5 Common Real Estate Scams

Even though we live in a time when consumers are more aware of real estate scams,they are constantly evolving. The fraud we think try to avoid just becomes more sophisticated. Scammers will always try and cash in on the big trend that’s happening in real estate. The internet and wealth of information has been great for the home buyer/seller, but it is opened new avenues for scammers trying to get you to fall for their schemes.

Real Estate Scam #1

Online rental/Sale Scams

90% of home buyers searched online during their home buying process¹. The downside has been the focus on online scams trying to trick during your home buying process. In these real estate scams, properties are listed on online classified sites (think Craigslist) where people illegally pull these listings and re-post them as their own. They will pose as the agent that represents the listing and ask for money upfront to cover their broker fee. If something doesn’t seem right and they always seem to have an excuse, make sure you are doing business legally and covering all your bases. The Federal Trade Commission gives great information on how these rental scams work, signs of a scam, and how to report them.

Be aware of listings that promise exactly what you want to hear. “must sell now” or “no-cost financing” are all ways to try to get your attention. Yes, people will get a locksmith to make a key for a vacant home and pretend to be the landlord in order to get deposit money. Make sure to always check who you are buying from.

The three rules when renting a house:

  1. Never pay in advance
  2. Don’t pay for something you haven’t seen
  3. Don’t wire money to people you haven’t met

Real Estate Scam #2


You always hear that property is a great way to invest your money. The only thing that you need is the right information to know how to invest! Right? Luckily people will gladly try to lure you into a seminar that promises to tell you all the “secrets” in real estate and how to get rich fast. There are some legitimate seminars out there, and there are also seminars that exists solely to take money from the misinformed. Sometimes these things are completely legal, but you don’t know that until you are already committed and lost thousands of dollars. They will ask for attendance fees, or money up front to give you books of information. Sometimes they charge high prices for information freely found on the internet.

The real workshop to stay away from is the ones that promise a “for sure” way to make millions. It just requires you to give thousands of dollars for “advanced” material. Once you realize those millions are never going to happen, you want your money back. Often times by enrolling in workshops they have you sign a release that prevents you from taking legal action (I know, we never read the fine print). Sometimes a simple Google search or some basic reading can go a long way.

Real Estate Scam #3


There are many different types of foreclosure real estate scams. The California Association of Realtors broadly lists some in three different categories.

  • Phantom help – This happens when they promise to “help you” for services for a fee. The reality is they don’t want to help and will just do things you could have easily done on your own.
  • Bail-out – these are con artist who will offer you a rent-to-buy plan to buy the title of your property and then rent it back to you until you are back on your feet again to buy your property back. How nice right? Usually they will sell your property to another buyer and dishonors the rental agreement all together.
  • Bait-and-switch – A simple scam where they tell you one thing is happening but it’s something completely different.

Many other types of schemes involve foreclosures, just drive through your town and look for signs on telephone poles that read “We Buy Homes”. Don’t panic, you still buy a foreclosed home and get a great deal! Make sure when dealing with foreclosure you seek legitimate help. If you want to learn about about a foreclosure and how to handle one, check out this webpage from USA.gov.

Scam #4

Home Improvement

Your home could always use a little work, but be mindful of who you hire to do these jobs. A home improvement scam is probably the easiest to notice, as they usually just do a cold greeting at your door promising things that will likely never happen. The reality is these types of scams are often done in certain types of neighborhoods or on the elderly. Make sure to be aware if this type of work is being done to anyone you know.


The setup: A bad/fake contractor will approach you and will point out areas of your house that need work. They will mention that they have already done work on your neighborhood (how convenient!) and they can offer you a great deal, because they need to get rid of the rest of their materials from previous job. They will push hard sale tactics and usually require money upfront. Probably the most obvious red flag is work can only be down today or in a very short time frame. They will even go as far to say that your home is dangerous to live in if you don’t make these proposed improvements.

If you are looking to have work down on your home, it’s probably obvious you shouldn’t hire the first guy off the street. Get recommendations, check credentials, and put everything writing with a written contract.

Scam #5

Online/Email Fraud

The NAR has reported that types of wire real estate scams from breaking into personal email accounts are starting to become a real issue. These hackers are targeting real estate transactions and trying to make money by posing as someone you trust. Since they have access to your licensee’s email account, they will start this scam before closing of the house. The scammer will send an email posing as the title company to the buyer with new instructions on where they need to wire money. This type of cyber-crime is hard to detect because they have access to tons of important information that gives the email credibility. The email is sent from the trusted email address (remember they are currently logged into your account!).

If you are worried this type of scam can happen to you, establish trust with people and talk to them about their email practices. Often times they will tell you that they would never ask for money this way in the first place. Never send wire transfer information via email. If you are wiring funds, make sure to contact the individual via a phone number that you know is legitimate to tell them about the transfer. Never follow any of the information provided in emails if you suspect suspicious activity.

Simple Steps

One of the best ways to prevent real estate scams or hoaxes is just simply being mindful of current scams and do a little extra homework before you make any big decision. Or simply, have the right agent to guide you. Follow the rules you always hear about and don’t be afraid to ask questions. Someone doing legitimate business with you will always want to answer questions, not the other way around.

By |2017-05-24T13:53:14-07:00June 11th, 2016|Tips|0 Comments

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