Scams in Real Estate: Situations You Must Be Aware

Photo by Bruno Martins

You can gain a lot from immersing in real estate industry. But you can also lose if you aren't careful of your transactions. Some people try to take advantage of others to increase their commission, boost their sale or attract clients. Different agents and realtors adhere to various scams in real estate.

Whether you want to buy a house and lot for sale in Laguna or sell a condo in Makati, you must be aware of the situations rampant in the industry to avoid misfortunes.

Changing Lender

If you receive a letter about a transfer of your loan to a different financial institution, you must be alert especially if you didn't request a change of account. Verify the contents of the letter before you take any action. Read each line carefully to ensure the validity of the information on it.

Double Sale

The owner or agent handling the property closes a sale with a second buyer even if the first one already settled the payment. It can also be an act of neglect on the side of the initial buyer on registering and transferring the title.

Fake Agents

Ordinary people would use photos of real listings from other sellers or real estate agents to bait people to deposit their initial payment. Most people use rental listings as they have fewer requirements than the sale of a property.

Fake agents would also put up and offer foreclosed properties. They forge property titles and documents to appear legitimate. The transaction can be a deadly catch if the potential buyer cannot or doesn't perform due diligence before securing their initial deposit. Buyers only discover the deceitful act once the agent is out of reach and disappears without a trace.

False Buyer

Some individuals would present themselves as interested or potential buyers to property sellers and real estate agents. They issue bouncing checks with the account numbers of their past victims without the knowledge of their targets. They establish rapport and gain the trust of their victims to acquire photocopies of valid IDs and signatures on top of the large sum of money they request.

Fraudulent Property Documents

Generated fake property titles used the details from old titles and backed up by supporting documents from a random mill. Creating a duplicate title of an existing property is another way to falsify records.

High-Interest Lending Rates

Unscrupulous lenders and small-time financial institutions lure vulnerable home buyers, renters, and house hunters to apply for their unfair and abusive loan terms. They pressure or deceit their victims towards a mortgage they don't need or can't afford.

Real Estate Investment Seminars

Get-rich-quick schemes aren't real. They are too-good-to-be-true and often come from individuals who call themselves experts in the industry. Often, these people provide inaccurate insights on the market and pieces of advice that may be irrelevant to growing real estate investments. Success doesn't happen overnight especially when talking about business.

Selling Schemes by Agents

Some agents would advertise properties that aren't for sale or handled by a different broker. The properties they offer have a lower price compared to their competitors to bait customers. Once an interested party probes on the house and lot or unit, the agent claims it as sold or unavailable and use this as a chance to sell a property they manage.

Another selling scheme by real estate brokers which may or may not be intentional is neglecting to disclose the crucial details. Misrepresenting a property is a tactic used by agents to close a sale. Meanwhile, other agents connive to raise their commission fees. One of them represents a seller while the other realtor is on the side of the buyer to change the property value.

Unfinished Developments

Some developments from lesser known developers ask for reservation fees or amortization even if they aren't finished with the advertised amenities or facilities. The structures are pending or entirely abandoned by the developer who may refuse to return their investors' hard-earned money. On the other hand, a developer may offer low rates for their properties on their pre-selling stage to sell their units. However, they delay construction until the turnover date and promise to finish on a certain period. They move the date several times until the buyer withdraws from the investment.

These are some of the fraudulent acts to be aware of when in the real estate industry. You gain a lot from learning the trade and investing your hard-earned money, but you can lose them once you associate with illegal acts. It doesn't hurt to pay attention once in a while. Involve other people in the awareness to minimize these acts of crime.