Shopping is fun, but house shopping is a whole new level of excitement. You’re probably already picturing where to plant your petunias or hang your Christmas stockings. While you’re busy designing your future garden oasis, some people are busy plotting ways to steal your hard-earned cash. Buying or renting a home is prime territory for scammers, and they often count on your excitement to hurry you into a mistake.
Reported losses in the U.S. from real-estate and wire-transfer fraud soared to $12.5 billion in 2023, according to the Internet Crime Complaint Center (IC3) of the Federal Bureau of Investigation (FBI). Navigating the real estate world can feel like trying to identify weeds in a new garden patch; some are obvious, while others look deceptively like the real deal. We are here to help you spot the poison ivy before you get a rash.
This guide will walk you through 12 common real estate scams, so you can focus on what really matters: finding a place where your hydrangeas will thrive and your mind will be at rest. If you suspect fraud now, stop any payments, save messages, call your bank, and report the incident to the Federal Trade Commission (FTC) or the FBI’s IC3.
1. Fake or Phantom Listings
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Scammers create property listings that look fantastic, often featuring beautiful photos and descriptions stolen from legitimate ads. They post these on sites like Craigslist or Zillow at a price that seems too good to be true. When you inquire, they will ask for personal information or a security deposit before you can even see the place. Once they have your money, they vanish.
This scam preys on your fear of missing out on a great deal. The scammer might say they are out of the country or too busy to show the property, creating a sense of urgency to get you to send money without a visit. They are counting on you falling in love with the pictures of that perfect yard and making a rash decision.
How to Protect Yourself:
- Always visit the property. If a landlord or seller refuses to let you see the home, walk away.
- Never send money up front. A legitimate agent or owner will not ask for a deposit before you have toured the property and signed a lease or contract.
- Do a reverse image search. Use the listing photos to see if they appear on other websites, which could indicate a stolen ad.
2. Wire Fraud and Escrow Hijacking
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This one is terrifying because it happens when you are deep into the home-buying process. You are getting ready to close, and you receive an email, text, or call that appears to be from your title or escrow company. The message provides new instructions for wiring your closing costs or down payment, claiming there has been a last-minute change.
If you send the funds to the scammer’s account, the money is gone in an instant. These criminals are sophisticated; they create email addresses and phone numbers that look almost identical to the real ones, making it incredibly easy to fall for the trick during a stressful time.
How to Protect Yourself:
- Confirm all changes verbally. Before sending any money, call your real estate agent, lender, or title company using a phone number you know is legitimate. Do not use the number provided in the suspicious email.
- Inspect email addresses. Look closely at the sender’s email address for any slight variations.
- Contact your bank immediately. If you suspect you have sent money to a scammer, call your bank right away to request a wire recall. Speed is critical.
3. Predatory Lending Schemes
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Predatory lenders target borrowers with less-than-perfect credit, promising them a mortgage loan when others will not. The catch? They charge outrageously high interest rates and fees, trapping homeowners in payments they cannot afford. It is the financial equivalent of planting an invasive species in your garden; it looks fine at first, but it quickly chokes out everything else.
These lenders know you are desperate to secure a home and will use that against you. Falling into this trap can lead to foreclosure, costing you your home and ruining your finances for years.
How to Protect Yourself:
- Shop around for lenders. Do not jump at the first offer. Compare interest rates and fees from several reputable lenders.
- Know the going rates. Research current mortgage interest rates so you can spot an offer that is significantly higher than average.
- Ask your agent. A trusted real estate agent can often recommend reputable lenders who will not take advantage of your situation.
4. Deed Fraud and Title Theft
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Imagine discovering you no longer legally own your home. In a deed fraud scam, a criminal steals your identity, forges your name on your property’s deed, and transfers ownership to themselves. They can then sell the home or take out loans against it without your knowledge. This is especially common with vacation homes, rental properties, or homes of the deceased.
You might not find out until you receive a foreclosure notice or an unpaid utility bill for a property you thought you owned. By then, untangling the legal mess is a nightmare.
How to Protect Yourself:
- Monitor your credit reports. Look for any unfamiliar financial activity done in your name.
- Check property records. You can access your deed records through your local county recorder’s office to ensure no unauthorized changes have been made.
- Consider title insurance. An owner’s title insurance policy can offer protection against losses from deed fraud.
5. Moving Company Scams
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You have found your dream home, packed up your life, and hired a moving company. The movers load everything onto their truck, but when they arrive at your new place, the price has suddenly doubled. They refuse to unload your belongings, including the padella you inherited from grandma, unless you pay their inflated fee.
This bait-and-switch tactic holds your possessions hostage. Some fraudulent movers do not even have proper insurance, putting your items at risk of damage or loss with no way for you to get compensation.
How to Protect Yourself:
- Get everything in writing. Insist on a written, binding estimate that details all charges.
- Check reviews and credentials. Look up potential movers on the Better Business Bureau and check for complaints. Ensure they are licensed and insured.
- Never pay a large deposit. Reputable movers typically ask for payment upon delivery, not a huge sum in advance.
6. Foreclosure Relief Scams
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Homeowners facing foreclosure are in a vulnerable position, and scammers know it. These con artists contact people who are behind on their mortgage payments, promising to save their home for an upfront fee. They may even tell you to stop communicating with your lender and to pay them instead.
