Know these 5 red flags for property fraud—and what to do if you encounter a scammer.

Finding a place to live can be difficult and scams can make the process even harder. Unfortunately, there are so many scammers in operation that Michigan Attorney General Dana Nessel issued a consumer alert about property scams. Here are five red flags to watch for as a homebuyer or renter, and what to do if you encounter a scammer.

Red Flag #1: A price that’s too good to be true

Scammers use a low price to lure people. After they have the attention of a homebuyer or renter, they ask for money just to see the home. In many cases, the person offering the home, apartment or vacant land doesn’t own the property or have the right to sell or lease it.

Be wary of any housing listed below prevailing market rates for similar properties. An online search of local real estate and rental listings will give you an idea of current prices. The same applies to vacant land.

Some scammers target homeowners with homes in foreclosure. They promise the homeowner a mortgage with an interest rate that’s significantly lower than other lenders. This is often a bait-and-switch operation or the lead-in to hidden fees. If the rate is too good to be true, it’s a scam. Check current interest rates on our mortgage page.

Red Flag #2: Asking for cash, wire transfer, gift cards or cryptocurrency

There’s a simple reason scammers ask for cash, wire transfers, gift cards or bitcoin: once payment is made, there’s no way the payer can get their money back.

Never make payments for deposits, down payments or rent in cash.

Red Flag #3: Posing as a real estate agent

A fake real estate broker or agent misrepresents themselves in order to get their hands on buyers’ and renters’ money. Their fake credentials can be very convincing, including licenses, websites, education and background.

Verify an agent’s license by checking the state database of licensees. Under “License Type” choose the real estate designation that matches the person’s title.

Red Flag #4: Pushing for a commitment before you’ve seen the property

Rental scams and real estate fraud can happen anywhere and viewing a property should be part of every home transaction. It’s the best way to verify that the home matches the advertised pictures and description.

Walk away from any seller or landlord who pushes you to sign paperwork or make a  payment before showing the property. Refuse to fill out an application that asks for personal information–like social security number and banking information–as a condition of viewing the property.

Red Flag #5: Complicated stories and grammar/spelling errors

The owner is out of the country. The rent is cheap because I need to pay for my child’s medical treatment. I have cancer. Scammers spin all kinds of heart-wrenching tales. If there’s a sob story with the home listing, it’s a ploy to turn your attention away from the fact that you’re dealing with a scammer.

Also, a real estate listing riddled with grammar and spelling errors is a likely indicator that the person posting the ad isn’t legitimate and is possibly running their scam remotely from another country.

What to do if you encounter a scam

Hopefully, knowing the red flags of real estate fraud will help you avoid becoming a victim to a scam. If you encounter a scam or fall prey to one, report it to the following agencies:

• Your local law enforcement agency
• The Federal Trade Commission
• The website where you found the fraudulent listing
• Michigan’s Consumer Protection Team

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.