Real estate is all about safety, home, and security. But those wonderful emotions, if you’re not careful, can lull you into a false sense of trust. And unfortunately, in real estate as in everything else, you need to be on guard for scams.
The good news is that same schemes keep popping up over and over—so here are the big two to watch out for.
The Rental Scam
What It Is: Taking application money (or even rent) on a place the scammer doesn’t own.
How It Works: The con artist gets photos of a vacant property and lists it, just as a realtor would. Unsuspecting potential renters get interested in the apartment, and hand over money for application fees, and sometimes even go so far as to rent. In a variation of this scam, the con artist actually gets keys to the apartment or house and shows it, even though he doesn’t represent the owner and doesn’t have the right to lease it. This scam got so popular that the FBI issued an alert about it earlier this year.
How To Stop It: Don’t deal with anyone who isn’t a licensed real estate agent in your locality. (Most states require agents to carry some sort of pocket ID cards, like a driver’s license.) Realize that if a true real estate agent is suddenly “called out of town,” someone from her firm will be available to show you the property. Never fill out a credit application before you see an apartment. Never wire anyone money for an apartment, and never give anyone cash for an apartment. Also, use common sense as far as apartment prices. If the price of something seems too good to be true, it probably is. Sometimes you can get a little bit of a price break by renting directly from a property owner—they might want, say, a particularly responsible student. But if you do want to rent directly from a property owner, ask to see their photo ID and look them up in your city’s tax records, to make sure they’re a true owner.
The Homeowner’s Scam
What It Is: Being charged $50 or $100 for a copy of your deed—a document you can get in most areas for about five bucks.
How It Works: If you’re a homeowner, you receive direct mail offering you a certified copy of your deed, which the letter calls a “must-have” or an “important” document. The letter offers you this document for a “reasonable” price of maybe $50 or even $99. However, the letter never bothers to tell you that you probably have a copy of your deed in your closing papers. What’s more, it never tells you that your deed is already on file with your county clerk and that if you need a copy, you can usually get one just by going down to the clerk’s office.
How To Stop It: When you buy a home, put all your closing papers—like your copy of the deed and your copy of the mortgage note—in a place where you can find them again. (Extra tip: the piece of paper you’ll actually need to see from this file is your HUD-1 settlement statement, which you’ll use to file your income taxes; everything else you look at so rarely you could just bury it in the backyard). If you need a copy of your deed (which is rare; I’ve owned several properties and have never needed a copy) just go down to your county clerk’s office and ask for one. You can then get a certified copy for just a few dollars. In Chicago, for instance, the first two pages of a deed are $2 each.
Tell us in the comments: Have you ever thought you were being scammed? What tipped you off?