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How to Spot Scams When Buying a Home
You’ve mastered spotting and avoiding predatory lending, but now that you’re buying a home, you need to be on the lookout for real estate scams. Many of these scams sound legitimate and are often designed to take advantage of new homeowners or those who haven’t done their homework. Remember, if a deal seems too good to be true, it probably is. But with a little preparation and research, you can avoid scams when buying a home.
Are There Requests to Wire Funds?
Any time you deal with a seller or real estate agent and they request that you wire them money, you should look for another home elsewhere. Do not wire money or give away your financial information to anyone you don’t know. If the person you are dealing with is giving excuses as to why they are using this method, it’s most likely a scam.
Are They Claiming to be From a Government Housing Program?
There are many scams out there where someone claims to be from or affiliated with a government housing agency like the HARP. These scams will sometimes have sites that look legitimate and ask you to pay a “fee” for their services. Remember, a government agency will never ask you to wire them money. If you are unsure if an agency or offer is legitimate or not, call the stated government agency and get the real story.
Is the Person Legitimate?
There have been cases of people claiming to be real estate agents or the owners selling homes that do not belong to them. In fact, there have been many former real estate agents still selling homes illegally! If in doubt, work with someone who has been referred to by a friend or family member. No matter what, you should always research the seller or real estate thoroughly before dealing with them.
Does the Appraisal Seem Too High?
Another scam that you could run across is known as appraisal fraud. In this scam, the seller will manipulate or claim the property is worth more than what it actually is. If you buy a home after this scam, you will become underwater.
Always check the date on the appraisal and get your own appraiser to check the home you want to buy. In addition, check the values of other homes nearby to get an idea of what the home may actually be worth.