8 Common Home-Buying Scams and How to Spot Them
If you’re selling a home, you might be targeted by scammers. Learn about how to protect yourself from eight common home-buying scams.
As the demand for convenient all-cash home-buying services grows, so does the prevalence of home-buying scams. Among these, wire transfer scams are particularly concerning, potentially diverting your funds to the wrong account, never to be recovered. Given the significant sums involved in home purchases, it’s no surprise that scammers are increasingly targeting this market.
“Real estate fraud is one of the fastest-growing cyber scams across the country,” FBI Special Agent Siobhan Johnson told ABC News in Chicago. In recent years, the FBI reports a 42% increase in the number of real estate crimes as scammers specifically target home sellers and homebuyers.
In this article, we’ll walk you through the most common home-buying scams, their warning signs, and how to make sure the money from your home sale stays in your pocket.
Avoid Scams by Using a Seasoned Agent
To avoid house-buying scams and get the most out of your home sale, partner with a top real estate agent in your market. They have the experience to get you safely and smoothly through the process, from prepping your house for sale to getting to closing day.
8 common home-buyer scams to avoid
The following scams involve fake or devious buyers trying to convince you that they want to purchase your home. We’ve also included one counterfeit seller scam. They may take different approaches, but their end goal is always the same: To cheat you out of your money.
1. The overseas or foreign buyer
This buyer contacts you — through a website, an email, or even through the mail — begging to buy your home. They explain that they’re overseas and won’t be back in the U.S. until a certain date, but they really need a place to live. And then, they offer to send you a cashier’s check to secure the house.
Scammers have been pulling this one for a long time, not just with home-sellers but with landlords, and with high-value items on resale websites. A few days after the cashier’s check shows up and you’ve deposited it into your account they contact you with a sob story about how their plans fell through and ask for a refund. They may even generously offer to let you keep some of the money as an apology, which really is meant to remove any doubts.
There won’t have been enough time for the cashier’s check to bounce, but bounce, it will — often just a few days after you send them back “their” money.
2. The eager-beaver and unavailable buyer
Sure, you think your house is great. But beware the eager-beaver buyer. Being excited about your home is one thing, but a buyer who comes across as obsessively eager to send earnest money or a large down payment sight unseen can be a red scam flag.
Similar to the foreign buyer scam, they’ll be unavailable to tour in person or take phone calls, but they still really want to buy your house. They could make an offer over your asking price, offer cash, promise to deposit earnest money into an account — and then run a cashier’s check or wire fraud scam.
Note that some legitimate buyers do buy homes remotely. But they’ll typically have an agent who walks them through the house on a video call or negotiates on their behalf. This is where your real estate agent can help you screen the real from the fake.
3. The detail-overload buyer
From the start, this buyer gives you detailed financial records and personal information — far more than someone would expect on an initial home sale inquiry. They send bank and financial statements without even being asked, to “prove” they can afford to pay cash.
In this situation, use your common sense. Would you send a stranger financial records? Probably not. While proof of funds is part of a legitimate cash deal, the information would always pass between your agents and the escrow company.
While they may be willing to provide lots of bogus financial details, they might not have references, a social media presence, or any real proof they exist.
Mike Galbally is an experienced agent in O’Fallon, Missouri, who works with 67% more single-family homes than the average agent in his market. He says that experienced agents “vet the buyer adequately to make sure you’re writing a good deal for your seller and it’s actually going to close.” This includes verifying funds and — sometimes — that the buyer even is who they say they are.