There probably hasn’t been a house hunter in history who didn’t want to get a great deal on a house. But in the current market, even finding a house you want and successfully getting it under contract can be a difficult task.
So if you were to find what seems to be an incredible deal, or an under-the-radar listing that nobody else is aware of, it’s understandable why you might want to throw caution to the wind and scoop it up, even if there are some red flags.
But, as the saying goes, if it seems too good to be true, it probably is…
10 Signs You May Be Dealing With a Fake Owner
Scammers aren’t new to real estate; they’ve been around for years in different forms. But according to this Fortune article, seller impersonation fraud is on the rise. Fraudsters are pretending to own property and putting it up for sale.
In the least, they’re hoping to get their hands on someone’s down payment money before the buyer realizes they don’t own the property. But they could also get away with the entire purchase price of a house, if a buyer never realizes it’s a scam.
Unfortunately, even a homebuyer who is typically cautious and logical can fall prey to them because they use fear-of-loss tactics, like listing the house for below market value, or suggesting that they’ll accept a lower price if you can close quickly.
You’re more likely at risk when a property is not listed through real estate agents, and is being marketed for sale by the alleged owner online, but a scammer could possibly sneak past a listing agent’s scrutiny and get listed on the MLS.
To protect yourself from this scam, here are some red flags that should trigger you to be extra cautious:
- The property is vacant.
- There are no liens or mortgages on record, and the property is owned outright by the actual owner.
- It’s priced below the market value of any other house like it in the area.
- You’re not allowed to enter the home to see it in person.
- The seller says they prefer cash offers. While most sellers would certainly love an all-cash offer, pushing for one, and enticing the buyer to pay cash is another thing altogether.
- The seller says they want a quick closing and will give you a better price if you can close quickly.
- They’re quick to accept an offer with little or no negotiation.
- All communication with them is through text and/or email.
- They want to sign all documents remotely, and use a notary who is also remote and doesn’t insist on the seller being in-person to notarize their documents.
- When pushed to do things in person, the alleged owner claims they will be out of the area for an extended period of time.
While those red flags could occur when dealing with a legitimate owner of a property you want to buy, it’s still better to be safe than sorry.
4 Things You Can Do to Protect Yourself From Fake Sellers
Working with a reputable buyer’s agent that you know and trust, or has been highly recommended by others, will go a long way in protecting you from getting scammed by a fake seller. He or she will help you discern if something seems off based upon their experience, and look into it more thoroughly.
But if any of the above warning signs are present, or you just get a sense that something isn’t quite right, here are some things you and your agent can do to put the “owner” to the test:
- Communicate to the seller if you have any reservations or concerns, and say that you need to be extra careful for your own good, as well as theirs… because sellers are also hurt if their home is fraudulently sold to someone. A true owner will understand your desire to be careful when you’re buying something worth as much money as a house is, and will appreciate that you’re concerned about them as well. If they get angry or resist, it’s a sign they aren’t truly the owner.
- Ask the seller questions that would be impossible for them to answer if they never truly lived in the property, or trick questions to see if they answer something in a way that’s an obvious lie.
- Make sure to have a title search done, and buy a title insurance policy. Don’t be pushed into using a title company the seller insists upon using. Hire your own title company or attorney to handle the closing, and work with professionals your agent has experience working with and trusts.
- Scammers have been known to obtain the social security and drivers license information of the homeowner. So make sure to request proof of their identity, and that it needs to be verified in person, or through a trusted third-party identification verification company if they truly cannot travel back to the area where you are buying the house.
As hard as it is to feel like you might be jeopardizing your shot at getting a home you want, or a great deal by demanding any of the above, you’re better off taking that risk than risking losing money you may never be able to recover, and still not ending up with the house you thought you were buying.
Scammers have been taking advantage of the low inventory and high buyer demand in the current market to prey on buyers who are desperate to buy a home by pretending to be the owner of a home they have no right to sell.
Make sure you work with a buyer’s agent you trust — and the services and professionals he or she trusts — to help you gauge whether or not a seller is the true owner of the property you’re buying. When a deal seems too good to be true, or there are other tell-tale signs that the seller isn’t truly the owner, dig deeper and require proof. An actual owner of a property will understand your need to protect yourself and provide the proof you need to proceed with confidence.
Thanks for reading. Remember, I don’t know you or your specific situation. Nothing in this article should be taken as advice specific to your situation. If you have any questions, though, please get in touch – you can find my contact form here. Also, please sign up for my monthly Neighborhood News newsletter for real estate information on your local area and my Homebot home digest for monthly information specific to your home.