Real Estate Scams

During times of recession or a general slowdown in the real estate market, scam artists start looking for easy money opportunities, preying on the weak and vulnerable, those who are in deep financial trouble, the elderly, and those who have a need to hear good news, whether it is the truth or a lie.

To say that any one of us can't be scammed is an untruth. When we are under pressure, we all tend to let our guards down and that makes us susceptible to those who are looking to make a quick buck.

Beware the phone calls, the individuals that show up at your door, the offers of help, especially if they sound too good to be true, and above all, the pressure tactics.

Some of the most common of today's scams are listed below:

1. The Straw Buyer: Straw buyers are individuals who are persuaded to use their good credit to purchase properties by signing loan documents with the promise of making quick money on a resale. Many times, the buyer is left holding the bag because the scam artist takes the money and runs. The buyer ruins his or her credit and may be held liable to pay back the loan.
2. The Bailout: Homeowners who are facing foreclosure are often told that they can be helped, if they put up a certain amount of money. The scam artist tells the homeowner that they can sell the property to an investor who will let them rent the property back. This scam usually leaves the homeowner in a bigger bind because the scam artist takes the money and the home goes into foreclosure anyway. There was never an investor.
3. Equity Rip off: Offers of loans are one of the biggest scams. A scam artist contacts a homeowner who is behind on his payments and offers to get the homeowner a loan. True enough, the loan can be underwritten but in the beginning, the loan is offered at very attractive rates and fees. But in the end, the homeowner is confronted with at a very high interest rate and with outlandish fees. At this time, desperation has set in and the homeowner has no choice but to accept the loan.
4. Rental Fraud: Rental fraud is common during periods of high foreclosures because there are many homes that are left vacant and unattended. Scam artists will actually advertise and rent the homes. Unsuspecting renters may find themselves being forced to move after putting up deposits and security fees.

Some scams are elaborate and are run by people in high places. Just because a person dresses nice and drives a big car doesn't mean they are honest. If you feel that something is too good to be true, it usually is.

If you are having issues with foreclosure, debt, or other problems, talk to someone that you know personally and don't let your pride get in the way. If you feel that someone is trying to pull a scam on you, don't hesitate to call the police.

Finance Topic of the Month: Managing Money