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7 Tips to Avoid Getting Sucked into Real Estate Investment Scams

Updated on July 23, 2010

Real estate investment scams are definitely a problem that many unfortunate people have run into. Real estate is worth a lot of money (even in these days when the real estate market isn’t exactly at its best). That always attracts fraudulent people and that’s why someone who is looking to invest in real estate may come across a problem with scams. There are definitely some things that you can do to protect yourself from scams when investing in real estate though. In fact, a lot of these things are basic and common sense things that you probably already know but can forget in the hasty excitement of buying a new home for investment. Let’s take a look at them so you can keep them in mind and avoid getting scammed.

Seven tips to protect yourself from a real estate investment scam:

1. Make sure that everything about the transaction is put into writing. The most important thing that you can do to protect yourself from becoming a victim of a real estate investment scam is to make sure that you get everything in writing. Assume that nothing is actually certain about the deal until it is in writing. Someone might make you a lot of promises about the property but they aren’t necessarily true unless they are in writing.

2. Ask questions and then ask more questions. Make sure that you get as much information as you can about the deal that you’re getting involved in. A good real estate agent and a good seller with both be more than willing to answer all of your questions. Be willing to walk away from the deal if your questions are not answered to your full satisfaction. Any real estate deal you make should have a benefit for you and a benefit for the other party. If the deal seems to favor you, find out what the other party is getting out of the deal by asking the right questions.

3. Do get professional assistance and advice. An experienced real estate attorney should be looking at any property contracts that you sign to make sure that they’re legitimate. If you’re not just buying a home for yourself but actually care about the process of investing in real estate then it might be worth it for you to join a real estate club. This would allow you to get help and advice about real estate deals from professional investors who are likely to have a good sense of whether or not you’re getting scammed. If you are merely buying a home, seek the insights of a professional inspector and assessor. Professionals are the way to go.

4. Double check that everyone you are working with in the deal really is a professional. Double check that the people involved in the transaction are professionals. Check that they have the right qualifications for their job. Scam artists will often invent elaborate backgrounds in order to gain your trust. You need to do more than just make sure that they have a website. You need to look for online reviews, reports with the BBB and other reputable third party information about whether or not they are truly working professionals.

5. Know the value of the property. Whether you are buying or selling a property, make sure that you know what the value of the property is. Look at the value of other comparable homes in the same area to get a general idea. Get a professional assessment for a more accurate quote. You want to work with people who are interested in a price range around what you know is the current value of the property. People who are too far out of that range (especially on the questionably low end) may be scammers.

6. Learn about the most common real estate investment scams. Do your research to find out what the most common real estate investment scams are. Check with the IRS and scan the local news headlines. You can always do a Google News search on the topic to find out what people are doing scam-wise in the real estate industry. Knowing what the common problems are in the industry will allow you to really know what to look out for. This is true for learning the most common scams as well as for learning the most recent scams.

7. Monitor your credit report during the time that you are investing in real estate. One of the most important things that you can do for yourself is to monitor your credit report. The fact of the matter is that you can make a huge effort to prevent problems with real estate investment scams but there is always the chance that a fraudulent person is going to get you in one way or another. The first sign of this is very likely to be identity theft or financial theft. In either case, you will be able to nip the problem in the bud if you notice it right away. That’s something that you can be more assured of if you are watching your credit report carefully.

Real estate investment scams are awful. They take the wonderful process of buying a home and investing in real estate and turn it into a really scary endeavor. However, you don’t have to be a victim of this unfortunate problem. Whether you’re buying a home for yourself or truly want to get involved in real estate investing, you can implement these simple tips to protect yourself from serious problems with scammers.


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  • profile image

    Blair Stover 7 years ago

    You guys are right, buyer beware. Use an experienced realtor who knows what to look for in terms of scams, especially if you are just starting out.

  • Granny's House profile image

    Granny's House 7 years ago from Older and Hopefully Wiser Time

    Great hub. Buyer beware!

  • K9keystrokes profile image

    India Arnold 7 years ago from Northern, California

    Using a REALTOR instead of a just Real estate agent would be the first and most important path to remaining safe and fiduciarily sound! Really great hub! It shows that you have the heart of an angel and the integrity of a lion - a winning combination in my book.

  • msorensson profile image

    msorensson 7 years ago

    Timely, useful and very appropriate for our times, Kathryn. Lots of people would benefit and avoid heart ache and regret if they follow your advice

  • dallas93444 profile image

    Dallas W Thompson 7 years ago from Bakersfield, CA

    Great advice! An informed decision lessens the chance to buy ocean front property in Arizona!