How to Avoid Fraud in a Real Estate Transaction
Buying property is an awesome investment but, in some cases, prospective buyers end up being scammed by unscrupulous people. Real estate fraud costs victims several billions of dollars every year in the US alone, and the scams often take many forms. Sellers can misrepresent information about their properties, which often results in buyers paying more money than the actual value of the property. For these and other numerous types of fraud in real estate, it is crucial to take the necessary steps to prevent such unfortunate scenarios. Check out the following measures that will help you avoid fraud in a real estate transaction.
Hire a Professional Real Estate Attorney
When conducting business in real estate, there are different legal aspects involved that should be fulfilled to protect the interests of both parties involved. The two major parties involved are the buyer and the seller, and both are not immune to cases of fraud. It is vital to hire experienced and dedicated attorneys to help facilitate different transactions in real estate to prevent fraud. It goes without saying that your attorney should be familiar with the laws of the state in which the property lies, so if it’s in Houston, be sure to find a good, Texas-based lawyer to ensure that you and the other party are in compliance with the state laws. Experienced, local real estate lawyers know how to prepare and process real estate transactions which can give you peace of mind when either buying or selling property.
Verify Property Ownership
Before you rush into buying property, you need to verify its ownership. Title fraud is common in the real estate sector and thieves can steal your identity and assume the title of your property. They can then sell your property without your knowledge. In some cases, they can use the title of your property to obtain a mortgage then vanish with the money. You may discover the fraud when the lender contacts you about the mortgage, and you may also see a stranger coming to your property claiming to be the new owner. So if you are a prospective buyer, be sure to verify ownership first before making any transactions.
Conduct Inspection of The Property
Property flipping is common, where the seller can use a phony appraisal to inflate the value of the property to sell it for huge profits. The fake appraisal usually appears authentic, thereby making it difficult to determine the true value of the property. Hire an independent inspector to evaluate the property first so that you can get an idea of its real value. You should not overly trust the seller or the estate agent about everything they say regarding the property. Try to inspect the property and compare it with other properties in the neighborhood to find out the right price.
Avoid Giving Your Identity And Credit Record To Third Parties
Another common type of fraud involves people who are often offered money to provide their good credit record and identity to be used in fraudulent loan applications. When the imposter uses your information to apply for a loan, they can disappear with the money, leaving you to make mortgage payments for a house you never bought. Avoid giving your details to anyone since it can be used to commit different types of fraud. In the same vein, you should avoid signing any document that you do not fully understand, and consult your real estate attorney before signing any documents.
Wire Transfer Fraud
Real estate transaction fraud can involve wire frauds, where buyers are requested to wire large sums of money to a false title company as part of the payment settlement. Normally, wire transfers are a safe mode of payment where the source of funds can be legally verified by all parties involved. However, some thieves can confuse the sender and provide them a wrong account number to siphon all the funds for personal use. Scammers can also hack emails to commit this kind of fraud to unsuspecting people. If you are overly trusting of a real estate company, you can be a victim of wire transfer fraud if you are not careful. You can prevent this type of theft by doing the following:
- Verify all account numbers before doing any transaction
- Protect your email account details
- Keep track of relevant contacts with close links to the transaction
- Never share personal information with anyone
There are different types of real estate fraud that you can encounter in different situations, and these often lead to huge losses among unsuspecting buyers. Sellers of property can also be victims of scams, so it is essential to hire a lawyer to ensure that legal precautions are taken before processing any transactions. Try to check the price ranges of different properties within a certain community before making a final decision when purchasing a home. It is also essential to do your research before you process any transaction in real estate. Never sign documents that you do not understand or lend your identity to someone.
