Understanding Real Estate Fraud

Real estate fraud is a serious issue that can have devastating consequences. Real estate fraud can affect anyone involved in the real estate market, including property owners, buyers, sellers, lenders, and even renters. According to the FBI, in 2021 alone, more than 11,000 people fell victim to real estate fraud in the United States. Americans lost more than $350 million due to real estate scams in 2021. Real estate fraud can take many forms. To protect yourself, you need to understand the various types of real estate fraud. Read on to learn about the real estate scams that can lead to financial loss and how to protect yourself against them.

Defining Real Estate Fraud

Real estate fraud is an umbrella term for various illegal and deceptive acts aimed at unfairly profiting from real estate transactions. With real estate fraud, the fraudsters or scammers trick individuals or organizations into making financial decisions that benefit them (the fraudsters/scammers). Unfortunately, technological advancement has provided scammers with new tools to deceive unsuspecting individuals and organizations. Real estate fraud can lead to significant financial losses for property owners, buyers, sellers, lenders, and renters.

Types of Real Estate Fraud

There are several types of real estate fraud. The following are some of the common types of real estate fraud;

1. Mortgage Fraud

One of the most common types of real estate fraud is mortgage fraud. This is an unfortunate pitfall for banks and other lenders. Mortgage fraud occurs when a person applying for a mortgage deliberately misstates, misrepresents, or omits crucial information on their loan application. For example, a borrower may alter property value or inflate their income.

2. Title Fraud

This type of fraud occurs when an individual deceitfully transfers a property’s ownership or title without the rightful owner’s consent. A fraudster may transfer the ownership or title to themselves or another party. Once the fraudster has control of the property’s title, they can take several actions, including selling the property to an unsuspecting buyer, taking out mortgages or loans against the property, or leasing the property to collect rental income.

3. Foreclosure Rescue Fraud

If you have fallen behind on your mortgage payments and are facing foreclosure, you need to be aware that you could be a target for foreclosure rescue fraud schemes. Perpetrators of this fraud claim they can help property owners avoid foreclosure. These scammers typically charge high fees for services they never provide. Some trick property owners into signing over their property deeds.

4. Rental Scams

These involve fraudsters pretending to be landlords or property managers creating fake listings to deceive renters. Renters are tricked into paying deposits for non-existent properties.

Protecting Yourself Against Real Estate Fraud

The following are some strategies that can help you protect yourself from real estate fraud;

• Confirm the legitimacy of property listings.
• Avoid unconventional payment methods. Stick to traceable options like bank transfers or checks.
• Watch out for signs such as high-pressure tactics, inconsistencies, or vague descriptions.
• Educate yourself about common real estate scams.
• Consult professionals.
• Verify borrower information (for banks and other lenders).

Contact Us for Legal Help

For legal help, contact our qualified San Francisco real estate attorneys at SAC Attorneys LLP.