How to Avoid Real Estate Fraud?
The first thing to be able to prevent or avoid real estate fraud is to understand how they happened. Just like learning about cyberattack or home safety. Educating yourself is key.
Real Estate Frauds are Real
In a recent stories on Globe and Mail, there are home owners who were defrauded their down payments. Homebuyers are being warned by mortgage brokers and real estate lawyers about a new form of fraud, in which criminals impersonate lawyers via email and trick people into sending their down payments to fraudulent accounts. The criminals hack into the lawyer’s email account and surveil the email exchanges for an extended period of time before sending a fraudulent email at the time of the down payment transfer. Two mortgage brokers, based in Ajax and Whitby, Ontario, shared their clients’ experiences of losing $82,000 and $88,000, respectively, to such scams. They suggest that wire transfers and direct deposits are becoming more common ways of transferring down payments, but it’s always advisable to discuss the transfer over a phone or video call first, and to verify the legitimacy of the account with the lawyer’s office through a known contact number. The increase in online real estate transactions due to the pandemic is making such frauds more likely, say industry professionals.
There are other frauds that were wildly circulating through the internet. Investigators and official warnings have indicated that mortgage and title fraudsters are targeting at least 32 properties in Ontario and British Columbia. For example, in Ontario, there are cases where “total title fraud” where scammers pose as homeowners to list properties for sale. These impersonators had to put on convincing performances, but they were not the only individuals involved in the scam. The fraudsters typically focus on homes with low or no mortgages and create fake identification in the homeowner’s name, paying “actors” $5,000 to $10,000 to put the property on the market and seek a “fairly quick” sale with an unsuspecting buyer. In some cases, impersonators pose as homeowners to obtain mortgages from private lenders. Title fraud resulted in a legal mess that could take a year and a half for the courts to sort out, but the potential payoff was much greater than mortgage fraud. There were one individual who was working abroad for 1 year came back to find out that his house was sold and new buyer has lived in the property for couple of months.
9 Ways to Prevent Against Real Estate Fraud
Real estate fraud can be prevented by taking several precautions. Here are some ways to prevent real estate fraud:
1 – Protect your personal information
Keep your personal information like your social security number, bank account numbers, and other identifying information safe and secure. Do not give this information to anyone unless you have verified their identity.
2 – Search for your home on MLS
Often the fraudsters will try to do a quick sales of your home via the popular MLS system. Search for your home address regularly on Realtor.ca can allow you to spot your home on sale quickly. If you have a good realtor friend, ask them to setup an automatic search on your house address via the MLS system and you will get automatic notification if your house comes onto the market.
3 – Be cautious of unsolicited offers
Be wary of unsolicited offers that come through email, social media, or phone calls. If an offer seems too good to be true, it probably is.
4 – Verify identities
Verify the identities of anyone you do business with, including real estate agents, brokers, and lenders. Check their credentials, and make sure they are licensed and reputable.
5 – Conduct your own research
Research the property and its history thoroughly before making any transactions. Look for public records, past sales history, and check for liens or other encumbrances on the property.
6 – Use title insurance
Title insurance protects you against title fraud and other issues that may arise with the property’s title. Make sure you get title insurance when purchasing a property.
7 – Be cautious of wire transfers
Be careful when sending wire transfers, especially to people you do not know. Scammers often use wire transfers to collect money from their victims. Always validate with the bank the entities you are wire transfer to and also check with the original source such as the brokerage and the lawyer whom you are wiring to. If in doubt, revert back to a bank draft and physically drop them off to the source.
8 – Monitor your credit
Monitor your credit reports regularly to make sure there are no unauthorized activities or accounts opened in your name.
9 – Stay informed
Stay up-to-date on the latest scams and fraud schemes related to real estate by following reliable news sources and government websites.
By taking these steps, you can help protect yourself from real estate fraud and avoid becoming a victim.
