From health insurance scams to credit card and identity theft and wire fraud, these terms are all too common in today’s world. Unfortunately, the real estate industry is not immune and holds its own unique set of risks.
Title Fraud
Identity theft and mortgage fraud are two common ways scammers attempt to illegally transfer the deed to your home. Through filing forged deeds and records, they will try to gain ownership of the property. When you purchase your property, make sure to get title insurance which includes protection from this type of fraud and forgery. Always protect and monitor your identity and credit.
Land Sellers
Recently, we’ve seen an uptick in scammers posing as vacant land owners trying to sell the property and often the landowner has no idea this is in progress. In the real estate community, we’ve been working on ways to verify information before proceeding with sellers for this very reason. These scammers are quite crafty and constantly evolving their practices so this is something we work on diligently.
Wire Fraud
Wire transfers are frequently sent by buyers to purchase a property through the title company, and then the title company pays the seller their proceeds via a wire transfer. This is orchestrated by the closing agent at the title company specified in the contract and is included in their closing fees, although the bank may require an additional fee. Scammers follow the real estate transaction and as closing approaches, send official looking email giving wire instructions to their accounts.
Equity Skimming
The results of equity skimming can end in foreclosure, additional loss of funds, and will hurt your credit score. A scammer will “rescue” a homeowner by assisting with mortgage payments if they fall behind. They promise to pay the lender and sometimes the homeowner for transferring the title to their name. However, after the homeowner transfers the title, including the equity they’ve built in the property, the scammer does not pay the lender and, because the loan is still in the homeowner’s name, this can result in foreclosure. They may take this even further and allow you to rent from them which results in lost money for the monthly payments as well.
Rental & Timeshare Scams
Rental scams happen when a scammer posts your home for rent on sites such as Facebook or Craigslist. Money is then transferred to them for security deposits or rent, without the renter having access to the house. This often happens with properties that are currently listed for sale because the scammer can easily access photos and details about the home. Timeshare scams are when scammers solicit themselves as “managers” via emails, postcards, and cold-calls that request funds to be transferred.
How to be Safe?
Realtors®
It is critical to have a trusted team of professionals when conducting real estate activity, such as a Realtor®, title company, and mortgage lender. We take multiple safety precautions in the vetting process as we are taking on new clients. While we want to give everyone the benefit of the doubt, we also want to keep our clients and ourselves out of trouble, which includes all parties to the transaction. Everyone working the sale needs to stay vigilant through the duration of the transaction.
Buyers and Sellers
Let your Realtor® know if something seems suspicious, especially with emails and wire transfer requests and instructions. Know your home buying or selling team so you know who to trust and ask questions. Your Realtor® should never ask for sensitive information only through email. Always have a clear understanding of the costs associated with earnest money, closing payments, mortgage loans, and any other transactions to assure the funds make it into the right hands. Never open or click on suspicious email or included links or documents - look at the email address it was sent from first. Do not give out personal information or specific information about your property to people that aren’t trusted advisors. Keep up to date on your property or have a property manager to make sure nothing suspicious is happening while you’re away.
Read more about these types of fraud and scams from the Colorado Department of Regulatory Agencies Division of Real Estate. Please let us know if you have any questions about fraud in real estate as we would love the opportunity to guide you through the process.
