10 Common Home Buying Scams of 2022

10 Common Home Buying Scams of 2022

If you’re in the market for a new home, or you want to sell your propery, beware of these 10 common scams that could cost you time and money.

1. Phantom Listings 

If you’re searching for a new home, beware of phantom listings. These are fake listings that are used to lure in buyers and then steal their money. Here’s how they work:

The scammer will create a fake listing for a home that doesn’t actually exist. They may use real photos of a similar home, or even stolen photos from another listing. They’ll post the fake listing on classifieds websites or social media platforms.

When someone expresses interest in the property, the scammer will ask for a deposit to hold the property. Once they have the deposit, they will disappear and the victim will never hear from them again.

To avoid being scammed, only work with reputable real estate agents or cash offer companies and do your own research on listings before you make any payments. If something seems too good to be true, it probably is. Be wary of anyone who asks for money upfront without providing any services or goods in return.

If you think you’ve been the victim of a phantom listing scam, report it to the authorities and file a complaint with the Federal Trade Commission.

2. Bait and Switch Listings 

Bait and switch listings are a type of fraud that occur when a seller lists a property for sale at an artificially low price in order to lure in buyers. Once the buyer is interested, the seller will then try to convince them to purchase a different, usually more expensive property. This type of fraud can be difficult to spot, but there are some red flags to watch out for. 

Some common signs of bait and switch listings include: 

  • The listing price is significantly lower than similar properties in the area
  • The listing agent is reluctant to give any information about the property unless you schedule an appointment
  • The listing agent is not the owner of the property
  • The address or location of the property is not given in the listing
  • The property is described as being “in need of work” or “a fixer upper”

If you suspect that a listing may be bait and switch, you should proceed with caution. Try to get as much information about the property as possible before scheduling an appointment to see it.

3. Rent-to-own Scams

Rent-to-own scams are becoming more and more common. And unfortunately, they can be very difficult to spot.

Here’s how they work:

You find a house that you really like. But you don’t have the money for the down payment or the monthly payments. So, you enter into a rent-to-own agreement with the owner.

The owner agrees to let you live in the house and make payments for a set period of time, usually two or three years. At the end of that period, you will have the option to buy the house outright.

Sounds great, right?

Unfortunately, rent-to-own scams are becoming more and more common. And they can be very difficult to spot.

Here are some things to watch out for:

The owner asks for a large up-front payment. This is often called a “option fee.” The owner should only ask for a small, refundable deposit. Anything more than that is a red flag.

The monthly payments are much higher than the market rent for similar properties in the area. This is how the scammer makes their money. They’re counting on you not being able to make the payments and having to give up the house.

The contract is full of legal jargon that you don’t understand. If you can’t understand what you’re agreeing to, don’t sign it! Get a lawyer to look it over first.

The owner is pressuring you to sign the contract right away. A legitimate rent-to-own agreement should not be a rushed process. Take your time and make sure you understand what you’re getting into.

If you’re thinking about entering into a rent-to-own agreement, be very careful. Make sure you do your research and understand exactly what you’re agreeing to. Otherwise, you could find yourself in a very difficult situation.

4. Foreclosure Rescue Scams

Foreclosure rescue scams are unfortunately becoming more and more common as the housing market continues to struggle. These types of scams prey on homeowners who are facing foreclosure, and promise to help them keep their home or sell it in a short sale. However, these scammers usually only end up taking the homeowners’ money and leaving them in an even worse situation.

If you’re facing foreclosure, it’s important to be aware of these types of scams so that you can avoid them. Here are some common signs that a foreclosure rescue scammer may be trying to take advantage of you:

The scammer asks for money upfront: This is a huge red flag! No legitimate company or individual will ever ask for money upfront in exchange for services related to foreclosure rescue.

The scammer promises to help you keep your home: While there are some legitimate programs out there that can help homeowners facing foreclosure, no one can make any guarantees. If someone is promising that they can definitely help you keep your home, they’re likely just trying to take advantage of you.

The scammer pressures you into signing over the deed to your home: This is another huge red flag! You should never sign over the deed to your home to anyone, even if they claim it’s just temporary. Once you do this, you will have no legal ownership of your home and the scammer will be able to do whatever they want with it.

If you’re facing foreclosure, the best thing you can do is to talk to a housing counselor or attorney who can help you understand your options and make sure you’re not being taken advantage of. Don’t let a scammer take advantage of your situation and end up costing you your home!

5. The Property Flipping Scam 

One of the most prevalent home buying scams today is the property flipping scam. In this scam, a fraudster will purchase a property, usually at a low price, and then quickly resell it at an artificially inflated price. The fraudster may even promise to provide financing for the purchase.

While there are some legitimate businesses that engage in property flipping, it is important to be aware of the risks associated with this type of transaction. If you’re thinking about purchasing a flipped property, be sure to do your homework and work with a reputable real estate professional.

What is Property Flipping?

Property flipping is the process of purchasing a property, making improvements or repairs, and then selling it for a profit. While there are some legitimate businesses that engage in property flipping, it is important to be aware of the risks associated with this type of transaction.

What Are the Risks of Purchasing a Flipped Property?

