The housing market continues to thrive in the Houston area. In fact, according to the latest report by HAR, home sales in October climbed 14.7% when compared to October of 2012. October actually showed gains in all housing segments, with the exception of the under $80,000 market. Buyers have also depleted the inventory of homes to 3.1 months in the Houston area. However, the strong home buying climate has produced a number of scammers who are on the prowl for homebuyers or renters who are relentlessly searching for a home.
With homes selling in record time, especially rental properties that are often snatched up within a day or two of entering the MLS, scammers are taking advantage of the optimal environment to target consumers. Advertisements for homes that REALTORS list are copied and pasted on various websites by scammers, especially rental properties, and many of these homes end up being currently occupied or sold. Typically, scammers will lure in buyers/renters by advertising the listing at an extremely low price. As an influx of interested candidates respond, the scammer will ask them for a deposit by Western Union in exchange for a key to the property or to hold the property, ensuring it will not be snatched prior to a showing. Many who have fell victim to these scams didn’t spot the signs, such as the deposit, or the fact that the “home owner” or “real estate agent” was never available for showings.
Plenty of other scams are circulating the real estate industry, as well, including predatory lenders, appraisers, mortgage brokers, and home improvement contractors. However, there are a number of tips that will deter you from being scammed and ensure you are a wise consumer!
- Use a REALTOR! A REALTOR has access to the MLS and will only access listings that are actually for sale or lease, rather than internet search engines or Craigslist. After all, anyone with an email address can advertise and make claims.
- Interview several real estate agents, and check their references. Ensure that they are affiliated with a brokerage and have represented themselves accurately.
- Before leasing a home or putting down a deposit, plug the address into an internet search engine to view other advertisements for the listing. Make sure that all advertisements for that listing include the same information regarding owner, price, etc.
- Prior to your home search, attend a home ownership education class.
- Obtain information about the price of other homes in a neighborhood. If the home you have found seems to good to be true, it probably is.
- Hire a qualified, licensed inspector to property inspect the property before signing anything or supplying a deposit.
- If repairs are required, determine which party in the transaction will be responsible for these repairs. If you are, be sure you can afford them. In addition, each repair that is needed and who is responsible should be included in the contract by your real estate agent.
- Compare closing costs and fees of a variety of lenders. If someone steers you to using a specific lender, be suspicious.
- Beware of any lender or Mortgage Company that encourages you to lie about your income level in order to secure your loan. If you can’t afford it on your real income, you will risk losing the property altogether. It is crucial that you don’t let anyone convince you to borrow more money than you can afford to repay.
- On your loan application, every piece of information must be accurate and complete. Don’t make a false statement, and if someone encourages you to do so, consult with your REALTOR about the situation. No matter what, lying could result in criminal penalties.
- Read every document thoroughly and carefully. Ask questions about every detail that you don’t understand. Never sign a document without a full understanding of what it states.
- Ask an attorney to review the contract if possible. Most attorneys are familiar with real estate contracts, and they will not overlook any detail that seems questionable.
By following these tips, homebuyers or renters will likely avoid falling victim to a number of scams. However, the most effective way to guarantee that every facet of the transaction is legitimate is to hire a professional real estate agent who has experience with reputable lenders, inspectors, appraisers, and mortgage brokers. When attempting to find these individuals on your own, there is a higher risk of encountering a number of different issues and scams.