There’s a lot of pressure that comes with transacting in real estate. When you find the perfect buyer, you want to act quickly. Unfortunately, con artists know and take advantage of this, tricking sellers in all kinds of ways.
You can avoid falling victim to a home-buying scam by learning about the most common ones and their warning signs.
Signs the buyer is a scammer
A buyer who can’t or doesn’t want to provide references is a red flag. A genuine investor has an established network of contractors and agents that can provide references. A prospective buyer who can’t provide references and doesn’t want to put cash down on your home should be avoided. It’s a sign they might try to shift the deal for a fee or at a markup, and it could fall through.
A legitimate buyer knows they have to make an upfront deposit. An equally worrying sign is a buyer who has no online presence whatsoever. Very few people have absolutely no digital footprint. If you can’t find anything about them online, it’s a red flag.
If the buyer seems shady, look them up through various avenues like Facebook, LinkedIn, other social media, or a specialized platform to look for people online.
Most Common Types of Scams
Buyers who are not available to view the property in person, provide too many details without being asked, etc., might be shady. Here are the four most common scam buyer types.
1. The buyer is abroad or otherwise unavailable
The buyer gets in touch through email or a website asking to buy your home. They tell you they lie abroad and won’t be back in the country until a certain date, but they really, really love your property and want to live there after returning. They offer to send a cashier’s check as collateral.
This is not a new scam by any means. What’s more, it doesn’t only happen with real estate. It can happen with any item of high value.
If you fall for it, you’ll get the cashier’s check as promised and deposit it into your account. Some time passes, and they get in touch again. This time, it’s a sob story about how they can’t buy the home after all and want their money back. They might offer to let you keep some of it to appease you.
As you probably anticipate, the cashier’s check will bounce, usually several days after you send “their” money back.
A similar scam is when the buyer seems too eager, even obsessed with your house. They want to send money without having seen the property in person. They might even offer a larger than standard down payment.
They can’t take calls or tour in person, like the foreign buyer, but they will offer to pay cash, make an offer over your asking price, send a cashier’s check, or promise to deposit earnest money into an account.
While purchasing a property remotely isn’t out of the question – it happened during the pandemic – the buyer must have an agent to show them the home on a video call and negotiate for them. A reliable real estate agent can help protect you from a scam.
2. They sent too much money
The buyer was available to tour the property physically and liked it. They sent some money, but it was too much “by accident.” They ask for part of it back via wire transfer. A few days later, the check bounces, and you can’t recover your refund.
3. They give too many details
The buyer provides a slew of personal details and financial records right from the start. An initial property sale inquiry doesn’t require that much information. They send financial and bank statements without you asking them to so they can “prove” they can afford to pay cash.
You probably wouldn’t send a virtual stranger your bank statement. These details have to pass between the escrow firm and property agents. The buyer could be giving you false information. It’s especially suspicious when they can’t provide references, and they have no digital footprint.
4. The foreclosure scam
This one afflicts property owners who are behind on their mortgage payments. The scammer offers foreclosure relief in the form of an offer to stop the foreclosure or change the terms of the existing loan. They ask for cash upfront, which is a red flag. Legitimate organizations that help struggling homeowners don’t ask for payment upfront. No entity should ask you to pay them before rendering services. Do an online search on the person or the business they claim to represent. Look at their website and read online reviews. If there is too little information to go on, run.