Real Estate Scams (And How to Avoid Them)

With the advent of technology, scammers have gotten smarter and have more resources and tools at their fingertips. If you're a party to a real estate transaction, continue reading this blog to learn how you can avoid common real estate scams.

Promises to Save a Homeowner from foreclosure

The first type of scam we want you to look out for are foreclosure rescue scams. Here, a company "promises" to save a homeowner from going into foreclosure. Most of the time, the company will ask the homeowner to pay some fees upfront. The scammer will then commonly try to take out a home loan on the owner's behalf or try to convince the homeowner to sign the home deed to them. Unfortunately, the people who fall for these scams often lose their homes because the company forecloses on them or takes them over.

Of course, these warning signs do not necessarily mean that the company you are communicating with is scamming you, but if you do recognize these warning signs, take it as your cue to investigate further: the company is telling you that you need to rent your home; the company is urging you not to contact your lender; or the company requires you send mortgage payments to a third party.

Appraising Real Estate at an Inflated Amount

When the real estate market is hot, appraisal fraud is rampant among companies or individuals who purposefully appraise the real estate at an inflated amount (above the fair market value). Among the warning signs of this real estate scam are, but are not limited to, the following: Overstating the features of the property; making up appraisal papers; obvious digital manipulation.

In these real estate scams, borrowers usually try to get better loans by giving lenders false or wrong financial information (e.g., lower interest rates, better terms, etc.). In some cases, borrowers will say they plan to live in a home when, in reality, the home will be rented out.

Most of these real estate scams involve "flipping" properties, which means selling them at a much higher price. Most of the time, appraisal scams are linked to flipping scams because fake appraisal documents are used to justify the house's high price.

Real Estate Seminars that Seem Too Good to be True

Even though these scams are about real estate, they don't involve real property directly. People are instead promised a gift or "insider" real estate information that will make them rich soon. Among the warning signs of this real estate scam, but not all of them, are companies like: "No upfront cost," they say, and they promise you the world. You're being told that you need to take more classes. The first "free" seminar won't teach you anything useful. If it seems too good to be true, definitely do not jump head first. Remain vigilant, do research, and talk to an attorney if you still have doubts.

Real Estate & Probate Attorneys in Los Angeles, California

It’s not every day the average person engages in buying or selling real estate. Real estate transactions involve complex regulations and can pose a number of risks. The stakes are high in real estate transactions, so it is critical to have a real estate attorney looking out for your best interests. At Gomez Law, our experienced attorneys have represented first-time home-buyers, sellers, entrepreneurs, investors, landlords, developers, brokers, and agents, among others.

Contact us today to set up a free 30-minute consultation with our experienced real estate and trial attorneys to learn more about how we can help you.TT