Buying a house is stressful enough without worrying you’re being scammed into the bargain. Whether you want to sell your home as-is, or after a renovation, the options are wide and varied.
But house buying scams are on the rise, and the scammers behind these real estate frauds are ever more creative. Reportedly, 2018 saw as many as 11,300 instances of rental fraud, and that only covers cases reported to the FBI since many people find house-buying scams embarrassing and don’t disclose their experience.
Don’t let scammers discourage you from buying that new house, though. Homeowners might be vulnerable to real estate scams, but provided you stay alert to any red flags and know what signs to watch for, you can avoid house buying and retail scams.
To help you feel more confident selling your home and negotiating with real estate agents, we’ve put together a list of real estate scams and scammer techniques to watch out for.
Types of House Buying Scam to Look Out For
There is a lamentable variety of house buying scams prevalent in the current real estate climate.
Thee include:
- Cash Offer on House Scams
- We Pay Cash for Houses Scams
- Wire Transfer Scams
- Loan Flipping Scams
All of these are marketed by scammers who present as either home buyers, real estate agents, or investors to part you, as a homeowner or house seller, from your money. Here’s what some of these scams look like.
Cash Offer on House Scam
There are two routine cash offer scams to be wary of.
In the first of these, the homeowner receives an email, usually from a foreign buyer, prepared to make a cash offer on the property. The scammer offers a check and is prepared to buy the house sight unseen. But, assuming the buyer is foreign, they won’t be able to receive your telephone calls directly, and the check won’t come through right away. In fact, it may never clear at all.
If you’re selling a house, all these things are red flags, the foreign buyer, the unavailability, the willingness to purchase your house without a viewing. As a rule of thumb, when trying to spot a cash offer house buying scam, if it looks too good to be true, it probably is.
Watch out for cash offer buyers who:
- Show signs of spelling or grammatical errors
- Live abroad
- Cannot respond directly to calls/contact
The other cash offer scam homeowners encounter comes through supposed investors. These are scammers who contract homeowners into a property sale but without the earnest money, or good faith deposit, to back the investment up. They will include a variety of clauses that let the scammer out of the contract scot-free but leave the homeowner contractually obliged by the scam.
To avoid this type of investment-based cash offer scam, look for:
- Sketchy advertising
- Unprofessional behavior
- Lack of references or visible money
We Pay Cash for Houses Scam
Cash for Houses scams or We Buy Houses scams target homeowners who need to quickly sell or otherwise leave their homes. Opportunistic scammers are quick to pounce on such vulnerable people, offering immediate cash and often waiving inspection fees.
In particular, these real estate scammers look for:
- House sellings with expired listings
- Homeowners in foreclosure
- Estates/houses in probate
- Damaged or vandalized properties
- Homeowners with evicted tenants
- Properties transferred to seller by employees
When looking to sell a house quickly or for cash upfront, homeowners need to be wary of equally upfront expenses. A reliable realtor receives their commission after a sale, and the initial quote is drawn up for free. If the person offering cash for your home has sudden and immediate expenses, be wary of scammers and look directly into what these are for. Money flows from buyer to homeowner and not the other way around.
You’ll also want to be alert to offers to buy your home sight unseen. This is another hallmark of a We Pay Cash for Houses scam and should make you suspicious.
Wire Transfer Scam
Wire transfer house buying scams, sometimes called escrow wire fraud, typically occurs when you go to finalize a sale or make a payment on your lease or new property. When you become a party to a wire transfer scam, you typically receive an email, call, or text, purportedly from a trusted company advising you to perform a wire transfer to facilitate your sale.
It’s particularly insidious because the scammer goes out of his/her way to mimic the website and contact information you’ve been interacting with. For instance, they might use a mirror phone number to echo the (reliable) company number you’ve been interacting with. It’s similar enough that you not only take the call but don’t recognize the one-digit difference as it flashes across your phone screen.
If you don’t immediately register that you’re party to a wire transfer house buying scam and follow the scammer’s wiring instructions, retrieving your money can be challenging. There are good odds the scammer has absconded with them by way of an off-shore account.
