Real Estate Scams to Be Aware of When Entering the Real Estate Industry

When you make the decision to enter the real estate industry, you know that it can indeed be a lucrative and rewarding endeavor. And whether you’re a novice or industry expert, if you do it right (whatever area of real estate you choose), it can financially change your entire life. You just want to make sure you enter the area of the industry you’re most passionate about, and whatever that area is, you want to become well-versed in it, especially in real estate investing.


Because just as the industry can be quite lucrative, it can be financially draining as well. Have you ever heard the phrase “money pit” used before? Well, if you haven’t, a money pit is an investment you make that is constantly requiring money. All too often people will get into real estate investing and purchase homes from auctions “as is” and end up purchasing a “money pit.” Some are so bad that it’s less expensive to completely tear down the house and build a new one from the ground up.

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If you think that’s bad, wait until you find out about the scams that go on in the real estate industry. The FBI reported $150 million in real estate fraud losses in 2018, and just like these fraudulent transactions happen to homebuyers, it can happen to you as well, because as a real estate investor, you’re in the market to buy a home just like anyone else, and those fraudsters have all the resources and can access information to try and get you as well.

But prevention is key here. If you make special efforts to become aware of the real estate scams out there, you won’t fall prey to them like others in the past. You just have to pay close attention to certain deals that sound too good to be true and pay special attention to red flags. Fortunately, there are ways to identify those red flags and alert you to avoid them before it’s too late.

Here are the real estate scams to be aware of.

Real Estate Scam Red Flags to Watch Out For

Loan Fraud

In real estate investing, you’re going to run into “deals” offering unbelievable interest rates. It will be tempting to take those loans because they’re such a good deal, right? But all too often, if something is too good to be true, it probably is, and it’s probably a scam too.

A lot of these fraudulent loans will come from a “mortgage agency” or “lending firm” and offer discounted loan rates, but for an upfront fee… That upfront fee is a deal-breaker. And, these “mortgage agencies” will sometimes also ask for your personal information and banking information too… this is indeed a major red flag. You want to go with a trusted lender like Visio Lending.

Wire Transfers

Overseas real estate investing is becoming more and more popular. What if you’re wanting to purchase a property in another country as a vacation rental… You find a property you like and the seller is requesting that you wire the money to them. Well, this isn’t an uncommon occurrence with it being overseas, you just have to pay attention to any potential red flags.

According to, Pakistan’s 1st Online Real Estate Marketplace, before engaging in any transaction, be sure to ask for official records such as the mother deed, sales deed, or even a property tax receipt which can serve as proof of ownership.

Are there any hasty or random changes to the housing contract? Are there spelling errors in the emails? Do they refuse to talk on the phone? You want to ask as many verifiable questions as you can before you send any money anywhere. And if you’re unsure about it, consult with a licensed and experienced Pompano realtor for advice.

Home Improvement Cover-Ups

All too often, sellers get in a time crunch to get their home sold and will sometimes opt for cheap services or simply try to cover certain damages and get away with having to pay for it. This has happened to many people before and they ended up buying a home that initially looked perfectly fine but later revealed its true damages.

Looks can be deceiving. Make sure they’re not using “puddy” or paint to cover any type of necessary repair like painting over water spots. Water spots are a direct indicator of a leak in the home, and if the source of the leak isn’t fixed, it can cause severe roof or foundational damage.

Now, there are certain issues in homes that you can do yourself but major issues need to be handled by the seller themselves. If you’re unsure that the property you’re interested in has been inspected and had the necessary repairs done, you can always ask for the home inspection paperwork…

If they can’t or refuse to provide you with it, it’s probably a scam, unfortunately.

Interesting Related Article: “Real Estate Investment: Tips to Find Great Deals