REALTORS® serving Calgary and area

Real estate fraud is rare, but it’s important to spot the warning signs.
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Real estate fraud is rare, but it’s important to spot the warning signs. Getty Images

Oct. 05, 2018 | Barb Livingstone

The most common real estate scams and how to spot them

Real estate fraud and scams are rare, but often receive an outsized amount of media attention.

Former Real Estate Council of Alberta investigator, and current supervisor of training and compliance with CREB®, Ryan DeLuca says it's far more likely day-to-day real estate transactional details – without the benefit of advice, research and direction from licensed professionals – will trip people up.

However, here are some of the potential, albeit rare, issues to avoid and how to spot them:

Title fraud
DeLuca describes this as the only case of fraud where a homeowner is totally oblivious to what's happening – until the bank comes looking for its money or the new "buyer" shows up. The scammer, often through identity theft, gets an additional mortgage on the home, or sells it. Homeowners should get title insurance or check their land title documents regularly through Service Alberta.

Straw buyer fraud
In this scam, you are offered money for your name on a mortgage because the "real" buyer – maybe someone new to the country – is unable to get a mortgage. You're told the title will eventually be transferred, only it never happens, and you end up on the hook for money borrowed.

Foreclosure scams
People in financial distress are most likely to get caught up in real estate scams, due to a tendency to look for an easy fix and overlook major red flags. In this scam, someone offers to buy your property for a small amount of money and rent back the home until you can "catch up." The rent's high, you will never "catch up" and the property eventually gets sold from under you.

Property investment seminars/courses
Offered by unlicensed professionals, these courses often promise the secrets to buying and flipping properties for millions of dollars.

"They make it sound simple," said DeLuca. "The seminars are free, but then they sell you books and paid seminars."

Usually U.S.-based, these seminars don't speak to Canadian or Alberta laws and regulations. "There is nothing wrong with attending for general information, but unless you have a background in contract law and real estate, you can get into a lot of financial and legal trouble [following their advice]," said DeLuca.

Rental scams
In this scam, a condo owner rents to a tenant who, instead of living in the unit, uses it for short-term rentals, breaking municipal bylaws and possibly damaging the condo in the process. In a similar scenario, people sometimes rent units from services like Airbnb or VRBO only to find the posting was created by scammers, not the unit's owner.

Because relevant legislation and bylaws are constantly changing, DeLuca says doing your research, reading all contracts and seeking the help of a licensed professional – whether it's a REALTOR®, lawyer, mortgage broker, reputable lender or property manager – are the best ways to avoid becoming a victim of any real estate scam.

"Find someone who will act in your best interests," he said.

Tagged: Calgary Real Estate | Calgary Real Estate News | Calgary Real Estate News | City of Calgary | How To


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