Fraud in real estate is more common than most people realize, though the most prevalent types today are different from what people typically imagine.
Wire fraud is the biggest threat right now. Scammers hack into email accounts of agents, title companies, or lenders and send fake wiring instructions to buyers right before closing. The buyer wires their down payment and closing costs to the scammer's account instead of the title company, and the money is usually gone within hours. Always verify wiring instructions by calling the title company directly using a phone number you know is legitimate, never from a link in an email.
Title fraud involves someone forging documents to transfer ownership of your property without your knowledge, then taking out loans against it or selling it. This is more common with vacant land or investment properties that the owner doesn't check on regularly. Title insurance and owner's title policies protect against this.
Rental scams are common too. Someone lists a property for rent that they don't own, collects deposits and first month's rent from multiple victims, and disappears. Always verify that the person renting the property is the actual owner or authorized property manager before sending money.
To protect yourself, verify everything independently. Don't trust email instructions for money transfers. Get title insurance on every purchase. Work with licensed professionals. And if a deal seems too good to be true, it probably is.
The most common fraud you will find in real estate will involve; Rental, Mortgage and Foreclosure.
or Affordable Housing.
Rental fraud - is when a person is posing as the landlord and advertising a rental property as their own. They will prepare lease contract and request security deposits only to later find out you are scammed. (Make sure you use a licensed realtor). Mortgage fraud is when someone is misrepresenting information of income, assets on a mortgage application to secure a property. Foreclosure fraud is the homeowner is being targeted by individuals promising to help them save their home and negotiating with their lender. If you are facing foreclosure, understand your options. A local realtor/attorney with background in short sales/foreclosures will be able to assist.
Darren, fraud in real estate is very common. The main frauded is wiring funds to the title company for closing. Buyers should be aware of emails with instructions for wiring funds to closing. Always verify with your Realtor and the Title Company. We sometimes see someone representing they are the property owner when they are not.
Hi Darren,
Absolutely, like most other things there is fraud in real estate. Biggest one I am aware of is the email fraud. Never ever believe an email that your escrow company is changing the routing number to wire your funds without speaking directly to the escrow officer. Escrow will always confirm the bank account that you want it wired to right before escrow closes. Also, never sign the Title paperwork over to someone else. Ask a real estate attorney or a Realtor that you can trust before you sign any documents. People get tricked into signing over the documents and then their home is gone. Also, to do a loan modification noone is allowed to charge you. Do not pay anyone upfront to do a loan modification. This is illegal in California.
Not super common, but it does happen—most often with wire fraud (fake closing emails), identity/title fraud, and fake rental/listing scams. Biggest rule: always verify wiring instructions by phone using a known number.
