Shield Yourself: How to Spot and Avoid Real Estate Scams

In recent years, real estate fraud has emerged as one of the fastest-growing types of scams. From wire fraud to fake listings, these schemes prey on unsuspecting homebuyers, often resulting in devastating financial losses.

One heartbreaking example is a West Virginia couple who lost $255,000 after scammers hijacked email communications with their agent, tricking them into wiring their down payment to a fraudulent account. Unfortunately, such stories are not isolated incidents.

If you're planning to buy a home in 2025, staying informed and vigilant is your first line of defense. Let's look at some typical scams and how you may protect yourself.

Beware of Wire Fraud

Wire fraud is a prevalent and costly scam that targets homebuyers during mortgage transactions. Scammers intercept emails containing wiring instructions, manipulate details, and deceive buyers into transferring funds to fake accounts.

Red Flag: Sudden changes in wiring instructions from your mortgage broker, especially emails urging you to act quickly.

Pro Tip: Always confirm details directly with the office using a trusted phone number. Never rely solely on email communication.

Protect Your Earnest Money

Earnest money is a good faith deposit that shows your intent to buy a home. However, scammers may misuse these funds for personal gain or fail to deposit them into secure accounts.

Red Flag: Requests to pay earnest money directly to a seller or an unverified account.

Pro Tip: Ensure your deposit is handled by a reputable third party, such as a title company or escrow agent, to secure your funds.

Spot Fake Listings

Fraudulent listings on platforms like Craigslist lure buyers and renters with suspiciously low prices. Scammers often copy legitimate listings and alter details to deceive potential victims.

Red Flag: Incomplete information, prices that seem too good to be true, and requests for deposits before signing a legitimate contract.

Pro Tip: Cross-check property details across multiple trusted real estate websites to verify legitimacy.

Avoid Title Scams

Fraudsters often target vacant properties, using stolen identities to pose as sellers. Buyers eager to close deals may fall victim to these schemes, losing their funds entirely.

Red Flag: Sellers who can't provide proof of ownership or rush to close the deal without sufficient documentation.

Pro Tip: Work with experienced real estate professionals and title companies to verify seller identities and ensure proper documentation.

Vet Contractors for Repairs

Homebuyers aren't the only targets. Fraudulent contractors often demand large payments upfront for repairs and then vanish or perform subpar work.

Red Flag: Contractors asking for significant advance payments or avoiding licensing and insurance discussions.

Pro Tip: Make sure contractors have the necessary references, insurance, and licensing before hiring them. Pay just once when you're satisfied with the job.

Bottomline

Real estate scams can happen at any stage of the home-buying process. Stay informed, trust your instincts, and verify all details before proceeding. If you're considering making Orange County your next home, let’s connect to ensure a safe and successful real estate journey.

Reference: Heidenry, Margaret. "How Homebuyers Can Protect Themselves Against Real Estate Scams." December 27, 2024.