Scams in real estate are quite common. Every year, many people lose their hard-earned money to these frauds. Some of the strategies that these scammers adopt include completely deceiving people, making promises that impossible situations will take place, playing with the perception of the other party, and taking advantage of victims by issuing fake documents.
It is seen that there is a great number of distinct types of fraud in real estate, particularly on the part of construction businesses and contractors.
In this blog, you will learn more about the reasons why real estate is a target for thieves, the types of real estate scams that target purchasers and renters, as well as recommended practices for preventing real estate scams in Pakistan.
Why are there so many instances of home scams?
Due to large sums of money and the exchange of sensitive information among various parties in real estate transactions, thieves frequently target this industry. Real estate is also a regular target because it is a typical target for insider trading.
Scams involving real estate are commonplace in every facet of the housing market, and unscrupulous individuals target homeowners as well as tenants.
Real estate scams and frauds are common in Pakistan
One of the most essential things that you can do to protect yourself from being taken advantage of by scammers is to educate yourself on the most typical types of fraudulent activity in the real estate industry.
- Wire transfers:
Real estate wire fraud is a widespread type of crime that may be committed online. Homebuyers are frequently targeted by this type of scam as they proceed through the process of purchasing a property.
Criminals can acquire access to bank accounts, social security numbers, and other sensitive information through hacking into email and other kinds of communication. Examples include email and text messaging. Criminals can use this knowledge to their advantage and steal hundreds of thousands of Rupees from your customers by intercepting their transactions.
- Deed Fraud:
Theft of a home title sometimes referred to as deed theft, deed fraud, or house stealing happens when the title to a piece of property is gained illegally and without the approval of the owner. Thefts of titles occur often at crucial stages of sales and refinancing deals.
The Thieves frequently acquire the information necessary to carry out a title theft by pretending to be real estate professionals or other third parties to steal their identities. Homeowners who find themselves the victims of title fraud are urged to file complaints with the Federal Trade Commission (FTC).
- Mortgage fraud:
The process of purchasing a house may be stressful and expensive, and prospective buyers may be deceived by lenders advertising themselves as having “no strings attached.” A loan with low-interest rates and no closing fees may be promised by those perpetrating this sort of mortgage fraud.
After the closing of the loan, the new homeowner could be surprised to learn that the interest rates and costs were greater than expected. Working with reliable lenders and urging customers to thoroughly check the paperwork they sign at closing are the best ways to avoid falling victim to these scams.
By utilizing a safe closing portal such as Graana.com, you will have the ability to converse and exchange papers with customers, therefore assisting them in better comprehending the entirety of the closing procedure.
- Foreclosure:
As a result of unforeseen financial difficulties, homeowners run the danger of falling behind on their mortgage payments and ultimately losing their property. Scammers may approach homeowners who are on the verge of losing their homes to foreclosure and offer them temporary respite from the foreclosure process.
Regrettably, during the epidemic, there has been an increase in the number of instances of fraudulent foreclosure relief schemes, which target homeowners who may have lost their employment.
Encourage a borrower who is having trouble making their mortgage payments because of financial difficulties to have a conversation with their lender about the possibility of modifying their loan, asking for a deferment, or finding another solution.
- Fake rental contracts:
It’s possible for renters to fall victim to several cons, each of which can result in varying degrees of monetary loss. Fake rental adverts are a frequent method used in rental fraud schemes. In this particular scenario, a con posts an ad for a rental unit on the internet, and contacts prospective tenants to persuade them into paying a security deposit or the first month’s rent.
For instance, a scammer might post about a house for rent in E-11, Islamabad, and when potential tenants will contact him, he will ask for an upfront payment and disappear.
The Federal Trade Commission (FTC) issued a warning that any demands for payment, particularly those involving a wire transfer or cash, before seeing a landlord or signing a lease are red flags that indicate a potential rental scam.
Scammers may tell lies regarding the availability of amenities (such as air conditioning or laundry facilities) to enhance the amount of rent they can charge for a unit in other instances.
- Moving Scam:
The act of moving might present new possibilities for cons to commit fraud. Scams involving moving to tend to fall into one of two categories: (1) firms that overcharge with costs that are not revealed, and (2) companies that receive a deposit and then vanish without a trace.
Both of these practices are unethical. To stay away from such a scam, we suggest you research each possible moving company you choose and obtain at least three quotations from them before hiring them. This will help you from being taken advantage of by dishonest moving businesses. Moving businesses that ask for cash payments or big deposits are often a red sign of fraud.
How to prevent real estate scams:
- To avoid being a victim of a real estate scam or fraud, you should always keep your personal information secure and be aware of the tactics that con artists use to prey on homeowners and renters.
- Carry out your investigation before committing to a partnership with a company or a person. This includes both buyers and renters. Inspire them to look up testimonials on real estate websites and advise them to speak with seasoned real estate agents about the firms and people they have worked with in the past.
- Even though homeowners and renters have access to a greater number of internet resources than at any other time in history, they still require the assistance of real estate experts who can guide them through the business using their knowledge.
- Clients should be made aware of frequent warning signs; if something raises suspicions, they should be encouraged to inquire further about the matter with the firms they do business with. Reputable businesses will make it abundantly apparent both the information they want and the reasons why they require it.
- If fraud occurs, clients should be encouraged to register complaints with the Federal Trade Commission as well as the Better Business Bureau’s scam tracker: As a first step in repairing any harm, victims of real estate fraud may file a report with the Federal Trade Commission (FTC).
These were some of the things that you should keep in mind to stay away from real estate scams. We hope these tips will help you to tackle the real estate scams around you.
