10 Tips to Protect Yourself from Real Estate Fraud
Updated: May 18, 2023
Real estate is a high-stakes industry, and unfortunately, it’s also one that’s ripe for fraud. Real estate fraud can take many forms, from rental scams to mortgage fraud to investment schemes.
No matter the type of scam, the end result can be devastating, often resulting in significant financial losses.
In this blog post, we’ll discuss ten tips to help you protect yourself from real estate fraud.
Research the Property and the Seller
Before entering into any real estate transaction, it’s important to do your due diligence. Research the property and the seller to ensure that everything is legitimate.
You can check public records to see if the property is subject to any liens or legal issues. You should also research the seller to ensure that they are the legitimate owner of the property and confirm their identity.
Many real estate scams involve identity theft where the fraudster has assumed the identity of the actual owner.
Use a Reputable Notary
Using a reputable notary is one of the best ways to protect yourself from fraud. Choose a notary who is licensed and has a good reputation in the industry.
You can check their license status online with your state's regulatory agency. A good notary will be able to guide you through the transaction and help you spot any red flags.
Never mail documents to the seller and let them get notarized and sent back. You should always select the notary to ensure the seller is not using a fake notary stamp.
Get a Professional Inspection
Before purchasing a property, it’s important to get a professional inspection. This can help you identify any issues with the property and prevent you from making a costly mistake.
A professional inspection can also help you negotiate a better price for the property. Make sure to use a licensed inspector and review their qualifications beforehand.
Use a Reputable Title Company
The title company is responsible for ensuring that the property's title is clear and that there are no liens or legal issues.
Using a reputable title company can help protect you from fraud and ensure that the transaction goes smoothly.
Research title companies online and read reviews from previous customers to help you choose the right one.
You should also pay for a title policy or title commitment when buying a property. The title policy acts as an insurance policy guaranteeing you are getting clean and clear title to the property.
Don’t Sign Anything Without Reading it First
Never sign any document without reading it first. If you’re unsure about anything, don’t be afraid to ask questions.
If you’re uncomfortable with any part of the transaction, don’t be afraid to walk away. Make sure you have a complete understanding of the terms of the transaction before signing any paperwork.
Also Read - Signs Your Cash Buyer is a Scammer
Don’t Wire Money Without Verifying the Instructions
Wire fraud is a common type of real estate scam. Scammers will trick you into wiring money to them instead of the legitimate seller or escrow account.
To protect yourself from wire fraud, be cautious of any unsolicited emails or phone calls asking for money.
Always verify the wire transfer instructions with the seller or escrow company before sending any money. Be sure to confirm the details by phone or in person.
Use a Secure Payment Method
When paying for a property, always use a secure payment method, such as a cashier's check or wire transfer.
Avoid using cash or personal checks, as these can be easily forged or stolen. If you’re unsure about the payment method, consult with your title company.
Be Wary of Email Scams
Email scams are a common tactic used by scammers to trick you into wiring money or providing personal information.
These emails often look legitimate and may even use logos and branding from legitimate companies.
To protect yourself from email scams, be cautious of any unsolicited emails asking for money or personal information.
Always verify the sender's email address and don't click on any links or attachments unless you're sure they're legitimate.
You may also want to lookup the IP address of the sender. Fraudsters can use proxy servers to fake their IP address so this is not foolproof.
Use a Real Estate Attorney
If you’re buying or selling a property, it’s always a good idea to use a real estate attorney. A real estate attorney can help protect you from fraud and ensure that the transaction is legitimate.
They can also review all documents and contracts to ensure that everything is in order. Having a legal expert by your side can provide you with peace of mind and protection from potential legal issues down the road.
Trust Your Instincts
Finally, always trust your instincts. If something seems too good to be true, it probably is.
If you feel uncomfortable with any part of the transaction, don’t be afraid to walk away.
Trusting your instincts can help protect you from potential fraud and ensure that you make a wise investment.
In conclusion, real estate fraud is a serious issue that can have devastating consequences. However, by following these ten tips, you can protect yourself from fraud and ensure that your real estate transaction goes smoothly. Remember to do your due diligence, use reputable professionals, and always trust your instincts. By taking these steps, you can make a wise investment and avoid becoming a victim of real estate fraud.