King Solomon’s advice for prosperity and a righteous life involves numerous warnings against the enticement of sinners and the wicked. In today’s housing market, those warnings remain valid, as scams and frauds target all aspects of the real estate market. So, because these schemes can so easily trap the unwary, we’ll wrap up this intermittent series on real estate scams with a rundown of the Federal Trade Commission’s warning signs:
1.Demands to send a deposit or down payment sight unseen to secure a property. Many scammers post listings stolen from legitimate sites and repost them to marketplaces like Craigslist. Interested buyers are told to send a payment or deposit to lock in the deal – then the scammer pulls the ad and vanishes.
2. Requirements to put up money to get money. This is a hallmark of scams like the Nigerian money transfer. Adapted for the housing market, it often asks potential victims to open an account, deposit a fraudulent check and send funds to the scammer to “cover the costs of the transaction.”
3. Pressure to act immediately. This is a feature of most scams. Would be victims are warned of dire consequences or the loss of a good deal if they don’t respond right away, take too long to read paperwork or fail to send money.
4. Instructions not to consult anyone. Fraudulent companies promising mortgage relief often demand that consumers cut their lawyers, lenders or credit counselors out of the loop and work only with them.
6. Requirements of an upfront fee before any services are actually rendered. This is a direct violation of the FTC’s MARS (Mortgage Assistance Relief Services) Rule. Some scammers also demand that mortgage payments be made directly to them.
7. Extravagant guarantees to get results in all circumstances for everyone. This is common in mortgage relief scams, but it’s also a feature of short sale “brokers” and other offers of assistance to get loans or close sales.
8. Lack of paperwork or documentation on the deal. Some scams urge would-be victims to go ahead and send money or sign paperwork, promising that titles, deeds or other documentation are being processed or on the way but they never appear.
9. Offers and propositions initiated outside the country These, such as the Nigerian scam, involve an individual in trouble, who has a lot of cash on hand ready to invest in a property. Although many foreign investors are legitimate, these scams typically demand money from the victim in order to complete all or part of the transaction.
10. Demands to transfer a title or deed. This kind of scam often targets seniors, with promises to handle all aspects of a mortgage on their behalf, or to arrange a sale for them.
The Federal Trade Commission and local entities such as California’s Real Estate Fraud Task Force take and investigate reports of real estate scams. Reporting suspected fraud helps to protect not just the housing market, but also renters, homeowners and investors applying Jason Hartman’s investment strategies to build wealth through income property. (Top image: Flickrr/GoldBeach)
The Solomon Success Team
