Real Estate Schemes and Scams

August 18, 2016

Fraud and scams are common in the realm of real estate. BBB Serving Northeast Florida & The Southeast Atlantic urges you to be on the lookout so you don’t fall victim. Whether you are buying, selling, or foreclosing, BBB wants to make sure you are doing so with caution.

Rental Scams

As indicated by the National Association of Realtor Estimates, 90% of consumers turn to the web first to search for a rental. Con artists exploit the posting’s date to target their victims by posting them as their own. These phony listings will require you to provide money forthright, asking you to wire it. In addition, they may also ask to run a credit check on you and provide you with a phony application that asks for personal and financial information. Scammers will even go to the extent of strategically listing the rental price at an extremely low rate to garner interest, enticing more people to attend an open house, in which they can pass out more fake applications.

Being proactive is your defense. Do your homework before sending any money to anyone you don’t know.

First, check with the local tax assessor’s office to determine who owns the property.

Second, google the address and see if the property shows up on any real estate website for rent or for sale. If the property that was advertised for rent on craigslist shows up for sale on a real estate website, there is a serious problem. Contact the real estate company and apprise them of the situation.

Third, if possible, contact the neighbors of the property you are planning on renting. Ask them about the owner and status of the property. Is it for sale? Or rent? Or in foreclosure?

Foreclosure Fraud

Losing your home is scary and you wouldn’t want scammers to aggravate the situation. Con artists will often pose as foreclosure experts offering to help negotiate and reduce your mortgage payments. At times, they will request to collect the fees upfront and then vanish. In times like this, these false ads may sound appealing, but BBB urges you to do your research before allowing anyone to assist. It is vital to know your rights. Thus, recognize that it is illegal for a company to charge for mortgage relief services until you actually receive and accept a written offer from your lender.

Here are some red flags:

Asks for money up-front

Requests wire transfers

Asks to make mortgage payments directly to them
Suggests you transfer your deed

Title fraud

Though rare, one of the most devastating scams is title fraud. This typically starts with identity theft. The scammer will use illegitimate documents, acting as the property owner, forge documents, and transfer the property in his or her name. In the wake of securing a home loan, the trickster will take the money and vanish. In these cases, homeowners that rent out their homes or do not have a mortgage are in fact more vulnerable to falling victim to title fraud. The best way to ensure you are not scammed is to get title insurance.

Timeshare Scams

If you own a vacation timeshare - the use of a vacation home for a limited, pre-planned time - be cautious of bogus resale companies who take advantage of anxious sellers in an overcrowded market. Unscrupulous companies typically contact you by phone, mail or the Internet asking you to call a phone number about your timeshare. The salesperson may claim that the market is "hot" for resales, when in fact the market varies considerably depending on location and the prime season for that particular unit.

If you are considering reselling your timeshare and are approached by a company offering to help, the BBB recommends the following:

Do not agree to anything over the telephone until you have had a chance to check out the company.

Ask the person to send you written materials. 

Ask for references, including address and phone number and contact them. 

Ask where the company is located and in what states it does business.

Ask if the company's salespeople are licensed to sell real estate where your timeshare is located. If so, verify this with the state licensing board.

Find out if the company charges a commission. Do they handle the entire closing and provide escrow services? Do they charge an up-front listing or advertising fee? What does it cover and is it refundable?

Be wary of companies charging an advance "appraisal" fee for services. Consider opting for a company that offers to sell for a fee only after the timeshare is sold.

Contact the BBB, state Attorney General's office, and local consumer protection agencies in the state where the company is located to find out if complaints have been lodged against the company.

Keep in mind that there are other resale options. You may try selling your timeshare yourself, by placing an ad in a newspaper or magazine, or contacting a real estate agent familiar with the area. If all the timeshares have been sold in your development, consider asking the seller to establish an on-site resale office. As an alternative, you may consider an exchange program. For a fee, these programs allow you to arrange trades with other resort units in different locations.



About BBB

For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2014, people turned to BBB more than 165 million times for BBB Business Reviews on more than 4.7 million businesses and Charity Reports on 11,000 charities, all available for free at The Council of Better Business Bureaus is the umbrella organization for 113 local, independent BBBs in the United States, Canada and Mexico, as well as home to its national programs on dispute resolution, advertising review, and industry self-regulation. BBB Serving Northeast Florida & The Southeast Atlantic was founded in 1987 and serves 57 counties.