By now, most of us know that the housing market has been going crazy! Out of state buyers and real estate investors are clamoring for properties in Connecticut, but not every offer comes from an above-board buyer. So how can you avoid falling for a scam when you are selling your home in 2022? Let’s go through some of the common types of scams in the real estate market, and then go over some tips on how to avoid getting caught by scammers as you try to sell your home in Connecticut.
3 Common House Buying Scams to Be On The Lookout For
Though all scammers share a common goal – conning you out of your money – different scammers will try and use different methods for taking advantage of you. The real estate market can be a fast-paced environment, so it’s important that you take the time to slow down and keep your eyes open for these different scams aiming to take your money and property. Here are some of the different ways scammers will try to take advantage of sellers in today’s real estate market.
“We Buy Houses” Scams
These “investors” may have taken a quick real-estate seminar, and now think they’re going to strike it rich in the home buying business, while in reality, they aren’t buying the homes at all. They frequently make offers sight unseen, and don’t try to get much information about the condition of the property. These scams involve pressuring a home-owner to quickly get locked into a contract, then shop this contract around to other buyers for a fee. They don’t actually have the money to buy your house, and usually had no intention to in the first place. If they can’t find a buyer for your home, they’ll walk away, often using some inspection clause in the contract that gives them an out.
Escrow Wire Fraud
Escrow wire transfer scams are another common method fraudsters use. In this scam, the end goal is to access your money and bank account information. This scam usually occurs when a scammer sends you an email asking you to provide after hacking into a title company or lender’s email server.
When you follow their escrow wiring instructions, the scammer receives your funds and moves on to their next target. You typically find out about this fraud when your realtor, closing attorney, or title company informs you they need your payment and have no record or knowledge of the previous transaction you completed to the scammer.
Here are some red flags that can expose the scammers when they contact you:
Urgent, last minute changes, immediate payment demanded
Strange, abnormal grammar and numerous typos
Sent from a new email address that is almost the same as who you’ve communicated with before – but with subtle differences, a digit or letter off, a different domain host
Fake Foreign Buyers
In this scam, you get an email from a foreigner who wants to relocate to the United States. He might even explain why. This buyer says he saw your property online, loves it, and would like to buy it sight unseen … and for cash. He then offers to send you a cashier’s check. You’ll receive all the pertinent information: the person’s name, phone number, address, and when he would like to close, but all of your contact will be via email or through their “attorney.” But, like many versions of this scam (popular in auto purchases and other markets), the buyer will accidentally send the check for too much, and ask you to wire a portion back to them right away, as you wait for the foreign check to clear, only to find out that the check was a forgery, and be out the money.
So How Can I Avoid Getting Scammed?
Because scammers often use advanced technology and interact digitally with their victims, it can be challenging to avoid real estate scams. However, it’s important to stay vigilant about protecting your personal information and bank accounts. When you are getting ready to sell your home, be sure to keep these tips in mind so that you can stay safe and keep yourself protected.
Here are some tactics you can take to avoid real estate scams:
Keep Your Personal Information Safe
Never give your personal or financial information to someone you don’t trust. Don’t provide financial information through emails or website links. When a scammer asks you for your social security number through email or phone, don’t give it to them. Giving them this essential information grants them access to your personal data to commit identity theft; doing this damages your credit score as they apply for and use their credit cards.
Avoid Paying Fees to A Cash Home Buyer
When you sell a home, the proper process is someone buys your house, they give you money, then you sign over the deed. This is the only order things should go in. A request to do something different raises a major red flag. Fees, especially those that pop up after you’ve signed a contract, are suspicious. So-called “hidden fees” like service charges or market risk fees are likely a scammer’s attempt to get cash out of you without the true intent of purchasing your home. Don’t pay anything upfront, even if the fee sounds reasonable.
Be wary of being rushed and of last-minute changes:
If a potential buyer pressures you to agree to their offer and rushes you to sign a contract before you’ve had proper time to review it, you should be wary. A legitimate home buying company will have no problem with you thinking it over and will even encourage you to check with someone you trust or an attorney during the process. When an investor is in a rush to purchase your home, there’s no way they have time to collect the proper amount of information to make a legitimate cash offer. Especially if they never see the property or ask questions about its condition. A proper investor won’t want to offer you money for a property they know nothing about. There’s no way they can fairly assess your home without taking time and following an organized process.
Rushing at any point in the process can be a major red-flag. If you’re already in the process of buying a home and you receive news of a last-minute change, take the time to verify that it’s real. Don’t act hastily or out of emotion.
Wait Until Closing to Sign Over Your Deed
Signing over the deed is another task that should only happen during closing, in the presence of a real estate attorney. If your investor wants you to sign it over in advance, and then rent the property back to you, just say, ‘no.’ Signing over ownership early can open the door for scammers to take a huge advantage, leaving you high and dry with the remaining mortgage payments and no cash for the house.
When it comes to legal documents, don’t sign anything until you have money in hand or have consulted a lawyer.
Verify and Do Your Due Diligence on the Company
The first clue that you’re entering into a scam is if the business wanting to buy your home doesn’t actually exist.
Many of the publicly posted “We Buy Houses” signs you see posted around feature one single phone number as the way to contact them – oftentimes not even including their company name or information. Others may have business cards, or even a simple website, but you should always dig deeper. Especially if the person is interested in purchasing your home as fast as possible. Take a moment to investigate.
A legitimate real estate buying company will most likely have multiple ways to contact, communicate, and verify their existence. You should have access to these, such as a professional email address, company website that includes business information, blogs, and even social media accounts. If a buyer doesn’t provide several communication outlets and isn’t transparent with information, run the other way. They are most likely a scammer.
Trust Your Gut: If an offer seems too good to be true, it probably is.
As the saying goes, “all that glitters isn’t gold.” When you deal with these types of buyers, their goal is to get you to commit to their attractive price before you realize that they plan to walk down their offer after you’re invested in the process. If you’re in a rush to sell your home, they know you might not have the time to start over. Don’t get caught up with a seller that will offer you something that seems great, but ends up costing you in the long run.
What to Do If You Think You’ve Been Scammed
If you think that you have been the victim of a scammer when it comes to your home sale, you need to report it to the proper authorities.
- Contact your local law enforcement agencies and let them know about the fraud
- Contact a credit agency to place alerts or freezes on your credit score
- File a complaint with the Federal Trade Commission
In Conclusion
While the threat of scammers and fraud can be scary, you can keep yourself safe while selling your home in Connecticut. Verify the company, do your-due diligence, keep your information safe, and most importantly, trust your gut. If something makes you feel uncomfortable or seems too good to be true, pause, take a step back, and look closely at what is happening. Ask a trusted friend or a real-estate attorney for their opinion. If you stay vigilant, you can avoid scammers and have a great home sale! If you need help, or are looking for a verified, reliable home buyer to work with on the sale of your home. Contact us, or complete the form below and we will get right back to you!