When you encounter any red flags or signs of a wire transfer house buying scam, your best bet is to check and double-check your correspondence. Be especially wary of notifications advising that your wire transfer instructions have changed, and pay particular attention to email and phone numbers. If they look even moderately different, disregard the message.
Loan Flipping
Loan flipping occurs when a lender persuades a homeowner to borrow money against refinancing their mortgage, often to prevent foreclosure, though not exclusively. The lender then ups the amount of money owed by the homeowner with each subsequent lending, leaving you with high, even unaffordable loan repayments but without the resources, such as the mortgaged house, to finance their payment.
Seniors with memory problems and home equity are particularly susceptible to this kind of scam. Often the scammer persuades the homeowner that the loans will ultimately be put towards renovating the house, increasing accessibility to the elderly, property value, or both. Inevitably the lender or scammer fails to deliver on the promise.
Spotting a House Buying Scam in Idaho
Not every house buying scam in Idaho comes with obvious warning signs and red flags like typos. Scammers can present as highly plausible, making spotting a house buying scam in ID tricky. So how do you tell a genuine offer from a house buying scam?
Offer to Buy Without Looking at the House
When trying to spot a house buying scam, be wary of offers to buy without viewing. A genuine house buyer or real estate agent is unlikely to offer on a property sight unseen. Even if they can’t put in an in-person appearance, a sincere home buyer will at least want a survey done to assess the property for potential problems, like old wiring or unsupported walls.
Can’t Provide Reliable References
When trying to decide if your potential offer comes from a realtor, a scammer, or an honest buyer, ask for references. Scammers tend to have no reliable references, helping you spot a house buying scam in Idaho.
Don’t consider selling your house without first checking references, and follow up individually with potential home buyers to simplify the home buying process by alerting you to possible real estate scams.
Not Using Professional and Official Forms
A trustworthy real estate company always uses professional forms and correspondence. Be alert for free email platforms, and other unprofessional documentation, as this is often the first red flag that you are interacting with a scammer.
How to Avoid Being Scammed
Selling a house is complicated, and part of the appeal of a well-constructed scam is that it makes it look easy. Ready cash offers, enthusiastic buyers, and other conveniences contrive to make scam offers both convincing and attractive.
Your best bet is to do your research to avoid being scammed and subject to potentially fraudulent real estate transactions.
Know Who You’re Negotiating with
Avoid engaging with a third party. A buyer who is ‘out of the country’ may try to hand you over to an agent or lawyer working on their behalf. Always double-check this person’s credentials, dedicated scammers have even gone to the lengths of producing fake keys to drawing in the unsuspecting.
Verify Communications
As discussed, unprofessional documentation can be a red flag. Flimsy or cheap advertising flyers, typos, and emails generated by free services are all things to look out for.
Stay alert for notifications claiming your wire transfer or payment transaction instructions have changed too, and confirm with your realtor before submitting a payment.
Research House Buying Process
The best way to protect yourself and spot a house buying scam before being taken in by it is to do your research. Find out what the best companies buying houses in Boise, Idaho, or Idaho more generally are, and what kind of scams are prevalent in your area.
Both the house buying and selling process can be complicated: Knowing how the house buying process should work will help you spot a house buying scam in Idaho by recognizing what shouldn’t happen.
Watch out for:
- Cash offers
- Offers to buy sight unseen
- Over-eager buyers
- Lending offers on mortgage payments
- Unprofessional contact details or documents
All these things point towards real estate scams, and knowing the signs will help you spot a house buying scam before getting caught by one.
Keep Your Information Safe
Always protect your bank account and phone number details. Pay special attention to any incoming calls, too, to prevent against wire transfer scams. Even if a phone number looks familiar, confirming with your real estate agent that they’ve contacted you reduces the risk of a home buying or rental scam.
Conclusion
If you do still fall prey to a house buying scam and don’t know what to do if you’re scammed when selling a house, report it directly to the FBI, internet crime complaint center, or other law enforcement agency positioned to help you.
Remember to look for:
- We buy houses scams
- Cash offer scams
- Wire transfer scams
Not all offers are scams, though, and if you’re looking to sell your house, we can help. We buy houses across Boise, Idaho, and are happy to help you negotiate the house selling process.