How to Avoid Real Estate Property Fraud


Fraud is defined as any intentional or deliberate act aimed at the disguise, omission or exposure of sensitive information to gain an unlawful advantage and cause detriment to other parties in the process. A deed which puts others in a vulnerable position or coerces them to surrender valuable intelligence qualifies as fraud.

Potential Costs

Man handing another man money for a house

Fraud is a raging incidence which affects more companies than you may think. Take the recent case of Barclays. The multinational bank from Britain had to incur a 2 billion dollar settlement in a US fraud case. The United States government sued the financial service provider citing their misconduct regarding the sale of mortgage-backed securities. Furthermore, statistics show that scammers stole information worth 16 billion dollars from companies in 2016, which is an increase of more than a billion from the previous year.

Real Estate Scams

The central matter to consider is property fraud and how to counter them. Investors can adhere to certain measures to avert potential property scams. We will explain what some of these are below:

Investment Scams

One of the most frequent ways to scam investors is by enticing them with expedited deals. If you fall victim to such offers, you are likely to incur heavy losses. There are no shortcuts to making money, especially when it comes to real estate. Any get a rich quick offer will certainly be fraudulent.

Assume that you are seeking an investment in the property business. You scour the market independently but find no feasible investment opportunity. You may encounter a property dealer who encourages you to invest in a promising prospect which would give you considerable gains in a short duration. Investors should beware that such plans are a money-making device for fraudsters.

Susceptible investors may be tempted by such offers and a chance to become an opulent real estate owner may prove too much. They may even make a significant contribution under the assumption that it is nothing more than an innocuous business transaction. However, they may never recover their investment at all.

One way scammers do this is by making empty pledges about real estate projects that are being planned and will yield handsome dividends once they reach fruition. They collect funds from gullible investors and leave without a trace. Additionally, these properties may never actually reach completion.

In order to avoid such unfavorable circumstances, investors and buyers should seek help from legitimate professionals or those who are experienced in the real estate business. A trustworthy employee of a reputed property firm will not lead his clients astray, but hiring an atttorney is highly recommended!

It is also advised that investors do thorough research before they make moves in the realty business. Besides scams, the property market can be precarious which is ample reason to proceed cautiously also.

Identity Theft

The numbers pertaining to identity theft are quite alarming. According to the latest statistics, criminals have stolen more than 107 billion dollars from companies in the past six years. No profession is safe from potential scams and that includes the real estate business as well.

These figures are relevant because identity theft is possible in property business as well. Offenders have been known to assume the identity of others and sell their property or mortgage it. Imagine a scenario where a business tycoon operates a diverse investment portfolio. He will be handling the financing of different ventures, which may include real estate as well. If his identity is stolen, it could wreak havoc for his entire dossier. More specifically, if a scammer obtains his credentials or passwords wrongfully, they may carry out transactions like selling or leasing the house, unbeknownst to the actual investor.

Fund Interceptions

Scammers employ another deceitful trick to extort money from investors. They pose as property dealers or solicitors to coerce the buyer into making a bank transfer for the specific property into their accounts. Although this sounds particularly ludicrous from an investor’s perspective, there are cases where this can happen.

There are two ways scammers can carry out this conspiracy. They can impersonate legal personnel or pretend to be real estate experts. This would allow them direct access to buyers who are interested in purchasing a property. Scammers have all the tools required to construct a gimmick and entice investors to transfer amounts to them. If they are successful, they will depart with the money in tow and will never be heard from again.

The other way is to simply infiltrate the bank accounts in order to intercept and plunder the savings of victims. Either way, the onus is on investors to be vigilant and discreet when they are looking to make such a significant investment. Undergoing a substantial loss will be one which few people could actually recover from, which is exactly why prudence is urged.

Guaranteed Rent Return

Yet another method of bluffing buyers is to mislead them with false promises about irrefutable rental returns. Scammers accomplish this by advertising that the relevant real estate will bring investors a handsome amount from a tenancy agreement if they put it on the market for rent.

They even go as far as printing fictitious listings of multiple projects on the internet in a bid to lure unsuspecting buyers into their well laid out plan. Such advertisements are meticulous in nature and appear authentic, particularly to inexperienced investors. The promise of a surefire return on investment is the ideal scenario for any buyer.

As always, those looking for an investment opportunity should carry out their own research before they jump in. For instance, buyers can look online to gauge the validity of real estate offers. One of the many advantages of the digital age is that information is easily accessible on the internet. A quick glance at Google could provide adequate answers. If the property dealer involved in this deal has an online presence, buyers must peruse through their official website if it exists. They can look for reviews from other customers or testimonials from clients. If the information appears legitimate, only then should a buyer proceed. If there are outrageously negative reviews online and customers have listed the property dealer as untrustworthy, then the person is probably a scammer.


Posted On September 11, 2018