Buying a property or investing in real estate is something that most people have always dreamt of. Many even spend their hard-earned money for it. Be careful though, eagerness in investing and passion in making money might not always work well especially when we’re in a rush, and sometimes, even when we’re careful. This is because fraudulent acts are committed. Let’s talk about real estate scams and how you can avoid them as someone who’s saving up and planning to buy one soon.
Fraudulent acts in real estate renting, buying, and selling
Scams do occur in the real estate industry, albeit possibly less frequently. However, just because it’s less common doesn’t mean we shouldn’t shine light on it or make it a big deal because the amount of money we deal with in real estate is no joke. Familiarize yourself with common real estate fraud and scams to avoid falling into one.
Scammers’ most popular technique is to upload stunning photos of real estate on social media. They will then demand a deposit and attempt to seduce potential victims into purchasing it. Once the initial deposit has been sent, the initiator will block you.
Scary, right? Thankfully, there are methods to protect yourself from real estate scams. You can better defend yourself if you know how to avoid real estate scams and types of real estate scams.
5 Common Types of Real Estate Frauds
Real estate scams and fraud come in a wide variety of forms, however, some of the more typical ones includes the following:
1. Dual Sale
Philippine real estate scams involve a realtor selling a home to two buyers. A duplicate sale occurs when the first purchaser fails to complete the transfer of title into their name and the realtor sells the home again to a different purchaser without the prior purchaser’s knowledge.
Both purchasers end up with identical titles in their own names. In the event of a double sale, the party who the court will identify as the owner of the property will either be the one who registers the property in their name, possessed the title in good faith, or has the oldest title on file.
2. Renting Fraud
In this kind of scam, the con artist presents themselves as a landlord or property owner and offers to rent out a house that doesn’t exist. Nowadays, the majority of individuals look for homes or condos online, and scammers will utilize this practice to their advantage. Online property listings are simple to copy and paste, making it simple for con artists to pose as real estate brokers. Some of them would demand money right away, along with a security deposit or broker charge.
Be wary of anyone who asks you to send money right immediately to a specific bank account yet can’t appear for the viewing or meet you in person.
False accounts and phony listings of real estate for rent or sale are prevalent in most real estate classified advertising. It is therefore essential to contact a trustworthy internet real estate portal to make inquiries about houses. Given that they have a reputation and brand to uphold, most well-known businesses would be more dependable. Additionally, they employ brokers that hold licenses.
3. Falsified Land Titles
Many real estate agents are searching the major cities of the country, including Metro Manila, for unoccupied lands that they may advertise as their own and then sell. They’ll search for copies of land titles and other relevant documents that are available to the public through regional government organizations.
In Recto, a known neighborhood where forged documents are routinely produced at cheap prices, it is simple to obtain fraudulent land titles. The fraudsters will only include their name and certain information about the subject lot on the document.
Dealing with reputable real estate brokers and developers is the best method to avoid this fraud. Brokers in the Philippines are required by Republic Act 9646 to hold a license from the Professional Regulation Commission.
By obtaining a Certified True Copy of the title from the Registry of Deeds, you can also carry out your own research. The location of the office is frequently in the city or municipal building where the property is situated. To access this document, you must have the owner’s full name and the title number.
4. Property flipping fraud
Real estate con games are when the con artist convinces you to purchase a property at an exorbitant price with the promise that they will later sell it back to you at a profit after making modifications.
A property that is on the verge of foreclosure will be purchased for a sum far less than the amount the owner owes the bank. After that, the new owner will persuade the bank to agree to a short sale of the subject property because they will incur more costs if they go through with a foreclosure. In order to make a profit, the new owner eventually offers the property to a new buyer for a higher price. In this situation, the original and new owners frequently work together for their mutual advantage.
5. Scams involving Foreclosed Homes and Lots
Because they are unable to inspect the property they are going to acquire, overseas Filipino workers are typically the victims of foreclosure scams. The con artist would fabricate legal papers for a buyer while posing as a legitimate homeowner or agency. The property owner won’t be aware that the house and lot have already been taken over by foreclosure beyond that point.
