Home buying scams - things to watch out for when buying a home
If you are buying a home, then you're looking at making a huge purchase and a huge step in your life moving forward. So it is perhaps not surprising that home buyers are sometimes targeted by scammers. While some home buying scams are so obvious you wonder who falls for them, others have been known to catch even the otherwise savvy. These scams are especially dangerous if you are tired and stressed, as you are likely to be in the middle of the home buying process!
At Bellwether Community Credit Union, we want to keep you safe from any home buying scams, so we put together a list of common scams to look out for!
10 Common Home Buying Scams
1. You Got Phished
To be precise, you sent money to what you thought was the seller or their bank, but was actually a cybercriminal impersonating them. Bear in mind that most reputable banks will not email you to request for a wire transfer. If you get an email, call the bank and ask if they sent it. They may ask you to forward them the bad email so their fraud department can investigate.
Check with your agent, too. This is called an "email access scam," and it is one of the most common scams out there. If they suddenly change how they want the money, be suspicious - and contact the realtor and thier bank.
2. The House Doesn't Exist
This one is more often aimed at renters, but anyone who is relocating is vulnerable to this. Needless to say, you should not buy a house you haven't looked over. Sometimes the house exists - but it doesn't belong to the person trying to sell or rent it to you. Check ownership using searchable databases or CourthouseDirect.com.
Working with a reputable realtor should keep you from falling for this one. Avoid Craigslist - a common home buying scam is to duplicate a real listing on Craigslist and then get you to overnight the money. Often they seem to be offering a good deal, but in reality, it's too good to be true.
3. Your Realtor Assigns the Sale to Themselves
This is something scammy realtors do - sometimes with forgery involved. They do this if you have life problems that might, say, prevent you from working - they will tell you a lender won't finance you. Make sure you have power of attorney set up before buying so that somebody else can step in and avoid this.
4. Fake Lawyers
The fake real estate lawyer scam works like this: The scammer impersonates your lawyer or the seller's and redirects the funds to their own account. The red flag for this is if they suddenly tell you to direct your money to a different account. Always double confirm any changes!
5. Unlicensed Realtors and Fake Escrow
In this home buying scam, the scammer pretends to be a realtor, sells the property, and then has the escrow money put into their own account. Make sure your realtor is licensed - and that their license is up-to-date. And verify companies used for escrow - contact the escrow company yourself if you are not sure.
6. The Fake Viewing
You arrange a viewing of a house for sale, but the realtor backs out. He just tells you the owner or landlord will be there. When you get there, there are a bunch of other people interested in the property. You work out a deal with the realtor, but then discover... that the house has been sold or rented to somebody else. They weren't a realtor at all...
7. The Greedy Movers
This isn't really about buying a home, but there's a very prevalent scam out there in which movers will give you a quote and then refuse to unload until you pay twice or three times the original quote. In some cases the quote may be legitimately low - for example, if you have more stuff than the movers thought and it genuinely takes them longer.
You can avoid this home buying scam by having a representative look at your stuff or by sending them photos before obtaining a quote. But in many cases, the movers are just holding out for more cash. Always use a reputable moving company and if you can move yourself, do it.
8. Mortgage Bait and Switch
Don't get so desperate you get a mortgage from a fly-by-night shark (if they promise to approve anyone for a mortgage, they're probably a shark). Watch out for shady lenders who might offer one interest rate, and then suddenly increase it come closing time. Avoid "exotic" mortgages where the initial payments are majorly discounted - this can result in doubling or tripling of payments later. Always go to a major bank or a reputable credit union for your loan.
9. "It's a Great Deal."
Be suspicious of buying a home that is being offered for a price way lower than the going rate. There probably is - yes - something wrong with it. Get a home inspection (you should anyway) to see if the thing wrong with it is something you can deal with.
If the seller refuses to allow a home inspection, walk away. If they try to say you don't need one because they already got one... then there's almost certainly something very wrong with that house!
10. The Title Scam
"You don't need a title company." They claim they own the house free and clear because there's no mortgage. This can mean they don't own the house at all, or it could mean that you're about to get caugh up in something more than irritating - perhaps a less-than-amicable divorce in which one member of the couple is trying to sell the house cheap out from under the other. You always need a title company.
More Ways to Ease the Process of Buying a Home
Needless to say, the best way to avoid these scams when buying a home is to work with a reputable, licensed realtor. The other important thing to do is keep control of your emotions and stress levels - do whatever you need to get yourself to stop, think, and evaluate (unless it's resorting to 'self-medication' - never make important financial decisions if you've been at a bottle. Seriously.) A good realtor will know all of the red flags, and if your realtor says to stop and think, listen to them. A reputable bank or credit union will also be able to advise you on avoiding scams. And never, ever send secure financial information by email.
For more information and to find out about our mortgage offerings, please check us out here!