If you are thinking of buying a house, something you should know is how to avoid a real estate fraud. Recognizing the signs of these frauds is necessary to protect your investment. Pawel Kentaro Grendys, an expert in Latin American real estate, explains how to avoid real estate scams, the most common types of fraud and some tips to avoid falling into them.
Real estate frauds annually generate damage in the tens of millions of dollars annually, both for sellers and buyers. When you find yourself in search of a home, you can find fraudulent people who want to take advantage of the situation.
Scammers usually request bank transfers to set aside a home, this being the first warning sign of fraud. In this modus operandi, a deposit of at least 10% of the total value of the alleged property for sale is requested, without the visit to the property offered or a formal deal having been made.
This advance is requested under the pretext that there are several buyers interested in the property and that this money will make the difference between you and them. “One way to avoid real estate scams is to know that an advance deposit will have to be made as long as it is established in the contract of sale,” says Grendys.
Another of the most common types of real estate fraud is identity theft, in which scammers pose as a real estate agent or advisor. In some cases, the scammer impersonates another seller by copying their ad and changing personal data or pretending to work for a company that doesn’t exist.
Scammers may try to contact you via email, which apparently belongs to lawyers, financial advisors, or real estate agents, and ask you for an amount for expediting paperwork. The offer they make you may seem attractive. However, the reality is that no financial institution will contact you directly, so you must report them immediately.
Sometimes scammers advertise properties that do not exist, using photos of properties from Internet sites that look nothing like the other properties in the colony to which they belong. If an ad does not have photos of both the exterior and interior of the property, it is most likely false.
Another common real estate fraud is related to contracts. A contract of sale is the document that gives legality to the transaction. With it, you can make sure that you are not being the victim of any scam, whether you are a buyer or a seller.
Asserts Grendys, “If the alleged seller refuses to draw up a formal sales contract, it is most likely a real estate fraud. For no reason should you continue with the purchase.”
This document always includes everything agreed upon by both parties and the signing of the contract must be carried out in front of a notary public. In addition, this document should be reviewed by your lawyer or your real estate advisor beforehand.
Another recurring real estate fraud is the submission of false documentation. Some scammers may resort to using false documents to prove ownership of a property. If you want to review the legitimacy of the documentation, you can check if it is registered in the Public Registry of Property. In this same place, you can see who is the owner of the property and what is the current legal status of it.
Hiding the faults or imperfections of a property is another real estate fraud that is common. The term hidden vices refers to the damages that, at first glance, you cannot notice but that, over time, will generate a problem in the property.
A sign that something is not right in the process of buying and selling a property is that many days go by without you receiving a response from the seller. Especially when you talk about face-to-face visits to the property or ask for more photographs of the property. Whether it is a private sale or through an agency, it should not be difficult to locate the owner of the property.
If a real estate company does not have a current tax address to which you can go, it may be because it is a false company. Investigate if you have a record and your reputation to avoid falling victim to real estate fraud.
Remember to check the market in the area to give you an idea of how cheap or expensive a property in that community can be. A low price may also be disguising some anomaly of the property.
If you are asked for personal or banking information, as well as deposits, without you knowing the property, it is a scam. Without a contract of sale in between, there is no way for the sale to be safe, since even advances are included in this document.
Lastly, if the seller insists that you make a decision soon, without giving you time to analyze or consider more offers, trying to make you act rashly is a sign that you could fall into a very common real estate fraud.