Top 5 Real Estate Scams: How Buyers, Sellers and Property Owners Can Protect Themselves

Real estate transactions involve large amounts of money, valuable property, personal information, and multiple parties communicating electronically.

Unfortunately, that also makes real estate an attractive target for fraud.

Scammers have become increasingly sophisticated. Some impersonate legitimate real estate professionals. Others create fake rental listings, forge ownership documents, target vacant land, or prey on homeowners facing foreclosure.

Whether you're buying, selling, renting, investing, or simply own property, knowing what to watch for can help you recognize a problem before money or property changes hands.

Here are five real estate scams consumers and real estate professionals should know about.

1. Wire Transfer Fraud

Wire fraud is one of the most dangerous scams associated with real estate transactions because a criminal can attempt to divert a very large amount of money with a single fraudulent message.

The scam often involves someone impersonating a legitimate party in the transaction and sending false wiring instructions.

A message may look convincing. Names, transaction details, email signatures, and other information can make the communication appear legitimate.

The goal is simple:

Convince someone to wire closing funds into an account controlled by the criminal.

How to Help Protect Yourself From Wire Fraud

Treat wiring instructions with extreme caution.

Before sending money, independently verify the instructions using a trusted phone number or communication method you already know to be legitimate.

Be especially suspicious of unexpected or last-minute changes to wiring instructions.

Never assume an email is authentic simply because it appears to come from someone involved in the transaction.

When money is about to move, verify before you wire.

2. Rental Scams

Rental scams can target people searching for homes online.

A scammer may advertise a property they don't own—or sometimes a property that isn't actually available—and offer an attractive rental price.

The prospective renter may then be asked to send a security deposit, application fee, or first month's rent before seeing the property.

Once the money is sent, the supposed landlord disappears.

How Renters Can Reduce Their Risk

Be cautious when a rental opportunity appears unusually inexpensive compared with similar properties.

Verify that the person advertising the property has the authority to rent it.

Whenever practical, see the property and verify the situation before sending substantial funds.

And be particularly cautious when someone creates urgency around sending money immediately.

A great deal isn't a great deal if the person offering it doesn't own the property.

3. Deed Fraud and Property Title Fraud

Deed fraud—sometimes called property title fraud—can be especially concerning in areas with significant amounts of vacant land.

A criminal may attempt to impersonate a property owner and fraudulently sell or transfer property without the legitimate owner's knowledge.

Vacant properties can present attractive targets because an owner may not physically visit the property very often.

Absentee owners can potentially be targets as well.

Fraudsters may attempt to use false identification, forged documents, fake entities, altered records, or other methods to make themselves appear legitimate.

Protecting Vacant Land and Other Real Estate

Property owners should pay attention to unexpected communications or activity involving their property.

If you own vacant land or property you rarely visit, periodically checking on the property and its ownership records can be worthwhile.

If somebody unexpectedly contacts you regarding the sale or transfer of property, be cautious about providing personal information until you understand who you're dealing with.

And when purchasing real estate, title insurance plays an important role in protecting against certain covered title defects and ownership problems, subject to the terms, conditions, exclusions, and exceptions of the policy.

This subject is particularly important to us because we've seen firsthand just how sophisticated property fraud can become.

4. Squatter and Fraudulent Occupancy Scams

Vacant homes, investment properties, and second homes can sometimes become targets for unauthorized occupants.

In some situations, fraudulent occupants may produce questionable leases or other documents in an attempt to claim a right to remain in the property.

Resolving an unauthorized occupancy situation can potentially become complicated, depending on the circumstances and applicable law.

What Property Owners Can Do

Regularly check vacant properties.

Appropriate locks, security systems, cameras, property management, and routine inspections can help owners recognize unauthorized activity sooner.

If you discover somebody occupying a property without authorization, don't assume you can simply remove them yourself.

Contact the appropriate authorities and obtain qualified legal advice about the proper process in your jurisdiction.

5. Foreclosure Relief Scams

Homeowners facing financial trouble can be particularly vulnerable to fraud.

Scammers may promise to stop foreclosure, negotiate with a lender, modify a loan, or provide some other form of foreclosure assistance.

The homeowner may be asked for an upfront payment and receive little or no meaningful assistance in return.

Some schemes can be considerably more serious and may involve attempts to obtain signatures, personal information, or even an interest in the property.

Be Careful With Foreclosure Assistance Offers

If you're struggling with mortgage payments, be skeptical of anyone guaranteeing that they can stop a foreclosure.

Understand exactly who you're dealing with before providing money, financial information, or signatures.

Start by communicating directly with your mortgage servicer about available options and consider assistance from legitimate housing counselors or qualified professionals.

Financial distress creates urgency—and scammers know it.

Why Real Estate Fraud Can Be So Convincing

One reason these scams work is that real estate transactions naturally involve many moving pieces.

Buyers.

Sellers.

Real estate agents.

Lenders.

Escrow officers.

Title professionals.

Insurance companies.

Inspectors.

Contractors.

And others.

There are emails, phone calls, documents, signatures, deposits, disclosures, and deadlines.

A criminal doesn't necessarily have to fabricate an entire transaction.

Sometimes they only need to successfully impersonate one person at the right moment.

That's why verification is so important.

Slow Down When Something Changes

Many scams rely on urgency.

Wire this immediately.”

The instructions changed.”

Someone else wants the rental.”

Send the deposit today.”

Sign this right now.”

Urgency can cause people to bypass the verification they would normally perform.

When something involving money, ownership, wiring instructions, identity, or signatures unexpectedly changes, that's exactly when you should slow down and verify.

A five-minute verification can be considerably less expensive than discovering fraud after the transaction has occurred.

The Bottom Line

Real estate fraud isn't limited to inexperienced consumers.

Sophisticated scams can target buyers, sellers, property owners, investors, renters, real estate agents, escrow companies, title companies, and other professionals.

Technology has made communication faster and transactions more convenient.

It has also given criminals new ways to impersonate legitimate people and organizations.

So remember:

Verify identities.

Verify ownership.

Verify unexpected instructions.

And especially:

Verify before sending money.

When something doesn't make sense, don't allow urgency to substitute for verification.

Have a Title or Escrow Question?

We're Bobby Tarango and Mike Arias, sales representatives with Chicago Title, working with real estate professionals throughout the High Desert on their title and escrow needs.

Through ChicagoTitlePro.com and TitlesEverything.com, we share real estate information and resources designed to help real estate professionals, buyers, sellers, property owners, and real estate agents better understand real estate and the transaction process.

If you're working on a transaction or have a question about title or escrow, reach out to Bobby or Mike.

Bobby Tarango & Mike Arias
Chicago Title
Title & Escrow

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