Investment scams in real estate sector- All you need to know

realestate-investment-scams

Investment Scams in real estate sector- All you need to know

The road to owning a house is not a tree lined path, in fact it is quite the opposite. More often than not, there will be many hurdles along the way and ditches you never saw before. The best way to safeguard your interests is to be aware and beware. Read through the ways and means you can be tricked and how you need to keep yourself on alert for any fraudulent wrongdoings by builders.

1. Title fraud
It may have happened to someone you once knew from long ago and may lead you into thinking that this kind of a fraud is very rare. The fact of the matter is that even though it is considered uncommon, a title fraud is one of the most disparaging rackets to affect real estate. For property owners this is comparable to a virtual nightmare.

In the case of a title fraud, there will be an identity theft to start with; later the scammer will use fake documents to pose as the original property owner and register the forged documents transferring the property to his or her name. These counterfeit documents will be used to sell the property or obtain a home loan. After the trickster has obtained the loan or line of credit, he will set off with the cash and leave the actual owners of the property with the burden of future payments.

It has been noticed that most identity thieves somehow obtain a forced release from the existing loan that may be ongoing on the house; but it may not always be so. Typically, these scammers target expensive properties or homes that are free of previous loans, sometimes even rented out homes, besides tricking unwitting senior citizens, who are unaware about identity thefts, so as to obtain loans with ease.

What to do to safeguard against this fraud?

Two words- Title insurance. This insurance will safeguard the actual propertyowners from infringement issues and inaccuracy in public records. It will also guard you from existing encumbrances such as unpaid utility bills, pending property taxes, infringement issues etc. Be absolutely careful with your personal information and take extreme precautions to secure your data, this way even your credit card information stays private.

2. Scams on rental houses

House hunters typically scour newspaper listings or the internet for potential properties to rent. Scammers are usually on the look out for these kinds of people. They will masquerade as real estate agents and will advertise somebody else’s rental listing as their own. Further, they’ll offer the house at a lesser rent and ask for the security deposit straightaway. You might be fooled into thinking they are authorised agents as they present rental documents too. It all turns out to be a sham at the end of it all as the buyer not only loses his security deposit but also his personal data (which the fraudster obtains from the rental agreement).

What to do to safeguard against this fraud?

To avoid tax payments many landlords rent out their properties without rental contract. Ensure you insist on a contract as proof of a permanent address and employ the services of a trusted real estate agent or a relocation specialist when setting up and signing a rental contract. Also, conduct an internet search on the address of the house you want to rent. Typically, watermarked photos are genuine and include contact numbers. However, this may be futile if the fraudster is adept at these techniques.

Don’t respond to advertisements which claim distress or urgency of any kind;consider a flashing red sign when ads say they have to rent out immediately or dirt cheap rentals. If the scammer doesn’t meet you at the property and calls a meeting elsewhere to exchange the keys or sign documents or worse collect the security/ rental deposits, consider it to be a red alert sign indicating things are hunky dory.

3. Say a big ‘no no’ to delayed projects

Unless of course you’ve already invested in it. If you’re a first time home buyer, make sure you use information from news articles or the internet to safeguard yourself against a delayed project. Don’t purchase a house from builders you have never heard of. Usually, unscrupulous developers will not have a clean track record and you can be sure that the project will never see the light of the day. Many times a builder has accepted down payments or booking amounts for a flat and vanished with the cash in thin air.

What to do to safeguard against this fraud?

Enquire with other buyers about the track record of the developer and check his delivery schedules. Make it a point to check online real estate forums on which there are discussions concerning project delays or builder reputations.

4. Don’t think it won’t happen to you

Most people prefer to close their eyes when purchasing or renting a propertythey’ve been eyeing for long. So when opportunity presents itself, they seize the chance to own it no matter what. Very often, the biggest mistake that people make is to think they know everything and that it could never happen to them.

Scams in real estate are no longer done by novices who are trying their luck.More often than not, the most deceptive scams are done by people who understand the system, regulations and loopholes in the system.

It’s no consolation that among the list of those who’ve fallen prey to real estate fraud are many bright and notable people.

 

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