Anyone can fall victim to property fraud now that online transactions are soaring and the pandemic has turned remote work into the norm. The National Association of Realtors and data from the FBI show that over 13,500 persons fell victim to wire and rental fraud in 2020. Total losses amounted to $213 million.
Buyers fall prey to wire fraud and sellers to foreclosure scams and title frauds arising from identity theft.
Here’s what you need to know to protect yourself from property fraud.
Kinds of property fraud
- Email hacking
Scammers block email between buyer and agent and change bank details. Then, they channel the money to their own account by posing as the one in charge of facilitating the process.
- Investment scam alerts
These get-rich-quick scams convince you to give money in exchange for fake high returns. In land banking, a piece of land is touted as investment material, but is actually non-existent or difficult to build any kind of property on. These buy-to-let scam involves companies that convince you to invest in rented properties that promise rental income. But these homes are in bad shape and cannot be occupied at all.
- Title transfers
Fraudsters falsify documents or pretend to be the rightful owners so they can transfer property under their name. They usually eye vacant, mortgage-free properties.
- Quick sale
Shady companies offer to buy property, only to drop the price at the 11th hour.
- Online shopping and auction platforms
Homes the seller doesn’t legally own are sold through online sites.
- Paying double commission
This happens when you change agents and someone your first agent introduces buys the property. Both agents will charge you commission fees.
- Holiday homes masquerading as permanent residences
When a beach property or any other kind of holiday home is advertised as a permanent residence, but can never function as one.
How to fight property fraud
- Research
Beware of mail solicitations offering big returns. Look the company up. Does it have a proper address, landline, mobile numbers, and website? Call the listed number. Make sure domain names and bank details sent by email and via previous communications match. Visit the property and get its history from the locals. Find out if the property has the right planning permits. Confirm wiring instructions before transferring money.
- Document all transactions
File several copies of transaction-related paperwork. Record phone conversations.
- Check the fine print
Read and understand legal documents. Consult a lawyer if needed.
- Take your time
Don’t be rushed into buying or selling property. Beware of requests for urgent fund transfers and sensitive information.
- Never email bank details
Give bank details over the phone, or go straight to the agent’s office. Your email can be hacked.
- Get a trustworthy Realtor
Get an accredited National Association of Realtors® (NAR) member who is bound by the organization’s code of ethics.
- Others
- Ask the title company when and how closing funds are obtained.
- Make sure the proper party received the money within 24 hours after its transfer.
- Be wary of new wiring instructions.
- Regularly check vacant property for signs of intrusion and install cameras there.
- Ask the county recorder’s office if it has a fraud alert system.
- Consider estate planning that allows you to include joint tenancy with survivorship rights or a transfer on death deed.
- For the buyer, a title insurance policy that takes care of transfer title issues.
We can help you avoid property fraud. Entrust your real estate transactions with Coldwell Banker Cascade Real Estate in Wenatchee and Leavenworth, WA. We have operated in the area for more than 40 years. Call us today at 509.888.8887 or connect with us here to get started.