4 real estate scams every estate agent needs to know about

Scams are becoming more prominent in every industry, and unfortunately, as estate agents, it’s important to know about the ones that are entering this industry. We’re here to introduce four of the most common real estate scams, to make sure that you are aware of them and know what you should do to help your clients avoid being a victim of real estate scams.

There are many devastating ways in which falling victim to real estate scams can affect buyers and estate agents equally, so awareness and preparation really is key. We understand just how much the smooth running and preparation of property sales can influence both buyer and agent’s confidence, and learning how best to tackle and deal with things such as agent scams can help reinforce this confidence.

Hidden property damage fraud

Hidden property damage fraud, also sometimes known as property misrepresentation, is where a seller doesn’t disclose known damage to the property to encourage the purchase to go through. This is a breach of responsibility to the buyer and could include things like faulty electrical wiring, a mould problem or structural damage.

As estate agents, you should work with a reliable surveyor that you can recommend to your buyers to ensure that a true representation of the property is available for them to buy safely in the knowledge that they won’t find anything unexpected that was already known before the purchase.

Rental scams

Another common scam is rental scams, which involve people posting rental ads on the internet, often on local marketplaces, with a very competitive price and usually very nice looking apartments or houses. In order to “secure the property before it is taken”, people are asked to transfer a security deposit, then are often blocked and never hear from the person again. Excessive upfront fees, lack of clear contact information, grammatical errors and not allowing any viewings are all common signs of rental scams.

As estate agents, making sure that you inform your clients about the risks of rental scams is important, encouraging them to use genuine estate agents when they’re looking to rent. Warn your existing clients of the dangers of rental scams, as well as publishing useful information on your website in the form of blogs or even through social media posts about what to look out for.

Title or deed scams

Title or deed scams are another scary form of real estate scam which involves criminals forging documents to steal the title to your home. It’s common for people to call themselves “property managers” and claim to help them with the process of purchasing a home and setting up the repayments, which conveniently go straight to the person who pocket the payments. The theft of the deed occurs by identifying homes to target, forging the notary signature and maybe even working with an unethical notary to help them with the scam. Once they have ownership, they can then take payments and eventually even get an eviction notice sent to the owner.

So, to prevent this type of scam, estate agents should have procedures in place to prevent fraudulent listings, conduct full and proper investigations prior to putting a property on the market and also educate their clients on the risks where they can.

Loan Fraud

Lastly, we have loan fraud, which involves people working with shady loan officers acting as private lending agents who falsify applications and mislead about the right type of mortgage that the person needs. Common signs are lenders offering discounts for upfront payments, promising quick and easy approvals for fast payments or anything that seems too good to be true.

If one of your clients ever says they’re using a private lending agent for their mortgage, make sure that you do some research to ensure that it’s legitimate. You should also have reliable and trustworthy professional lenders that you know you can rely on, so that you have an alternative option to offer if they aren’t 100% confident in the lender they have.

Final thoughts

Being aware of common real estate scams, and how to protect your clients from them, is what you should be doing as a trustworthy agency. If your client is worried they’ve been a victim of a real estate scam, particularly loan fraud, make sure they get in touch with investment fraud lawyers who may be able to help. Be informed, follow the right procedures and help your clients experience a smooth process when they’re renting or buying somewhere new!