With the volume of money that regularly changes hands in the real estate business and the high value of assets being exchanged, it’s more important in this industry than any other to avoid scams. Between fraudulent wiring, predatory lending, and rental scams, there are many pitfalls to be on the lookout for when navigating the world of real estate. In fact, scams involving real estate are on the rise, with over $339 million in losses between October 2014 and October 2019.
However, with a bit of preparation and foresight, a savvy investor can sidestep any of these issues and save themselves time and money. Consider the following precautions when operating in the real estate industry.
Pay Attention to Email
Phishing is one of the biggest scams in many industries, and real estate is no exception. Often, it can be as unsophisticated as changing one letter in an email address to pose as an individual requesting a wire transfer—often one that they’ve scouted out in advance. Hacking into email exchanges is often a prelude to such a scam, as it allows the scammer to accurately portray one or more of the participants in the exchange. This often comes down to education—learning to identify suspicious emails, and never taking action without prior verification.
Know Your Records
Often preying on homeowners that might not keep close tabs on their equity, predatory lenders will attempt to persuade individuals to repeatedly refinance their properties, borrowing more money and charging higher fees. This scam affects senior citizens with memory issues the most, though it can even sabotage a savvy property owner that isn’t paying attention. Keep good records and thoroughly vet anybody that works with your finances when you’re in real estate.
Watch out for “Foreclosure Relief”
When homeowners get behind on mortgage payments, it can put them in a difficult position that may require them to foreclose their homes. This is when scammers can step in with offers of foreclosure relief. Sometimes posing as government agencies, they will claim that they can help homeowners reduce mortgage fees and save their homes, only to leave them saddled with fees of their own and leave them even worse off. If you’re considering foreclosure, work directly with your loan servicer instead of falling for a scam or contact a housing counselor to learn the options available to you.
Sometimes, despite ample precaution, a scam can result in the loss of your money. When this happens, it’s important to immediately contact your financial institution to see what methods of recourse are available to you. You should also quickly contact your local FBI office to file an official report. However, prevention is far superior to even the most prompt response, as there is often little recourse if the charge goes through.