T
he real estate industry is plagued by scams, with scammers preying on the large sums of money involved in buying and selling properties. Realtors often see these schemes firsthand, and they're eager to share their stories as warnings to others.
One common tactic used by scammers is creating a sense of urgency while asking for upfront fees or deposits. Mark Sanchez, Senior Real Estate Manager at Gator Rated, warns that fraudsters love making things seem urgent and then demanding money. "Never neglect to do your due diligence," he advises.
Sanchez shares two personal anecdotes as examples of scams to avoid. In one case, a seller provided fake inspection reports to hide foundation problems in a house. Sanchez recommends bringing in a third-party inspector to verify the property's condition, even if it costs a few hundred dollars upfront.
Another scam involves fake condo developments. Fred Loguidice, founder of Sell My House Fast Wisconsin, lost five figures in such a scheme early in his career. A colleague presented him with a "can't miss" deal on a pre-construction condo, complete with contracts and virtual tours. However, as time passed, excuses mounted, and progress stalled. Loguidice eventually hired a lawyer to investigate and discovered that the original plans were never fully approved and the developer had a shady history.
A third scam involves fake lenders. Brian Rudderow of HBR Colorado shared a story about a buyer who was asked for a $10,000 good faith deposit by someone posing as a hard money lender on LinkedIn. This is a red flag, as lenders typically earn their fees at closing, not before. Rudderow warns that buyers should do their due diligence and research any lender or deal thoroughly.
The takeaway from these stories is clear: before handing over your money, do your due diligence and trust your instincts. If something seems too good to be true or raises red flags, it's better to err on the side of caution and seek advice from a trusted professional.
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Avoiding Real Estate Scams: Lessons from a Personal Cautionary Tale
Be cautious of rising real estate scams: fake lenders, phony inspections & pressure tactics. Verify documents and avoid upfront fees.
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Avoiding Real Estate Scams: Lessons from a Personal Cautionary Tale
Be cautious of rising real estate scams: fake lenders, phony inspections & pressure tactics. Verify documents and avoid upfront fees.