Your home is probably your largest asset and one that you’ve invested in the most. When you’re buying an apartment or a house in New York, you want to get the best home for your money. You’ve probably scoured the internet, gone to a few open houses and may feel like you’re close to finding that perfect home.
There are over 6,000 apartment and homes for sale in Manhattan right now. So how do you know if that perfect flat in Tribeca is legit? Hundreds of New Yorkers are taken in by real estate scams every year. If you think you’re too smart or too savvy to get ripped off, here’s a story about a judge who just got taken for 1 million dollars. So pay attention. Here’s how not to get ripped off when buying a house in New York City.
According to a Forbes article, 90 percent of people start their rental search online. In online scams, the con person will swipe a listing, re-post it on another site such as craigslist and pose as the agent. Signs of this scam include little time spent in the listed apartment, a vague contract with no copies, keys handed over before the deposit and rent are paid, and cash is strongly preferred. These kinds of scams usually target 20-something-year-old women and those who find themselves in need of an apartment quickly.
In popular rental scams, money for the security deposit or broker fee will be asked for up front. The scammers will ask you to wire money to a friend to prove you have the funds. They will then pose as that friend and collect the money. Application fees for phony credit checks are another way that con artists take advantage of those who are in dire need of a great apartment deal.
Bait & Switch
In these scams, a real estate agent lists a home for sale on popular listing sites. Shortly after, your home is listed on different websites as a rental. These con artists dupe people into renting already-occupied homes and in more recent cases, offer an excuse for how a listing is currently unavailable to show. The miscreants proceed to offer a rent that no one can refuse and acquire the renter’s personal information including social security numbers and months’ worth of rent, making this a scam that significantly effects realtors.
Bait and switch scams have been around forever. If you’ve ever been to a store that doesn’t have a sale item in stock but tries to upsell you to a more expensive non-sale item, you may have been the victim of a bait and switch. In real estate, a bait and switch can occur when an agent advertises a desirable or affordable home with no intention of ever showing it to you. In fact, it’s probably not really on the market, to begin with.
The tactic is to draw you in with a great looking home so they can then take you to less desirable properties and hard sell you on them. If you contact an agent, homeowner or other representatives about a property and they immediately start talking about someplace else, it could be a bait and switch.
This scam is so ubiquitous these days; someone has probably already tried to pull it on you. You move into your new home and receive an official sounding phone call from someone claiming to be able to lower your utility bill. You agree and give them your billing information. If it’s not just a straight-up credit card scam where they’re going on an Amazon spending spree, then your new bill looks just like your old one but a lot higher.
Those savings they promised you either never materialize or are laden with so many fees that you’re paying twice as much as you did before. Oh, and by the way? You’re locked into a two-year contract, and the cancellation penalty is hundreds of dollars. The bottom line is if someone calls you out of the blue saying they can save you tons of money, they’re probably lying.
With the affordability of housing nearing a record high, many people are developing a new interest in real estate investing. In these workshop-scam scenarios, self-proclaimed real estate experts will host several, pricy educational seminars claiming to give you vital information, tips, and even specific properties to invest in, all with the promise of huge returns. What makes matters worse is the fact that the signed paperwork for these classes lists that legal action can’t be taken against the purported “experts.”
While scams are scary, there are measures consumers can take to avoid them. Always remember to use a reputable broker, verify licenses, cross-check listings on multiple sites, avoid cash deposits, and most importantly, listen to your gut.
Loan Modification Scams
Due to the recession, millions of Americans are facing foreclosure and high mortgage payments. One of the most popular schemes involves “agents” from the Home Affordable Modification Program (HAMP) or Home Affordable Refinance Program (HARP) cold calling these Americans, collecting information, charging fees to modify loans, and suggesting that homeowners stop making payments. What makes these scams even more difficult to avoid is the fact that these fake companies have official looking websites and caller-ID numbers.
How to Avoid Real Estate Scams
Real estate agents are licensed by the city of New York. They also, for the most part, use proper grammar and don’t want to meet you in an alley (or reek of whiskey for that matter). If a deal seems too good to be true, or if something seems off about the “agent,” it’s a good idea to listen to your senses. Hiring a reputable real estate or buying agent that can help you navigate the New York real estate agent is a must. Not only can they help you find the perfect house, but they can also keep you from getting ripped off.