Real Estate Scams
It is important that as a home buyer or seller you understand
the precautions needed to avoid becoming a victim of any real estate scams.
There will be many people helping you achieve your goal of buying or selling your property,
but this does not mean you should rely on those agencies to inform you on every detail involved in the real estate process.
It is entirely your responsibility to read through all paper work and fine print, and know
what each signature entails.
Real Estate Fraud
Real estate fraud is one of the fastest growing crimes in the United States
and is perpetrated in numerous ways. Three of the most common of these crimes are known as real-estate fraud, appraisal fraud, and mortgage fraud. Real estate fraud is accomplished when an individual uses fictitious documents to obtain the deed or title to the property of a legitimate owner. The perpetrator will then obtain and default the loan taking the money and leaving the legitimate owner with an outstanding debt.
Appraisal fraud is carried out through property flipping. Here a property is purchased using the initial mortgage. Then, using a dishonest appraiser, the property is then appraised at a much higher value and sold for the maximum profit. The inflation of the property value is also orchestrated to obtain a larger loan amount.
Mortgage fraud occurs when the buyer qualifies for a loan using false income, credit, employment or appraisal documents to obtain a loan. This type of fraud hurts the lender as well as the unqualified buyer for then they usually are forced to default on their loans.
Signs of real estate scams are hard to spot, however there are some basic steps you can use to avoid falling victim to fraud.
- Be cautious of a broker that insists on you using a particular lender.
- Always make copies of signed documents.
- Have a third party appraiser.
- Get referrals before choosing your real estate professionals and make sure your aware of the their track record.
Make sure you understand what each type of fraud entails and how they work.
It is your responsibility to gain knowledge about the different types of frauds and scams
involved in real estate. With your invested time and effort it will be much more difficult
for a scammer to make you a victim of Real Estate scams.