The buyer usually gets the chance to move into the property only to learn that it is a foreclosed house and lot and that they must settle the debt with the bank that carried out the foreclosure. And if you make touch with the dealer, you won’t hear from them again.
Read Also: 6 Steps in Legit Checking Your Soon-to-be Property
How to Avoid Common Real Estate Scams?
Here are some guidelines you may use to stay clear of real estate fraud, whether you’re buying a home, renting it out, or thinking about making your first real estate investment.
1. Verify the agent’s and landowner’s identification.
A real estate agent or the property owner will typically speak with interested purchasers when they are interested in purchasing real estate. The owner of the real estate property may also be approached personally by a potential buyer in other circumstances.
In order to prevent real estate scams, a person should first request the real estate agent, broker, or property owner to show their official identification card, especially if they identify themselves as licensed real estate agents. When you are doing business with a real estate agent or owner that you have just met, it can be risky.
Read Also: How to Check the Legitimacy of a Property Seller?
The DFA – Office of Consular Affairs list the Professional Regulatory Commission (PRC) ID, Philippine Passport, Social Security System (SSS) Card, Philippine Postal ID, Unified Multi-Purpose Identification (UMID) Card, and Land Transportation Office (LTO) Driver’s License as some examples of recognized and legitimate government-issued identification cards. Moreover, make sure you get their name, email address, and home address.
2. Verifying the legitimacy of the property
The potential purchaser may ask for a copy of the property or real estate title if they are speaking with the owner directly. The person may now head to the appropriate Register of Deeds in the Philippines to obtain a Certified True Copy in order to determine the authenticity of the property title (CTC). The customer is now moving in the direction of greater safety by having their legitimate identification cards with them and cross-referencing them with the data included in the Certified True Copy (CTC).
Read Also: Documents to Look for to Ensure the Legitimacy of a Property for Sale
It is important to have a Certified True Copy (CTC), as the seller or real estate agent can try to con you by giving you a false ID or fake land titles. Anyone can claim to be the owner of the property, and doing so will be their way of deceiving the buyers, therefore verifying their identification and visiting the Register of Deeds are essential. The owner ought to be in possession of the land title.
Make sure the duplicate owner copy includes the correct designation on the left side of the form to further confirm the property’s title. Compare the original title’s front and back to the owner’s duplicate certificate of title to ensure that all initials, signatures, technical descriptions, annotations, and other details are same on both.
3. Protecting Your Data and Money
Although it could appear quite handy to transact online, scammers might easily steal your money using this method. Before completing any transaction, always remember to double-check everything. Make sure the realtor, lot owner, or homeowner you spoke with is a real person. As there are phony websites out there, never enter your information on a website without first validating it. False accounts that almost seem real may be created by scammers.
To avoid being misdirected by an incorrect email or website address, you must double-check all the email addresses, websites, and phone numbers that have been provided to you. To avoid becoming a phishing victim, double-check the website’s address. Be cautious if the number calling you changes suddenly; someone could be playing you like a fool in order to defraud you.
When buying a house and lot for sale, there are many things to think about, including the property’s location and accessibility, the reliability and condition of crucial documents like the land title and the owner’s duplicate copy, as well as the security of the transaction between the buyer and the seller or real estate agent.
The buyer must verify every detail, and the seller must collaborate for a successful transaction. People give their blood, sweat, and tears to every piece of property they have or will have. Every person should understand how to defend themselves because falling victim to fraud is a challenge that is difficult to overcome.
Choose a trusted real estate developer
Purchasing your property from a trusted developer with experience building homes for Filipinos is probably the best method to prevent real estate scams in the Philippines.
Bria Homes, one of the leading developers in the affordable sector offers house and lot packages that are perfect for you. Check out Bria Homes’ website and Facebook page to learn more.