Like in any other business, real estate investment scams do exist. While they may not be as obvious as the ‘Nigerian prince needs your help’ email scams, real estate investment scams can be just as detrimental. But don’t worry. Con artists aren’t the majority in real estate, and by simply keeping an eagle’s eye and being cautious you will be able to avoid them or catch them on their nonsense. Here’s what to do to avoid real estate investment scams.
1. Do Your Own Research
We live in an era where finding access to information is literally at the tips of our fingers – take advantage of that! This is the most basic way to avoid scams but it will come a long way. If you want to make sure of the credibility of a real estate company or a property finder website, go ahead and Google it. Find multiple review sites that describe people’s experiences with a certain business. The more critiques you find, the better and more likely will consistent criticisms be true. But still, be weary of what you read. What else can you do to validate a business’ reliability? This leads us to the next point.
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2. Check for Certifications
Just as you would meticulously do what you can to screen a tenant, accurately determine if you are getting involved with qualified professionals. Make sure the company, agent, or property manager you are dealing with is properly certified. Scammers will do what they can to avoid showing qualifications. For some of certifications of different kinds of real estate investors, click here and here. Same goes for home buyers. Be sure to ask for their credit and employment history. Real estate lawyers are also no exception to this rule. Don’t shy away from checking certifications, being reserved won’t save you if you fall in a conman’s scheme.
3. Seek Professional Advice
Once you have found reputable associates, ask for their help. Get advice from a real estate attorney if you want to know how to deal with legal issues, like Airbnb zoning restrictions or evictions. If you need help with property management, be sure to look for a property manager or management company. Check with your bank to learn more about loans and mortgages. Seek out advice from anyone who is qualified. Joining a real estate investing club will also provide great advice, and you may learn about how investors may have avoided or experienced real estate investment scams. Having professional and qualified outlets for advice will help you avoid real estate investment scams.
4. Don’t Act on Emotion
A key tip to become a successful real estate investor is to be assertive and level-headed when making important decisions. Scammers will go out of their way to prey on investors who are facing difficulties.
One of the most common real estate investment scams falls exactly into this concept. Loan modification is a scam in which a ‘lender’ or ‘agency’ will claim that they will get desperate investors out of dire situations like being near foreclosure or having difficulty in paying mortgage. The scammers will ask for a fee in advance, which should be a huge warning to you, since it is illegal for companies to ask for an advanced fee! The crooks would then tell poor investors that they will cover most of the monthly mortgage as long as the investor pays a small amount of it. Of course, they will need your financial information, maybe a bank account even, for this to happen.
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5. Take Your Time
This adds on to the previous point, do not rush when given a real estate opportunity. If you are not comfortable with a deal, then do not take it. Also, if your concerns and questions are left unanswered with whomever you are dealing with, then abandon the deal.
Here is one of the real estate investment scams that deals with being hasty on time. Some seminars held by experts in real estate will provide you with great investment information and tips. Almost unconsciously, this makes you build trust with the expert. By the end of the seminar, the expert offers you lucrative investment opportunities…but they are only available for a ‘limited time’. At this point the ‘expert’ is literally waving a red flag to you. Do not fall for this classic trick.
6. Signing Is the Way to Go
Nothing is official until it is signed upon. That’s the mentality you should have when dealing in real estate. An agreement is held only by a legally binding document. Do not rely on verbal promises. Doing this will save you from the more minor real estate investment scams.
7. Visit the Property Yourself
Even if you are scouring for properties online, be sure to visit the property before you invest in it. Make sure the interior and exterior are what they were said or agreed to look like. Something you may find concerning may not be an issue to the seller, so it’s important to visit the property before a purchase to not be extremely disappointed. If everything is in good shape, then you could consider investing in the property. This tip may sound simple, but if you were not to follow it, you could be in for real estate investment scams that could haunt you down the road.
Related: 5 Real Estate Negotiation Tips for Investors
8. Question Everything
Finally, question everything that comes to your mind about the property or deal. Make sure you know everything about what you plan to get involved with, whether it’s a property, deal, data, and anything else. Trust your spidey sense if something feels wrong.
Real estate investment scams can be truly devastating. You could lose so much in such a small amount of time all because of some stupid, yet cunning, trolls. If you encounter any scammers, be sure to do us all a favor and report them.
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