You’ve done your homework, worked with a qualified real estate agent, and feel like you’ve checked all the boxes (hah, literally) so you’re ready for your move. But despite your preparations, scammers and con artists might have a few curve balls to throw your way. And with something as big as a deal as buying a home, you need to be extra cautious with your money during, before, and after the sale. Consider these real estate scams even savvy homebuyers should be on guard for.
- The Hacked Closing
You’re so close to the point of ownership. Your closing date is upon you, and you get an email from your real estate agent with instructions on where to wire your down payment. What do you do if you find yourself the victim of this kind of mortgage fraud?
Real estate scammers hope you trust the email address you know, and that’s how they get you. According to Steven J.J. Weisman Esq. of Scamicide, this is one of the most common home-buying scams people experience.
“A cybercriminal hacks into the email account of someone involved in a real estate conveyance, such as the buyer, seller, lawyers, real estate agents or bankers involved in the mortgage,” he explains.
Because they have access to the emails, they know when the closing date is and contact the buyer with wiring money instructions from an address they know at just the right moment for it to look legit — the ultimate form of identity theft. Then the potential homeowners lose their whole down payment.
The fix? Keep communication open with the people involved (over phone as well as email) – and pay in person.
Realtor Katie Messenger had some buyers nearly tricked by this type of real estate fraud, but they sensed something was off and checked in to be safe.
“The lender had already talked to them on the phone and explained how they needed to bring their down payment to closing, so when they got this email with wiring instructions, they immediately called me and asked why things had changed.”
- Fake Tenants in Your Home
Imagine walking up to your new home after a sale, putting your key in the lock and…finding it that it doesn’t work. While you’re trying to figure out what’s going on, someone walks up and asks why you’re trying to get into their home.
This happened to one of realtor Anthony Grosso’s clients. The supposed tenant appeared to be the victim of a common scam in which someone advertises as the landlord of a vacant property, creates a lease, takes a down payment (sometimes via a wire transfer), and even provides keys – only for the renter to realize someone else actually owns the property. The renters are usually victims in this case – they lose their deposit and first month’s rent to the scammer. But if they’ve already moved in, they could have renter’s rights and the new property owner will have to go through a costly eviction process to get their own home back from the scammer.
In the case of Grosso’s client, there was a twist.
“There was no fake agent,” he said. “These scam artists broke in themselves, changed the locks, and created a fake lease. This was a scam they did over and over, and since they played the victim, there were never criminal charges.”
How can you avoid this? It’s tricky since the law hasn’t really caught up with the crime. If the home you’re hoping to buy has been vacant for a while, ask if anyone has been checking on the property regularly. Look to see if it’s listed on Craigslist as a rental property. If you suspect there may be potential fraud, ask your title company about negotiating visits to check that the locks still work, or the realtor’s lockbox is still in place. The most you can do is try to catch it happening before your purchase.
- The Electrical Breaker Swap
This is a lower-stakes scam than some of the others, but still worth being aware of: swapping required electrical breakers for cheaper versions.
Arc fault breakers, which break the circuit when they detects an electric “arc” which may increase the risk of electrical fire, are more expensive than traditional circuit breakers, but they’re required by modern building codes. People who flip homes have to install them during renovation to be on the right side the law, but it adds around $800 to their costs.
As a result, Evan Roberts of Dependable Homebuyers says he’s seen examples of flippers who will return to the home and replace these expensive arc fault breakers with the cheaper traditional breakers, adding profit to their bottom line.
Luckily, this one has a relatively easy fix. When you’re setting up your inspection, ask the inspector to check the fault breaker for you. You can even ask them to show you what it looks like, so you’ll notice a difference if the seller switches it out before you move in.
- Moving Companies Holding Your Belongings Hostage
Even if everything goes according to plan with the home buying process, you can still get conned during the move. Unfortunately, moving scams are extremely common and the federal government receives thousands of complaints every year.
But it can be hard to spot the bad apples before you choose a moving company, as my brother’s family learned the hard way. They went with a moving company that had both been recommended by a friend and had a good BBB rating, so they thought they’d done their due diligence. The quote of $3,500 seemed reasonable, but once they’d packed everything up they got a new bill for $7,000.
“This was our first move and since there was not a lot we could do and our stuff was already loaded, we signed the receipt,” said Jason Hicks.
This is how moving companies get you – once they have your stuff packed up, they can hold it hostage until you pay what they say you owe.
Making matters worse, once their items were delivered to the new home, “we realized we were missing a few things including a Wii, most of my tools, and a small TV.”
So, what can you do? Check the reviews along with the BBB score. Ask for in-home estimates and get several. If you know what’s normal, then you’ll be better at spotting too-good-to-be-true pricing that suggests a possible scam. And consider buying extra insurance to protect your belongings in the move, just to be safe.