Real estate related scams are on the rise, according to the FBI.
From calendar year 2015 to calendar year 2017, there was over an 1,100% rise in the number of BEC/EAC [business email compromise/ email account compromise] victims reporting the real estate transaction angle and an almost 2,200% rise in the reported monetary loss.Federal Bureau of Investigation’s Public Service Announcement dated July 12, 2018.
With the rise of real estate scams, it’s essential to protect yourself as a consumer. Real estate transactions involve a lot of money changing hands, which is what oftentimes make them a target of scammers. But as a buyer, seller or renter, this also means that there’s the potential that you could lose a great deal of money if you’re not careful.
Every day, there are new scams that are designed to target real estate transaction. In this post, we’ll cover some of the common real estate scams that are currently targeting real estate transactions.
Wire fraud has been a prevalent real estate scam in the past couple of years.
There are two different ways that wire fraud takes place in Knoxville closings. In each case of wire fraud, someone involved in the transaction has their email hacked. In any case, a buyer, seller, realtor, mortgage company or title company may have their email hacked without realizing it. The hacker will monitor their email and look for pertinent details about the transaction.
Here is how the scenario can play out.
Wire fraud affecting a buyer happens when a buyer gets instructions to wire funds to a place other than the title company. Usually, a buyer will receive an email from either the title company or their realtor asking them to wire the funds somewhere other than where they may have previously been told. This email often appears authentic because it’s coming from a realtor or title company’s email. When buyer wires the money, it goes to the wrong place, leaving the buyer out of thousands of dollars.
As a seller, the situation is similar. The title company will get an email indicating that they should wire the funds to a certain place. The email appears authentic because it comes from the seller’s email. So, after closing, the title company wires the funds, only to find out they’ve gone to the wrong place.
Wire fraud is a very scary concept since oftentimes the emails that are being sent appear to be very real. There are some precautions to take in order to protect yourself from wife fraud. Here are a few suggestions:
Rental scams are another problem in the real estate world. Renters often don’t realize that they’ve been scammed until it’s too late and they’ve sent a rental deposit and any other fees to the scammer.
Here’s how it works: a scammer steals posts a rental ad on Craigslist or a social media site. Oftentimes, a scammer will steal pictures of a home from other listings. The ad will be filled with great description, have a great price for rent, and require some fees be paid up front.
Rental scams can be tough because you’ll think you’re finding such an awesome deal that you’ll let your guard down. It won’t occur to you that it’s awfully strange you can’t see the rental property because the owner is out of town caring for a sick relative or on an extended vacation. You’ll accept those excuses as reasonable and quickly drop check in the mail for the required amount so that you don’t miss out on this awesome rental.
In this scenario, if it seems too good to be true, it probably is. Here are a few ways to protect yourself:
Foreclosure relief scams are another problem area in real estate transactions. These scammers prey on people who are behind on their mortgage and desperately want to get out a situation where they are drowning in debt.
Here’s what it looks like: scammers will try to lure in those homeowners who are behind on their mortgage payment. The scammer will try and get a homeowner to pay them a hefty fee for their services. In return, the scammer claims they will lower their monthly mortgage payment and save their home. Once the scammer has been paid, they’ll disappear along with the homeowner’s money.
You should always be leery of someone who contacts you directly to make all of your problems go away. Scammers will often discourage a homeowner from working with their loan servicer. Any of these scenarios should raise a red flag.
If you’re behind on your payments, work with your loan servicer or a HUD-approved counseling agency.
Scams are constantly changing in real estate. New and creative scams are always happening. As a consumer, it’s best to always be leery of things that seem too good to be true.
Are you in the process of buying or selling a home in the Knoxville area? Title Group would love to assist you in any way possible. You can reach us at 865-392-5801 or via email at [email protected].