How to Avoid Being Scammed When Buying a House

When it comes to buying a house, it's important to be aware of potential scams. Learn how you can protect yourself from becoming a victim.

How to Avoid Being Scammed When Buying a House

When it comes to buying a house, it's important to be aware of potential scams. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions and giving them confidence in what steps to take next. Unfortunately, there are scammers out there who are looking to capitalize on vulnerable homeowners who are in difficult financial situations. The first step is to never provide financial information through emails or links to websites.

This could include offering to negotiate with your lender for a fee or asking you to pay them directly while they work to resolve your situation. Be wary of urgent requests or offers that seem too good to be true. Fake representatives of lending institutions can also appear before a seller of housing or real estate, and they may try to obtain the seller's personal information, such as their bank account information, in order to “transfer the fictitious buyer's profits” to them. In addition to these venture capital-funded companies, several large domestic brokerage houses now offer the service of buying homes directly from the seller without the need to put them up for sale to the general public.

They use radio, television and online advertisements to attract people with promises of quick riches made through the purchase and sale of real estate. Since the goal of these buyers is to buy the home as little as possible, sometimes between 50 and 60% of its real value, sellers usually receive much less than they would have received if they had put it up for sale through a real estate agent. But instead of buying houses, most of these companies want to convince you to give up control of your home. Imagine listing your home for sale, finding a buyer, going all the way to closing, and then discovering that someone else has made a claim on your property, either through a discreet claim or an outright forgery. And because the email appears to come from a legitimate source, homebuyers will often follow fraudulent instructions and then use scammers' transfer instructions to send the money. This is not to say that there are no legitimate companies willing to buy your property promptly.

Although there are some legitimate companies that specialize in buying houses for cash, the “We Buy Houses for Cash” flyers placed on telephone poles are probably the work of scammers. Before selling through an unsolicited purchase offer, the seller must know the real value of a property. Tom Cronkright, the CEO of the identity verification solution CertFID and the victim of wire fraud himself, recommends being aware of some red flags that buyers can watch out for in order to avoid potential losses. This strategy means preparing your home for potential buyers to see and possibly letting it sit for sale for a long period of time. Before you begin the process of selling your home, it's good to have an action plan in place, such as those steps from the Federal Trade Commission (FTC) guidance on what to do if you've been scammed.

A homebuyer, for example, can only receive a cursory visual inspection when they believe that a full and detailed inspection is being done. By following these tips and being aware of potential scams when buying a house, you can protect yourself from becoming a victim. Do your research before signing any documents or transferring any money. Make sure you understand all aspects of the transaction before making any commitments. And if something doesn't feel right or seems too good to be true, trust your instincts and walk away.