaiming what’s rightfully yours.
Source:
fbi.gov/contact-us/field-offices/boston/news/press-releases/fbi-warns-of-spike-in-rental-and-real-estate-scams
