Spotting fraud in a home purchase is crucial—fraudulent activity can cost buyers thousands or even result in losing the home entirely. Here are some red flags and ways to protect yourself:
1. Title & Ownership Issues
- Forged deeds or fake sellers – Someone poses as the owner and tries to sell a property they don’t own.
- Undisclosed liens or claims – Back taxes, contractor liens, or judgments against the property.
- Protection: Always get title insurance and ensure a licensed title company or real estate attorney conducts a title search.
2. Suspicious Pricing & Pressure
- Too good to be true pricing – A price significantly below market value can signal fraud.
- High-pressure tactics – Urging you to skip inspections or rush closing.
- Protection: Compare with similar homes, and don’t let anyone push you to skip due diligence.
3. Wire Transfer & Payment Fraud
- Fake emails or texts from hackers impersonating agents or title companies with “new” wiring instructions.
- Protection: Always call your agent/title company directly (using a known phone number, not one in the email) to confirm wiring details before sending money.
4. Mortgage & Loan Fraud
- Inflated appraisals – Property appraised higher than actual value so the seller/lender can profit.
- Fake documentation – Falsified pay stubs, income info, or identity theft used in the loan application.
- Protection: Use a reputable lender and cross-check appraisal values against market comps.
5. Property Condition Misrepresentation
- Concealed damage – Sellers hiding mold, water damage, foundation cracks, or pest infestations.
- Unauthorized renovations – Additions or remodels done without permits.
- Protection: Always hire an independent home inspector and check with the local municipality for permits.
6. Identity Theft & Forged Documents
- Fake notaries or altered documents in closing paperwork.
- Imposter sellers/agents using stolen identities.
- Protection: Work only with licensed professionals, and verify credentials with your state’s licensing board.
7. Rental & Investment Scams
- Sometimes fraudsters “sell” homes they only rented or don’t even control.
- Protection: Cross-check ownership through public property records before signing or paying.
✅ Bottom Line:
- Always use a licensed real estate agent, title company, and attorney.
- Verify all documents independently.
- Never send money without verbally confirming wiring instructions.
- Trust your instincts—if something feels rushed, off, or “too good to be true,” slow down.