Whether you’re buying or selling a property, you should always be on the lookout for real estate scammers who are out to rob you of your hard-earned money. By learning some of the most common real estate scams and their warning signs, you’ll be in a better position to protect your wallet, credit, and peace of mind.
- Wire transfer fraud
By far the most common type of real estate fraud in California, wire transfer fraud usually involves the scammer pretending to be your real estate agent and demanding that you deposit a down payment into their bank account. Once the scammers withdraw the money, you may have no way of retrieving it at all.
How to protect yourself
Always be suspicious of a new email or unknown phone number asking for your money. When a potential scammer gets in touch with you, reach out to your agent using the original contact information they provided you – not the ones from the wire transfer request – to confirm that you are indeed talking to the right person.
- Loan flipping
Loan flipping, also known as loan churning, is a process in which a predatory lender pressures a borrower to continually refinance their mortgage, often convincing the latter to borrow more money each time. This practice offers little to no benefits to the borrower, while the lender collects fees with each transaction. The borrower often ends up with higher loan payments that they can’t afford.
How to protect yourself
While refinancing can be beneficial in certain situations, it helps to carefully review the terms of your new loan before taking it on. Pay close attention to the fees, premiums, terms, and amortization. If a lender keeps pushing you to take on a higher interest or extend the length of the loan, that’s a good indication that they’re trying to lure you into a loan-flipping real estate scam. Work only with reputable lenders and have all the fees and third-party costs disclosed to you.
- Foreclosure relief
A relatively new type of real estate scam, foreclosure relief seeks to take advantage of homeowners who get behind on their mortgage payments and are desperate to save their homes. Foreclosure relief scammers will claim to help you keep your home out of foreclosure for a fee. Sometimes, they may even ask you to “temporarily” transfer deed and ownership rights, which could make you lose all your rights to your home altogether.
How to protect yourself
Some of the warning signs that you’re talking to a foreclosure relief scammer is when they try to convince you to stop making mortgage payments. This can hurt your credit score and limit your options. They will also promise to help you avoid foreclosure as long as you pay their upfront fees or hand over the deed to your house. They’ll also require you to make your mortgage payments to an entity other than your lender.
When faced with foreclosure troubles, the best way to avoid getting scammed is to talk directly with your current lender and work out a way to modify your existing loan. Ask for forbearance or negotiate an arrangement that will allow you to make payments and keep your house. It can help to talk to an accredited housing counselor to learn about solutions that are available to you.
Protect yourself from common real estate scams in San Francisco today! Get in touch with me, Amir Hardy, at 415.602.0570 or send an email here.