Real estate scams are now a big concern in Canada. Cases of fraudulent activities have risen to such an extent that most buyers and sellers often fear being duped at some point. To make matters worse, scammers are now using more sophisticated tactics and taking advantage of more vulnerable investors than ever before.
With the high demand for property and increasing values of real estate, it feels as if there can’t be a better time for scammers to target unsuspecting people and steal money or property.
In the wake of the growing cases of scams, it has become important for investors to remain vigilant, take extra precaution and protect themselves from potential frauds. The trick is to research a lot, work with licensed professionals, and use only safe payment methods.
For investors, it’s equally important to know the types of scams that can haunt them and devise a right strategy for handling the frauds. Doing due diligence could also help a lot in minimizing the risks involved with a property investment.
In this blog, we will discuss some common real estate scams and share tips to avoid that.
Let’s get started then…
5 Most common real estate scams in Canada
Real estate scams are a cause of concern for buyers and sellers alike in Canada. They come in many flavours and occur with alarming regularity, creating an air of uncertainty in the minds of investors. Here are the five most common real estate scams:
- Title Fraud – In this type of scam, a fraudster will pose as the owner of a property, obtain a mortgage or sell the property without the knowledge of the owner.
- Rental Scams – In this type of scams, fake rental listings are created to seek a deposit or rental payment upfront without giving access to the property.
- Investment Scams – In this type of scam, fraudsters advertise bogus real estate investments, promise high returns, and demand an upfront payment.
- Foreclosure Scams – In this type of scams, fraudsters will target owners facing foreclosure and may offer to help either by promising some legal assistance or arranging for a mortgage.
- Wire Fraud – In this type of scams, fraudsters may pose as real estate brokers or lawyers, send fake wiring instructions and then get the funds wired to the scammer’s account.
Tips to avoid real estate scams
No matter how advanced scammers become, investors can still stay one step ahead of them if they are prepared and well-researched. Following some tried-and-tested methods can help anyone be it buyer, seller or rent avoid being scammed in the real estate market.
Here are some useful tips to avoid real estate scams:
- Always work with a reputed real estate professional – Many investors make the mistake of doing little or no online search on the real estate professional they hire for help. The right strategy is to first check the credentials and experience of the professional, verify their claims and then take them on board.
- Do the needful due diligence on the property – Researching the property for sale and doing the due diligence can greatly help minimize the risks of scams. If an investor has made sure that everything is legal with the property, from the title to tax records, they can avoid being scammed.
- Use only secure payment methods – Paying in cash or doing wire transfers is always fraught with risks when it comes to real estate transactions. To avoid risks of scam, investors should rather use secure payment methods such as a bank draft or cheque.
- Make any payment only after seeing the property in person – Wiring money without visiting the property in person can be risky. A lot of fraudsters use this tactic to dupe investors where they may ask for money upfront and then go missing without giving access to the property.
- Avoid falling prey to attractive pricing – Some investors fall prey to very attractive pricing advertised by scammers. If the price of real estate ad feels too tempting to be true, chances are it is and avoiding that would be the best way forward.
- Curb the “FOMO” urges – Scammers are aware how investors are often desperate to lay their hands on their favourite piece of real estate. This fear-of-missing-out urges can land people in trouble, particularly in the matters of buying or selling houses for sale. Fraudsters can take advantage of that and may use high-pressure tactics and force into making a quick decision.
- Follow the standard route – When buying or selling a property, the standard rule says, get everything in writing. Those who follow this rule are less likely to get scammed. As a savvy investor, the right way is to ensure all agreements are in writing and duly signed by both the parties in the deal. It’s equally important to have copies of all the documents saved for future reference.
Final Thoughts
Real estate scams are something that can’t be wished away overnight. They are going to stay forever and investors should learn to live with that. Rather than getting worried over them, the right way is to stay prepared, do more research and work with only certified professionals. This can keep investors free of risks and help them enjoy the fruits of their hard-earned money.