5 Common Real Estate Scams You Need to Know About

Written in partnership with CertifID.

Since every real estate transaction involves a significant sum of money, anyone in the home market today will likely run into scammers on the prowl.

The FBI reported that almost 10,000 Americans were victims of real estate scams in 2023, losing over $145 million – and those are just the people who reported the incident. Buying a home is probably one of your biggest investments and life transitions, so knowing how to protect yourself from cybercriminals will give you more peace of mind as you head forth on your real estate journey.

Around one in four American home buyers and sellers were targeted with suspicious or potentially fraudulent activities, with one in 20 reporting that they were victims of wire fraud, according to the CertifID State of Wire Fraud Report 2024. That study found that most people received minimal or no education about wire fraud during the closing process from their real estate professionals.

1. Wire Transfer Fraud

How it works: Scammers intercept legitimate wire transfer instructions and provide false account details, tricking victims into sending money (typically down payments or closing costs) to a scammer’s account. By conducting a so-called Business Email Compromise (BEC) attack, the criminals trick homebuyers, lawyers, or mortgage issuers and pose as one of the people in the conversation. Eventually, the scammer requests payment to their wire transfer account instead of the legitimate one. Scammers might also try to intervene with your mortgage repayments and try to manipulate you to wire them the money.  

Protect yourself:

• Educate yourself: Stay informed about common scams and phishing tactics. Educate everyone involved in the transaction about the risks of wire fraud.
• Use secure channels: Avoid sharing sensitive financial information via email – always use encrypted communication channels.
• Verify payment instructions: Be sure that you communicate directly with your title or escrow agent from the start of the process how they will provide payment instructions. Secure agents will have strict protocols or required tools to provide wire instructions. Always confirm payment instructions directly with trusted contacts using verified phone numbers or in-person meetings. If you receive any suspicious communications about “changing” wire transfer information, call your title or escrow agent immediately using a number you know is safe. 

Pay with another method: Finally, if you are uncomfortable in any way, drop off or send through overnight mail a cashier’s check.  

2. Loan flipping and predatory lenders

How it works: Predatory lending involves deceptive tactics to lure borrowers into loans they can’t afford, often resulting in financial distress and foreclosure. Generally, the predatory lender will bully the victim into refinancing repeatedly with worse terms each time. People with memory issues, like seniors, are common targets. 

Protect yourself:

• Communicate: If you feel pressured to take out a loan or reverse mortgage, talk about the situation with friends or family members you trust. If you think a loved one is falling victim to loan flipping, bring it up, even if it seems awkward. 
• Seek professional advice: For loans, consult known banks, certified housing counselors, and other financial advisors, and avoid doing business with unknown lenders who contact you out of the blue. 
• Know your rights: Familiarize yourself with federal fair lending laws and regulations to recognize signs of predatory lending practices.

Avoid high-pressure tactics: Be cautious of lenders who pressure you into quick decisions or offer unrealistic loan terms.  

3. Mortgage and foreclosure relief scams

How it works: Scammers promise foreclosure relief or loan modifications, like reverse mortgages, but demand high upfront fees and fail to deliver services. These criminals will often target homeowners who are at risk of foreclosure. The worst offenders even work to convince victims to sign over the deed of their house.  

Protect yourself:

• Contact legitimate sources: Reach out to your mortgage servicer or a certified housing counselor for genuine assistance. Always be wary of a company that reaches out to you about avoiding foreclosure or reverse mortgages. 
• Avoid upfront payments: Never pay a fee before you receive a service – legitimate agencies typically do not require upfront payments.
• Don’t declare bankruptcy: Don’t be pressured to declare bankruptcy as a method to delay foreclosure. Contact your mortgage lender or federal government agencies for assistance.

Report suspicious activity: Report any suspected mortgage relief scams to authorities like the FTC or the federal government’s Internet Crime Complaint Center.

4. Deed and title fraud

How it works: Cybercriminals illegally transfer property ownership without the legal owner’s consent, which can lead to the loss of your home title. In some cases, scammers steal your identity and then attempt to transfer your house’s deed to their name. In other situations, a scammer uses a fake title to “sell” to a homebuyer – they take the buyer’s money and the buyer gets a worthless, counterfeit deed in return. This latter type of fraud is most common with vacant land or unoccupied property, and has grown in prevalence over the past year, to the point where law enforcement has issued warnings about it.  

Protect yourself:

• Monitor property titles: Regularly check your property’s title for any unauthorized changes or fraudulent activity.
• Consider title insurance: Purchase title insurance to protect against deed or title fraud.
• Secure personal information: Follow good cybersecurity habits to safeguard sensitive personal and financial information to prevent identity theft and fraudulent transactions.

Don’t fall for offers to sell you title protection or home title lock offerings: These firms are not accredited title insurance agencies and don’t actually protect your title. They merely provide you tools to lock down your personal identifiable information (PII).

5. Rental listing scams

How it works: Scammers create fake rental listings with attractive offers to lure victims into sending money for deposits or rent. For example, the criminals might demand a payment before you can see the property.  

Protect yourself:

• Verify property details: Research the property’s ownership and rental company to confirm legitimacy.
• Avoid unsecured payments: Do not send money via wire transfer, gift cards, or cryptocurrency for any rental property.
• Don’t pay upfront: Don’t pay any money before signing a lease or otherwise verifying that the rental is legitimate. 
• Inspect the property: Whenever possible, visit the rental property in person or through a trusted representative to ensure it matches the advertised listing.

Buying a home is a huge decision. Scammers try to muscle in on any transaction involving payments, but you can stay vigilant and protect yourself. By verifying every party to a transaction, turning down high-pressure sales situations, and keeping your sensitive information safe, you can significantly reduce the risk of falling prey to fraud. Now you can hunt down your best real estate options with confidence.