There are several risks associated with purchasing a flipped property. First, the property may have been purchased at an artificially low price. This means that the fraudster may have paid significantly less for the property than what they are selling it for. Second, the repairs or renovations that have been made to the property may not be up to code or may not meet your expectations. Finally, if the fraudster is providing financing for the purchase, they may require you to make a large down payment and then charge you an interest rate that is significantly higher than the market rate.

How Can I Avoid Being Scammed?

If you’re thinking about purchasing a flipped property, there are some steps you can take to avoid being scammed. First, be sure to do your homework and research the property thoroughly. Try to find out how much the property was purchased for and how much was spent on repairs or renovations. It’s also a good idea to get a home inspection before making an offer on the property. Finally, be sure to work with a reputable real estate professional who can help you navigate the process and protect your interests. 

6. Home Warranty Scams

One type of scam that you may come across is a home warranty scam. These scams often involve someone offering to sell you a home warranty for your new home. However, there are several things to be aware of with these types of scams.

First of all, beware of anyone who contacts you unsolicited and offers to sell you a home warranty. This is especially true if they are pressuring you to buy it on the spot. If someone is legitimate, they will give you time to research the warranty and make a decision.

Another thing to watch out for is unrealistic claims about what the warranty will cover. For example, if someone tells you that the warranty will cover any repair that you need, no matter how big or small, be wary. In reality, home warranties typically only cover certain types of repairs and maintenance.

Finally, make sure to do your research on any home warranty company that you’re considering doing business with. Check out reviews online and see what other customers have to say about their experience. By taking these steps, you can help protect yourself from becoming a victim of a home warranty scam.

7. The Fake For Sale By Owner Scam

If you’re thinking about buying a home, you may be considering going the For Sale by Owner (FSBO) route in order to avoid paying a real estate agent’s commission. While there are some benefits to this approach, there are also some risks – including the possibility of being scammed by someone posing as a FSBO seller.

The fake FSBO scam is relatively simple: the scammer finds a home that is actually for sale (usually through a legitimate listing site like Zillow or Realtor.com), and then creates their own listing for the same property. They may even go so far as to put up a “For Sale” sign in the yard. When potential buyers contact the scammer, they will act like they are the rightful owner of the property and try to sell it to them.

If you’re considering buying a FSBO property, there are some steps you can take to protect yourself from this scam:

Do your research. Before contacting any FSBO seller, make sure you have independently verified that the property is actually for sale. A good way to do this is to drive by the property and see if there is a “For Sale” sign in the yard; you can also check public records to see who owns the property.

Be suspicious of sellers who are reluctant to provide information. A legitimate FSBO seller should have no problem providing you with their contact information, as well as answers to any questions you have about the property. If the seller is being evasive, that’s a red flag.

Don’t wire money to anyone you haven’t met in person. This is always a good rule of thumb when dealing with any type of transaction, but it’s especially important when buying a home. Once you’ve wired money to a scammer, it’s very unlikely that you’ll ever get it back.

8. The Straw Buyer Scam

Home buying scammers are always looking for new ways to trick unsuspecting home buyers. One of the latest scams is the straw buyer scam. In this scam, a dishonest real estate agent or loan officer convinces a qualified buyer to use someone else’s name and credit information to apply for a mortgage. The straw buyer is usually someone with good credit who is willing to be paid a small amount of money for their help.

Once the loan is approved, the real estate agent or loan officer arranges for the straw buyer to purchase the property from the seller. The seller is usually unaware that they are being scammed and believes that they are selling their property to a qualified buyer. Once the sale is complete, the real estate agent or loan officer disappears with the money, leaving the straw buyer with a property they can’t afford and a mortgage they can’t pay.

9. The Undisclosed Defects Scam

One type of scam is called the “undisclosed defects” scam. This is where the seller does not disclose any potential problems with the home to the buyer. The buyer may find out about these problems after they have already purchased the home. This can lead to expensive repairs that could have been avoided if the buyer had known about them beforehand. 

There are a few things that home buyers can do to avoid this type of scam. First, they should always get a professional home inspection before purchasing a home. This will allow them to identify any potential problems with the property. Second, they should research the property and the neighborhood before making an offer on a home. This will help them to be aware of any potential problems that could arise. Finally, they should always use a reputable real estate agent when purchasing a home. This will help to ensure that they are getting the best possible deal on the property. 

10. Identity theft

Identity theft is a growing problem in the United States, and home buying scams are one of the most common ways that criminals obtain victims’ personal information. There are many different types of home buying scams, but they all have one thing in common: the scammer uses the victim’s personal information to fraudulently obtain a mortgage or other loan.

When you’re looking to purchase a home, it’s important to be aware of the potential for identity theft and home buying scams. Here are some tips to help you protect yourself:

  1. Never give out your personal information to someone you don’t know. This includes your social security number, date of birth, credit card numbers, etc.
  2. Be wary of unsolicited emails, phone calls, or letters from people claiming to be from a real estate company or mortgage lender. These are often scams.
  3. Don’t sign anything until you’ve had a chance to review it carefully. This includes contracts, loan documents, etc. Make sure you understand everything before you put your signature on it.
  4. If something sounds too good to be true, it probably is. Be cautious of any offers that seem too good to be true, especially if they involve giving someone your personal information.
  5. Keep your personal information secure. Store important documents in a safe place and shred any unwanted papers that contain your personal information.

If you think you may have been the victim of an identity theft or home buying scam, contact your local police department and the Federal Trade Commission immediately.