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Most Popular Scam in Real Estate to Avoid (Schemes Explained) 





Let’s face it. We all need someplace to live. That makes buying a house one of the most stressful life experiences known to mankind. Finding a place to rent isn’t always easy, either. Once someone finds their dream home,  there’s always the fear of eviction or foreclosure due to financial hardship or other, unforeseen circumstances.

To top it all off, real estate scammers frequently prey on unsuspecting homebuyers, homeowners, renters, landlords and house flippers, among others.

Most Common Types of Real Estate Fraud

Here are some of the most common types of real estate fraud:

  • Moving company scams
  • Foreclosure scams — such as the American Standard Housing Online scam, which allegedly targeted homebuyers looking for sweet deals on foreclosed homes
  • Rental scams aimed at landlords, property managers, and property owners
  • Rental scams aimed at prospective tenants and renters
  • House/property flipping schemes

How to Avoid Getting Scammed

The best way to keep from being a victim of estate fraud is to use a bit of common sense. This means being on the lookout for and avoiding:

  1. Any real estate deal that sounds too good to be true.
  2. Moving companies that demand large deposits upfront without providing relevant information.
  3. Any unknown individual or business that promises an “instant” or “simple” solution for catching up on your mortgage payments.
  4. Anyone who requests a rental deposit before you have seen the property met the landlord in person and confirmed his or her identity as such.
  5. Anyone who asks you to participate in a quick house flipping project.

Foreclosure and Equity Splitting Schemes

This is just one type of foreclosure fraud. Here’s how it works. Scammers target homeowners who are behind on their mortgage payments. Once he or she finds a gullible homeowner the perpetrator offers to pay off outstanding mortgage debt. The fraudster explains he or she will do so by buying the home and allowing the homeowner to rent it. He or she then sweetens the deal by promising that the homeowner can buy the home back when they are back on solid financial footing.

If the homeowner agrees, the scammer simply takes the proceeds from any equity, which is what he or she really wants. In the end, the homeowner is left with no title. To add insult to injury, he or she is still in danger of losing his or her home to foreclosure.

Remember, if an offer to help you avoid foreclosure sounds too good to be true, it probably is. For foreclosure help, turn to professionals you can trust. As lawyers, we have a fiduciary duty to our clients, which means we are legally obligated to act in your best interest.

Rental Scams

While homeowners are targeted in foreclosure fraud schemes, renters are not immune from real estate fraud either. In the typical rental scam, the target is duped into putting a deposit down, or even paying rent for a bogus rental. The scammer sets the trap by using the address and photos of a property listed for sale to create a fake rental ad. The scammer also sets  up phone numbers and email addresses to facilitate communication with prospective renters. Once a target is hooked, the scammer instructs him or her to send a deposit to a post office box before granting access to the property. Then, once he or she has the money, the scammer simply disappears.

Property Flipping Scams

In an online video, the Federal Bureau of Investigation (FBI) warns the public about property or house flipping scams. A typical house flipping scam occurs when the fraudster acquires a property to flip that needs minimal work. Once he or she makes the “improvements,” the scammer finds an “interested buyer” (usually someone he or she knows) to “purchase” the house. The rest of the scheme involves the submission of a false and artificially inflated valuation to the bank and the issuance of a loan to the purported “buyer.” Next, the scammer pays the “buyer” and the real estate appraiser. He or she keeps the rest of the profit from the “flip” and leaves the bank to foreclose on a home at a loss.


In some ways, 21st-century technology makes real estate transactions simpler. Buyers can tour homes virtually and connect with real estate agents or brokers online. Would-be house flippers can find properties on the Internet. People in search of a good deal on a foreclosed home can turn to the Internet for relevant listings.

Because it facilitates certain transactions with limited personal contact, scammers also use this technology to their advantage. Among other things, unscrupulous real estate webmasters can manipulate content to woo targets with glossy photos, detailed floor plans, and so forth.

Becoming an educated consumer and acting as your own advocate is one of the best ways to keep from falling prey to popular real estate scams. If something seems off, don’t be afraid to walk away from a “good deal.”

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