Real estate is one of the most successful businesses throughout the world. Many individuals have build up their financial backbones by investing in plots for sale /residential plot and other properties. On the surface, it seems like an amazing investment opportunity for anyone, but the devil is in the details. Many have faced losses due to scams and frauds.
‘All that glitters is not gold’- is a saying that holds for the real estate market as well. Unfortunately, where the market goes on the rise many fraudsters and scammers also lurk about to catch unsuspecting investors off guard.
We are bringing forth this article to raise awareness about the prevalence of a few common types of scams within the real estate market. All so that you can save your hard-earned money from being wasted by investing in a random plot for sale /residential plot listing which is nothing but a scam.
This is probably one of the most common types of frauds that are committed in the real estate market. The scammer will put up an advertisement of plots for sale /residential plot that has no physical existence and will leave with the advance payments. This type of scam usually is set up for people looking to buy a property in hurry or for people looking for a rental place.
This scam is prevalent in places that are not verified for posting authentic listings. The scammer can find easy targets, as the process of listing the property has not been verified beforehand. If you find advertisements or listings of properties on social media sites; always be extra careful.
The few major red flags of such scams include there being no pictures of the real property. Furthermore, upon requesting the picture, the seller or renter will not comply with the request. The scammer, in this case, will also press upon the urgency of advance payments before the investor can visit the property. The seller also presents a lack of proper documentation of the property.
Many fraudsters are lurking around in the real estate business that actual little to no experience. These persons will often boast about the false tales of their success and the satisfaction of their clients. In actuality, they are nothing more than scammers that roll the deal in their favor; taking a hefty amount of commission or committing further frauds with the plots for sale /residential plot or property they are dealing with.
A common type of scam they can pull off is by getting in contact with multiple buyers of a single property. This type of scam is successful when the scammer collects advance payments for the property and when it is time to handover; the scammer escapes from the scene, leaving the hopeful investors disappointed and empty-handed.
Moreover, they can be a vector for committing multiple other scams with the property they take the responsibility of dealing with.
It is very important for an investor in real estate to thoroughly research the credibility of their agent. If possible visit their office and get in touch with individuals who they have worked for to get a proper and authentic review of their services. Demand their proper documents and certifications for the qualification of the work they are dealing for you. Check the records to make sure that the real estate agent that is dealing with your property matter is licensed and registered.
If the fake agents are allowed to slip through the verification checks, the results can lead to disappointment and monetary loss.
Tampering with Paperwork:
The proof of a real estate deal is embedded in the legal documents of the property. Whether you are on the giving or receiving end of the deal; it is very important to read the fine prints of the documentations you are being handed over.
It is a common, yet most dangerous scam on the real estate market. The documentation can be falsified or forged against the agreement between the two parties to favor one over the other. By signing the paperwork you may be handing over the property to a third party. You might not be handed over the rights to the property you are buying. You might be agreeing on a higher price to be paid. This kind of scam is carried out by either a false real estate agent or a fraudulent seller of a property.
Title fraud is a common type of scam committed through forged documentation. The priority of a scammer is to first aim for a sort of form of identity theft. Getting one’s information from an organization, through email interceptions, phishing, and phone calls, etc can all open up the opportunity for a scammer to steal an individual’s identity.
After getting this information the scammer will be forging together false documentation, with their pictures as they mimic the identity of the original owner committing the title fraud on property.
As stated before; it is very important to verify the authenticity of property documentation beforehand. You can utilize the services of authorities or get in touch with lawyers and other professionals that have the proper skill set to inspect the documentation. Never hesitate to refuse to sign a document that may seem suspicious or ambiguous to you.
Exaggerating market value and quick fixes on property:
For the benefit of the seller of the property; sometimes they will increase the value for sale. This increased value will be coupled with false claims over the condition of the property.
If a seller is in a hurry to sell their property they will try their best to sweep the problems with the property under the rug. They might do just enough patching up of the property to deceive a potential buyer for an exaggerated market price to what the actual value is worth. This is the way a house that is infested with termites, decay, or structural weaknesses; will be sold off for a much higher value.
Fake real estate agents can also commit such a scam by increasing the market value of a property such as a plot for sale /residential plot or a house to deceive investors into spending more.
One of the best ways to combat the risk of this scam is to consult and hire a proper real estate agent. That way you can get in touch with the actual market worth of the property you are looking into as well as help identify any recent cosmetic changes made to a property on market; that might indicate a falsified value.
Payment before Visits
We briefly touched on this type of scam in the fake listing section. Buyers of a property that require payment before visits are very suspicious. The reasoning for them doing so can be to hide a flaw in their property; a patchy repair, a poor condition, an undesirable location. This again can be a case of a false listing as the actual property may not even exist.
People who are looking for renting property and are aiming to move quickly, fall easily for this scam. They might not have the time or resources to visit the property beforehand and take what is told to them as the truth. The person who claimed to be the property owner or landlord might be a scammer that escapes with the advance payment of the rents.
We cannot stress enough that how important it is for a person to visit the property before investing in it! A single visit can reveal any flaws or misinformation that was given about the property and can save you your hard-earned money from falling into a scammer’s hands.
Fraudulent online forms:
This is a type of scam that takes place on unsecured websites where the scammer has set up an online form that credible victims will feel comfortable inserting their sensitive data into. This further leads to relating property fraud and other forms of fraud once the scammer has hold of your property information.
To avoid such a scam from affecting you, make sure that the website is registered and confidential for information such as your NIC number and personal details.
A common scam that is committed with overseas Pakistanis is when they hire a caretaker back in their homeland to look over their property’s matters. Some ill-willed caretakers try to act as the owners of the property and exploit it for their benefit. Sometimes this caretaker will put up the property for renting purposes for their benefit. In worse cases, such pretend owners have been caught selling off the property at a lower cost to escape with the money; without any consent from the actual owner.
It is important to keep a check on your property at all times, whether you are out of the city or overseas; especially if handed over to someone else.
Unfortunately, the bustling market of the real estate business is lurking with scammers that trick people. Keeping a keen eye on the behavior of a dealer, buyer, or seller as well as inspecting the paperwork are of prime importance when it comes to avoiding scams.
Moreover, always be a responsible citizen! In case you were affected by one of these fraudulent acts; you should always report the activity to concerned legal bodies. You should do this not only to recover your loss but to prevent others from falling for the tricks of such fraudsters.
We hope that this article was able to provide you with the basic knowledge of common scams in the real estate market so you can look out for them.