The Securities and Exchange Commission obtained a court order authorizing that more than $63 million be returned to investors who had been the victims of an

What are the most common real estate scams?

Let’s see now – there are sooooo manyyyy … I supply numerous links below, but by no means should those be considered exhaustive – they are just the tip of the iceberg in each instance. And there will be legitimate ethical people who include certain of the practices being mentioned here – I am just highlighting where scams are known to have transpired.

The TV show personalities / stars who offer real estate training – don’t expect that TV star to actually appear at the training that they purportedly offer. Quite a bit of this is just serving as a front for some training fulfillment programs that are based out of Utah: links https://www.biggerpockets.com/fo… and Real deal real estate investors and Scott Yancey/Flipping Vegas (an example company is called Nudge – see links: Nudge – Sales consultant and Has anyone worked with Nudge (Utah turnkey company)?) .

Update here – adding link to my answer where a real estate trainer was scamming via telemarketing calls: Steve Babiak’s answer to What is the oddest conversation you’ve had with a telephone scammer?

Let’s talk a bit about the real estate training practice of the upsell. Go to a town and host a seminar in some hotel ballroom for free or less than $200 (say $97 or $197). That is intended to get people signed up for the next level “boot camp”, let’s say that costs $3K or $5K. The boot camp attendees are told that they need mentoring, with a price tag of say $20K or $40K. What a highly profitable SCAM! These links are from persons relating just such an upsell: Scott Yancey/Flipping Vegas and Yancey Real Estate Workshop: Is $40,000 for Mentorship and Training worth it

James Wise had gone undercover to expose the above two practices: HWPG is going undercover at a Guru seminar and ​Flip or Flop or Scam?

Some of the TV show flippers fabricate their profitability numbers. Links here are by people analyzing such flips that really were more like a flop: Yancey Real Estate Workshop: Is $40,000 for Mentorship and Training worth it and Rehab Addict

The “turnkey” rental property (maybe more aptly name turkey instead) and the promoters of these properties. OK, they are not all scams, but too many unsuspecting people have been victimized by some shady promoters, like in these links: Sean Whalen and property 23 and Morris Invest Review (after 8 months of ownership) and Oceanpointe (and Morris Invest) Property Management Problems and Morris Invest Case Study 2.0 and Morris Invest Case Study 3.0

Timeshares – need I say more about those being a scam?

There is the collusion that can happen at foreclosure auctions, whether a trustee sale or sheriff sale. Links: https://www.fbi.gov/contact-us/f… and https://www.fbi.gov/contact-us/f… and https://www.fbi.gov/contact-us/f… and https://www.fbi.gov/contact-us/f… and http://www.bizjournals.com/atlan… and North Carolina Real Estate Speculator Pleads Guilty to Bid Rigging in Real Estate Foreclosure Auctions and Las Vegas called ‘mortgage fraud ground zero’

Fake or incomplete renovations by some TV show flippers. Links: ‘Flip This House’ Star Accused of Fraud and Report: Former ‘Flip This House’ star Sam Leccima accused of fraud and the YouTube videos below

How about the program that “offered to help families in trouble to find another rental home”, and was operated by somebody with about a dozen eviction filings against them on their record? Wait, it gets better – this one is by an already mentioned party! Link: Couple reappears in another I-Team investigation

Foreclosure rescue scams can’t be forgotten. Some states passed laws cracking down on this practice because it was so prolific. These videos illustrate some examples:

This next video is lengthy on the topic of foreclosure rescue:

There are loan modification scams, link that has many tales of these: Loan Scam Alerts > Home

Wire funding for real estate settlements (usually purchases) getting hijacked by scammers. Some links: How to Lose $225,000 in a Wire Transfer Fraud Scheme and WARNING!! and help please and Please protect yourself from scams! and 4 All-Too-Common Real Estate Scams Making Headlines

Wire fraud advisory link: http://files.constantcontact.com…

There have been reports of settlement agents not forwarding funds to pay off mortgages as they are supposed to do. Links: Pennsylvania title company owner facing 20 years in prison for stealing loan funds and WCSC and When Lawyers Steal the Escrow and Lawyer Charged with Stealing Escrow Funds & Failing to Pay Off Outstanding Mortgage – Mortgage Fraud Blog

Another form of settlement fraud occurs when the settlement sheets showed to lenders and the borrowers differ deliberately, showing to the lender larger amounts due, with the settlement agent keeping the difference. Link: Beware of fraud by closing agents at real estate settlements

This next link identifies a variety of settlement fraud methods: https://www.naic.org/store/free/…

Closing Protection Letters have come into use to deal with settlement agent dishonesty; link: Closing Protection Letters Frequently Asked Questions

Then of course there is all sorts of mortgage fraud, with both borrowers and lenders being dishonest. No need to say more here; you can read some at this next link: Mortgage Fraud Blog

Philadelphia has had many properties stolen from their rightful owners via fraudulent deed recordings of ownership transfers. Links: Dirty deeds: House-stealing scam common in Philly : WHYY and It’s outrageously easy for someone to steal your house and A Philadelphia story: Falsely declared dead, home stolen and no one will help

Update: Here is a link to similar “deed theft fraud” from the U.K.: My house was stolen after fraudsters intercepted my mail

Can’t forget to include the online fake rental ads, where the scammer posts a “for rent” ad for a property that the scammer does not own. The prospective tenant must make the payment to the scammer via some money transfer mechanism such as Western Union. Most are familiar with this already, so I won’t get into much detail here.

