Every year, homebuyers fall victim to scams that cost them thousands of dollars. Some scammers are so well-known that there are entire websites dedicated to exposing their schemes. Below are three popular homebuyer scams, along with tips on how to avoid them.
1. The “pre-approval letter” scam
Homebuyers should be cautious about “pre-approval letters” that require an upfront fee for a written statement indicating that a lender has already reviewed the borrower’s information and is willing to give them a loan. Unfortunately, there are numerous scams out there attempting to take advantage of those who are just starting on the journey to home ownership.
If a buyer receives a “pre-approval letter” with no requirement for payment, it’s most likely legitimate; however, if pre-payment is requested, it’s highly advised that further research is done on the offering before jumping in head first. If you need help finding a reputable lender or if you have any doubts or questions regarding a pre-approval letter, contact your real estate agent or the local housing authority to ensure your financial safety.
2. The fake home inspection
A fake home inspection is something you should watch for when looking to buy a property. It can be a costly mistake if you are unaware that the inspection didn’t represent an accurate review of the property conditions. It is important to research an inspector and exercise due diligence when selecting one to perform an inspection. Look for licenses, references, and other qualifications the inspector may have. Use only a reputable inspector to complete the home inspection. Also, if possible, aim to attend the inspection or ask a professional or knowledgeable individual to join you.
Real Estate Agents are invaluable when it comes to finding reputable and experienced professionals, including a legitimate home inspector. By being informed and proactive, you can avoid falling victim to fraudulent inspections.
3. Wire Fraud
Wire fraud is becoming an increasingly common problem in today’s world. It happens when funds are transferred from one account to another via wire transfer services and funds are then illegally misdirected away from their intended destination. This not only has a devastating financial impact on individuals and businesses around the world but can also leave them feeling extremely vulnerable due to the fear that more cybercriminals may come after them in the future.
To combat the rise of wire fraud, confirm the wiring instructions via phone before sending any funds. Do not accept the legitimacy of a last-minute email changing the wiring instructions, these are a ploy used often by Hackers. Protect yourself by paying close attention and verifying all related information before wiring any funds.
Safeguarding your financial well-being during the home buying process is paramount. These scams, including pre-approval letter scams, fake home inspections, and wire fraud, are all real threats that can have dire consequences if not addressed properly. By staying informed, exercising due diligence, and seeking assistance from trusted professionals like real estate agents, you can navigate the complex world of real estate with confidence. Remember, the journey to homeownership should be a rewarding and positive experience. Protecting yourself from scams is not just a wise choice; it’s an essential step towards making your real estate investment a successful and secure one.
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Richard has extensive experience in all aspects of buying and selling residential property. He has sold more than 400 homes and well over $100 million in residential real estate. There’s no need to guess. Get expert advice that will allow you to buy and sell with confidence and ease.
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