Once you pay, they disappear, and you are in a worse position than before. Your lender is the only one who can help you with a legitimate forbearance or loan modification. Anyone telling you otherwise is likely trying to scam you.
How to Protect Yourself:
- Work directly with your lender. Your mortgage provider has programs to help homeowners in distress. Call them first.
- Avoid companies that demand upfront fees. Legitimate housing counselors offer services for free or at a very low cost.
- Hang up on unsolicited offers. Be wary of any company that contacts you out of the blue, promising to solve your mortgage problems.
7. Home Inspection Fraud
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A good home inspection is crucial for identifying potential problems before you buy. Unfortunately, some inspectors are not on your side. A dishonest inspector might work with the seller to downplay or ignore major issues, like a faulty foundation or a leaky roof.
Others are simply unqualified and miss critical red flags. You end up buying a home that needs thousands of dollars in repairs, turning your dream house into a money pit. That “perfect for a garden” backyard might be a swamp due to hidden drainage issues the inspector conveniently missed.
How to Protect Yourself:
- Hire your own inspector. Never rely solely on an inspection report provided by the seller.
- Research and vet your inspector. Ask your real estate agent for recommendations, read online reviews, and verify their certifications.
- Attend the inspection. Walk through the property with the inspector and ask questions about any concerns.
8. Unscrupulous Contractor Scams
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From renovating a kitchen to just trying to build a new deck for your container garden, hiring a contractor can be risky. Contractor scams come in many forms. Some take a large deposit and never show up to do the work. Others do a shoddy job, use cheap materials, or go wildly over budget.
A common tactic involves a contractor going door-to-door, claiming they have leftover materials from a nearby job and can give you a great deal. This is almost always a red flag. Good contractors are usually too busy to solicit work this way.
How to Protect Yourself:
- Get multiple quotes. Collect at least three written bids from different contractors for any major project.
- Check references. Ask for and contact past clients to inquire about their experience.
- Never pay the full amount up front. A reasonable deposit is normal, but the final payment should only be made once the work is completed to your satisfaction.
9. Real Estate Investor Seminars
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You have seen the ads: “Learn to flip houses and get rich quick!” These seminars promise to teach you the secrets of real estate investing for a hefty fee. The events are often high-energy and filled with persuasive testimonials.
While some may offer basic information, many are designed to upsell you on increasingly expensive coaching programs and materials that offer little real value. They sell you a dream but leave you with an empty wallet and no closer to owning an investment property.
How to Protect Yourself:
- Be skeptical of get-rich-quick schemes. Real estate investing requires work, capital, and knowledge.
- Do your research. If you want to learn about real estate, look for courses at local community colleges or read books from reputable authors.
- Talk to actual investors. Seek advice from people who have successfully invested in property, not just from those who sell seminars.
10. Loan Flipping Scams
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Loan flipping is a predatory practice where a lender encourages a homeowner to repeatedly refinance their mortgage. Each time, they tack on high fees and points, stripping the equity from the home. It is often targeted at elderly or low-income homeowners who may not fully understand the transaction.
The lender profits from the fees, while the homeowner’s loan balance increases. It is like constantly digging up a plant and replanting it; eventually, the roots weaken, and the plant dies. In this case, you could lose your home.
How to Protect Yourself:
- Question the need to refinance. Only refinance if it provides a clear financial benefit, like a significantly lower interest rate.
- Read the fine print. Understand all the fees and costs associated with the new loan.
- Consult a housing counselor. A nonprofit housing counselor can review a loan offer and help you determine if it is a good deal.
11. Rental Application Fee Scams
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When searching for a rental, it is standard to pay an application fee to cover the cost of a background and credit check. However, some scammers exploit this process. They will list a property they do not own or manage and collect application fees from dozens of hopeful tenants.
The fees are usually small, around $50, so you might not chase after it when you never hear back. But for the scammer, collecting that fee from 20 or 30 people adds up quickly.
How to Protect Yourself:
- Confirm the property manager is legitimate. Do a quick search on the management company or landlord to ensure they are real.
- Ask what the fee covers. A legitimate landlord will be able to tell you exactly what the fee is for.
- Never pay with cash. Use a check or credit card so you have a record of the payment.
12. “We Buy Houses” Lowball Offers
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You have likely seen the handwritten signs on telephone poles: “We Buy Houses for Cash!” These companies target homeowners who are in a desperate situation, such as facing foreclosure or needing to sell quickly. They offer to buy the home as-is for cash, promising a fast closing.
While some of these businesses are legitimate, many are predatory. They will offer you a price that is far below your home’s actual market value, preying on your urgency. They are not trying to help you; they are trying to steal your equity.
How to Protect Yourself:
- Know your home’s value. Get a comparative market analysis (CMA) from a real estate agent before considering an offer.
- Do not be pressured. Take your time to evaluate any offer, no matter how urgent your situation feels.
- Explore other options. Even in a tough spot, you may have better alternatives than accepting a lowball cash offer.
Buying a Safe and Happy Home
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Staying vigilant is your best defense against these schemes. Always trust your gut. If a deal feels rushed or an offer seems too good to be true, it probably is. The goal is to find a wonderful new place to call home, where you can start planning your garden and putting down roots without worrying about being taken for a ride.
After you have secured your new home, the real fun begins. Start by assessing your new yard’s potential. Check the soil, observe the sunlight patterns, and start dreaming up your garden design. Protecting your investment starts with a secure transaction, but it continues with the care and joy you bring to your new space.