If you are considering a real estate transaction in Florida, it pays to be cautious. These transactions involve significant financial commitments, which makes them a tempting target for scammers. While Florida and the federal government have implemented many regulations to reduce the risk of fraud or scams during real estate sales, scammers are creative. If you do not take appropriate care when buying or selling a home or commercial property, you may have signed a financially harmful contract.
However, most scams are obvious if you take the time to consider the deal. Below, we explain the most common ways unscrupulous buyers or sellers may try to take advantage of you and how to avoid falling for their tactics.
Most Common Real Estate Scams in Florida
Most real estate scams rely on high-pressure tactics to encourage targets to make transactions without considering the consequences. The goal is to make the scammer’s offer seem like the best option targets have and make them fear that they will lose out if they do not sign the contract immediately. However, different scams accomplish this in a variety of ways. Some of the most common schemes include:
Wire Scams
Many scammers rely on the permanency of sending money by wire to take advantage of their targets. The scammer pretends to be a real estate agent or property seller in these schemes. They reach out to their target and request that the target wire a deposit or “earnest money” to a fake account to demonstrate that they are serious about buying a property. The scammer takes the money and disappears.
While earnest money deposits can be a genuine part of many transactions, be cautious. Make sure you know who your real estate agent is, and do not wire money to anyone without confirmation that they are who they claim to be.
Bait and Switch Offers
Another common type of fraud targeting property buyers is the bait and switch. The scammer posts a fake listing that looks too good to be true. When people reach out to discuss the property, the scammer informs them that it has already sold, but they have an alternative that’s basically the same.
They may try to get targets to sign a deal sight unseen or take them on a whirlwind tour of a property that looks great on the surface. Either way, the goal is to convince the target to buy a property that is either overpriced or has fundamental problems that would become obvious upon a more leisurely inspection.
Fake Interest Scams
Another common way to scam or pressure buyers into making poor decisions is by faking interest in a property. In these situations, the fraudster attempts to convince the target that a property is in high demand to lock in a higher selling price and cut short any investigations into the property’s condition. The scammer may:
- Imply or lie that there are multiple other parties making offers
- Lie about the other offers they have received
- State that if a bid is not made quickly, the property will no longer be available
This can pressure targets into making extremely high offers before the property has been inspected or otherwise overcommitting to a property that is not worth the time or money.
Lockout Clause Scams
Lockout clauses are often used to target property sellers rather than buyers. The fraudster pushes the target to sign a contract with a “hold” or “lockout” clause that prevents the seller from selling the home to anyone else. They will act incredibly impatient and make many promises regarding their intention to buy the property quickly and at an excellent price.
Once the lockout clause contract is signed, the potential buyer changes their tune. Now that the seller cannot sell to anyone else, the fraudster demands that they lower the price, cover fees normally paid by buyers, and make any number of concessions. They are relying on the seller’s desire to get the deal over with to allow them to make the purchase for significantly less than it would go for in a fair transaction.
Tips for Identifying Real Estate Scams
The speed at which many properties are selling has put a lot of pressure on potential buyers and sellers alike. Still, it is better to miss out on a property or buyer because you took the time to investigate the situation rather than commit to a transaction that will harm you. Tactics to help you avoid real estate scams include:
- Be wary of deals or offers that are too good to be true. In the current housing market, a dream home bargain is unlikely to be real. Similarly, someone offering you significantly more than a property is worth may be trying to take advantage of you. If it seems too good to be true, it probably is.
- Be cautious of high-pressure sales. Even in the most high-turnover markets, buyers and sellers alike should respect the need to think about a decision. If you are being pressured to decide immediately, there may be something the other party is trying to hide.
- Always take the time to do your research. Get the property inspected, have the title researched, and otherwise thoroughly investigate every potential property transaction to ensure you know exactly what you are getting into.
Seek Expert Legal Counsel at Isriel Ponzoli, Attorneys at Law
The most effective way to avoid scams and real estate fraud is to consult a skilled attorney like the experts at Isriel Ponzoli. Your attorney will help you review potential transactions for risks, cons, and other issues that may cause financial or legal difficulties later. Make an appointment with our Miami, Florida, real estate law firm today to discuss your needs and how we can assist you in your next transaction.
