Most of us have heard about real estate scams, which can cause problems not only for individuals, but also for the real estate market in general. If you’re going to be buying a home, selling a home or investing in real estate, it helps to know how to protect yourself against scams. Following are seven of the most important tips I’ve collected from my father and my own experiences.
1- Join an Organization
In many cases, the best way to protect yourself against real estate scams is to have a solid source of accurate information. When you join an investment club, you gain access to experts who can answer your questions when a deal seems “off”. In other words, don’t make decisions until you run it by your fellow members.
2- Request Identification
Before you show a property to a prospective buyer, and before you look at a property with a seller or real estate agent, verify they are who they say they are. Requesting valid identification is your best defense against real estate scams, and has become so common as to be considered the “norm” these days. If they don’t have I.D., go with someone else.
3- Safeguard Your Money
Your closing agent is your strongest ally when closing on a real estate deal, so avoid those scams by placing your money in the agent’s escrow account. This way, if you discover that you’ve been involved in a scam, you can yank your money from escrow immediately rather than struggling to find out where exactly it is. Remember, scam artists work together in teams, so it’s easy to be fooled.
4- Hire an Attorney
Your real estate agent might be experienced in handling contracts and negotiations, but an attorney has him or her beat on all counts. Before you sign anything, have your attorney look over the documents to ensure you are protected against real estate scams. It’s better to be overly cautious than to make a very costly mistake.
5- Locate Liens
Before you invest in or purchase a real estate property, make sure there are no outstanding liens against it. Real estate scams often involve trying to sell properties with hidden liens, especially when the lien was placed recently and doesn’t yet show up under title searches. This means using all of your city’s resources to locate potential problems.
6- Obtain Title Insurance
This tip is worth its weight in gold, and will go a long way toward protecting you from real estate scams. Unfortunately, this is an expense that shouldn’t be spared, even if you don’t think it’s worth the money. It only takes one sour deal to put you in the poor house, so start shopping around for title insurance immediately.
7- Compare on Your Own
Some real estate scam artists will provide fraudulent comparison reports when trying to sell a property. They will claim that similar homes or businesses in the area are worth twice their actual value, and will have a partner in appraisals or research to substantiate their claims. Do yourself a favor and research your own comparisons.