5 Real Estate Scams to Beware of

The best rule of thumb to go by is if it seems too good to be true, it probably is. To report scams, contact the NYS Attorney General’s office (or your state A.G. outside of New York).

1. Foreclosure rescue/loan modification programs. Be wary of any service that is charging you an upfront fee prior to performing the service. There are HUD-approved agencies that will assist distressed homeowners at no charge. In Rochester, http://www.thehousingcouncil.org/ is a HUD-approved counselor and offers free services.

NEVER deal with anyone who asks you to a) sign over the deed to your house; b) make payments directly to the counselor; or, c) tries to get you to sell them your house with the offer that they will then rent it back to you. No legitimate agency will ask you to do any of these things.

2. Craigslist rental scams. Beware of rental postings on Craigslist that ask you to send any money prior to seeing the property. One of the more popular postings claims that they are going to Africa to do missionary work and cannot show you the property. Again, a common theme is that the rental price seems too good to be true and they typically are not asking for a lot of money. Also, another sign these postings are not legit is the improper useage of English/grammar (e.g. I am pleased to know you).

3. Several individuals in NY were charged with felony fraud for posing as professionals with access to an “exclusive apartment list” and requiring individuals to pay a $200 search fee. No search was ever done. When people complained, they were ignored or issued a bad check as a refund. Again, they were asking for a nominal amount which people may not be as cautious about handing over. But a little amount times a lot of people adds up!

4. Exploiting reverse mortgages. Perpetrators take advantage of senior citizens and will typically target seniors through promotions in churches, holding investment seminars and direct mailers. Please note: There are LEGITIMATE reverse mortgage programs. Talk to a reputable lender or visit the HUD website. The scams again can often be identified as being too good to be true. Con artists look for seniors in distress – offering reverse mortgages initially, then telling them they don’t qualify but offer another mortgage product and eventually they lose any remaining equity and their home. Another common scheme is to entice seniors to take out a reverse mortgage and invest the money in annuities, real estate or some other investment product that does not exist in reality.

5. Manufactured homes and deposits. Potential buyers respond to an ad offering manufactured homes for sale. The seller claims to work for a lender and tells the buyer they can get them a loan with no difficulty. The seller requires a large deposit first to reserve the property. Once the money is paid, the seller is no where to be found. Again, there are LEGITIMATE offerings of manufactured homes but make sure you verify them as legit BEFORE you pay out any money.

Additional resources:
Better Business Bureau
FBI
NYS Consumer Protection Board