Landlords – both real and fake – who collect application fees and / or credit report fees from numerous applicants, with no real intention of approving the majority of applicants. Links: 3 Real Estate Scams And How To Avoid Them and How Can I Avoid Getting Screwed By Landlords Pulling Application Fee Scams? and Rental application fees growing in use in San Francisco

The scammer tenant who tries to pay the “move in money” for a rental with a check in an amount larger than the required sum, and requests the landlord to give the overage back in cash; meanwhile, the scammer’s check is no good, so the landlord’s bank makes a reversal and withdraws that money and charges the landlord a fee for the returned deposit. Landlord loses the overage amount plus the fees, and has rented to a deadbeat that now must be removed somehow; did I hear somebody say “eviction”? Link: https://www.consumer.ftc.gov/blo…

The professional tenant. So undesirable that some landlords are willing to pay this type of tenant to move out. Links: Woman accused of scamming landlords out of thousands and Carter: Landlords say Newark man refuses to pay rent, trashes apartments, then ties them up in court and my professional tenant nightmare…warning long and Is New Jersey becoming a “professional tenant” haven?

The real estate investor with a lease option or rent to own offering – the tenant pays an option consideration (fee) up front, while the investor here is well aware that very few of his optionee tenants actually end up exercising their option; lease ends without option being exercised, tenant must move out, investor gets to do it again – you could call this “churning”. Sure, not all investors offering lease options behave this way, but too many trainers of this method do highlight as a benefit that tenants fail to exercise their option, so the investor has the property and the option fee and even gets to repeat; essentially, the trainers encourage the scam to be played. Some links: Are Lease Options a scam to fleece people? and Sandwich Lease Option – good/bad idea? and Beware Wall Street’s Rent-to-Own Scam and 5 Ways to Spot a Rent to Own Scam – RenttoOwnLabs.com

There is one scam that was attempted upon me when I had a vacancy for one of my rentals being advertised online. The scammer emailed me a link to a fake ad that was supposedly using my photos and offering a lower rent for my rental unit. And the link used the logo that one rental advertising site uses, to make the fake seem more legitimate. Not sure how the scam on the landlord was supposed to work because I did not take the bait, but it just had too many signs of being a scam for me to go there. They tried this on me multiple times. They would use a different fake name each time, typically it would be a blend of some names in the news or names well known, and they would use a different Gmail account each time too. They continued to try this on me even after one of my email replies to them called them a scammer. Here is one of the email messages from this scam, “Angelo” gave his last name as “Pringle”; please be advised in advance to beware of the link, I did visit it using my phone and had no ill effects, but I am uncertain if it could affect a Windows PC differently if that was what the scammer targeted:


Hello,

Thank you for your reply, I am really interested in the apartment but I found the SAME apartment posted twice with different prices by another person.

My question to you, is this accurate? Is the apartment listed by you:

http://apartments.apartm-rntt.bi…

Please check the link and let me know.

Thanks,

Angelo


How about the people who call themselves real estate “wholesalers”. Links: Is wholesaling actually illegal in Ohio? and RE wholesaling in Florida is highly illegal? and r/antiMLM – I got scammed by real estate wholesalers… anyone else? and https://www.linkedin.com/pulse/s… and Beware of the Wholesale Scam by William Bronchick and https://www.ripoffreport.com/rep…

The state real estate commission (or some similar state government department) has the task of reprimanding and disciplining licensed real estate agents for their behavior that violates licensee requirements, as well as unlicensed persons who engage in activities involving real estate where such activity requires a license; and yes, many of these involve some sort of scam. Some links: https://www.dos.pa.gov/Professio… and https://www.dos.pa.gov/Professio… and https://www.com.ohio.gov/documen… and https://www.com.ohio.gov/documen…

This next link describes a few other scams that are worth mentioning: 8 Major Scams in Real Estate – What You Need To Look Out For – Land Century

I almost forgot about the now defunct “Trump University”. Link: Trump University – Wikipedia

I left out some things like “straw man” middleman scams and agent “net listings”. So there are more …

Now, did I miss any of the scams that might occur? I probably did miss mentioning some, so please do tell me if I did.

EDIT: came across the answer in this next link after I had written the above answer:

Tamara Ann’s answer to What are the cleverest scams you have come across?

EDIT #2: just came across this link where a scam coming from Airbnb guests is mentioned:

Robin Shannon’s answer to If bed bugs are introduced to the home will they be able to infest if the mattress is totally enclosed in a mattress cover?

EDIT #3: here is a Bankrate dot com article on this very topic:

4 Common Real Estate Scams And How To Stop Them Cold | Bankrate.com

And here is a link to a lawsuit that describes some scams:

https://www.paed.uscourts.gov/do…