Buying a home is an exciting process that involves a very large purchase. Unfortunately, large amounts of money can sometimes attract scammers who want to trick buyers before, during, and after the sales process.
The following are a few scams that homebuyers should beware of:
- Phishing for Cash
Fraudsters can use malicious software (malware) to monitor the email of someone who’s involved in a real estate transaction, such as a real estate agent or attorney. They then send an email, which looks like it’s coming from the agent or attorney to the buyer. The buyer is directed to wire money for a down payment or closing costs just before the closing date. Although the buyer thinks the money is going to the seller, it’s actually going to the criminal, who is often located overseas.
What to do: Call your known phone numbers for the individual named in the email to verify that the request is legitimate. - A Credit Repair Lie
Since your credit score affects whether you can get a mortgage loan as well as the interest you’ll pay, scammers may claim they can help you repair your credit. They sometimes say they can remove negative information – which is not truthful, as long as the information is accurate.
What to do: If the company wants payment upfront and its claims sound too good to be true, don’t fall for it. Check with the three major credit reporting agencies (Equifax, TransUnion, and Experian) to review your credit information, and if it’s lower than ideal, talk to your lender about ways to raise it. - A Misleading Location
It pays to be diligent in researching the neighborhood where you’re looking to buy a home. You may get a good deal on a home only to find that soon after you move in, construction begins on a major highway or town dump just beyond your property line.
What to do: Before buying a home – particularly in a new town – thoroughly research your neighborhood. Search online for information about the immediate area, talk to as many neighbors as possible, and contact a city council or planning commission member to find out if there are any upcoming plans you need to know about. - The Rush Job
When you show interest in a home, you’re told you need to act immediately in order to buy it. You’ll feel pressured to commit, sign papers, and pay money immediately. Later, you’ll find out that the seller doesn’t own the title but has your money or that the home has big, expensive problems.
What to do: Don’t let yourself feel pressured, even if you think you’ve found your dream home at a good price or you’re buying a home in a hot market. Real estate transactions are conducted in a deliberate, step-by-step way, so if you’re feeling rushed and pressured, you should walk away. - A Lemon Loan Modification
After you’ve bought your home, a company may contact you and offer to lower your monthly mortgage payments. You’ll be asked to pay a fee and give them access to your bank account, but the offer can be a scam.
What to do: Loans can sometimes be modified, but in order to do this, you should call or stop by a reputable bank or other lending institution. Don’t respond to any unsolicited offers by phone, mail, or email.
When you’re buying a home, fraudsters may try to take advantage of you financially. By doing your research, avoiding high-pressure tactics, and following up on any suspicious contact, you can lower your risk of becoming a victim of these scams.
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