To help you stay protected, here are five common real estate and mortgage scams to watch out for, along with tips to help you avoid becoming the next target.

1. Wire Fraud

Wire fraud is a common scam in real estate. Here’s how it typically works: you might receive an email, phone call, or text from someone posing as your title company or mortgage escrow company, providing instructions on where to wire your escrow funds. Scammers often create fake websites that look almost identical to your title company’s or lender’s, making the request seem legitimate. They also use spoofing tactics to make their contact information appear familiar, but often with a slight variation — a small detail that's easy to overlook.

If you follow the fake wire instructions without verifying, you could unknowingly transfer funds to scammers who quickly move the money offshore, leaving you with limited recourse to recover it.

Protect Yourself

To safeguard your transaction, always double-check the wire instructions by calling the phone numbers listed in your original documents. Avoid clicking on links in emails or texts, and verify instructions with someone over the phone at a number you've independently confirmed.

Be cautious if you receive any message requesting changes to existing wire instructions. Before sending a transfer, contact your escrow company at an independently verified number to confirm the information. Once everything is confirmed, notify the recipient so they can track the payment on their end.

2. Loan Flipping and Predatory Lenders

Loan flipping occurs when a predatory lender convinces a homeowner to refinance their mortgage repeatedly, often leading to more borrowing each time. In these cases, the lender charges high fees and points for each transaction, causing homeowners to take on larger, often unaffordable, monthly payments while depleting their home’s equity.

Seniors with memory challenges are particularly at risk for loan flipping schemes, as they may have substantial equity and may not realize they are being exploited. These lenders may suggest refinancing as a way to secure better loan terms or offer cash-out refinancing to fund home improvements for aging-in-place needs.

Protect Yourself

Older homeowners, especially those with cognitive concerns, should consider involving a trusted family member or friend in important financial conversations, particularly those involving mortgage decisions. If you’ve recently refinanced, it’s generally wise to avoid refinancing again immediately.

Additionally, beware of lenders who reach out unsolicited. This can be a red flag. To stay safe, work only with reputable banks or lenders and carefully review all associated fees and penalties. Lenders are legally required to provide loan estimates and closing disclosures detailing all costs. If refinancing, review these documents thoroughly, or consult a trusted advisor.

3. Foreclosure Relief Scams

When homeowners face financial hardships and fall behind on mortgage payments, their desperation to save their homes can make them easy targets for foreclosure relief scams. Unscrupulous individuals often use public records to identify homes in pre-foreclosure and reach out with seemingly helpful offers. However, these offers can be traps designed to exploit vulnerable homeowners.

Foreclosure scammers frequently claim they can reduce mortgage payments or prevent foreclosure in exchange for a hefty upfront fee. Unfortunately, instead of offering genuine assistance, these schemes typically worsen the financial situation of the homeowner.

How Scammers Operate

Foreclosure relief scammers employ various tactics to deceive homeowners, including falsely affiliating themselves with government programs or housing-assistance agencies. They may portray themselves as representatives from reputable organizations to appear trustworthy. According to the Federal Trade Commission (FTC), these scams can cost homeowners hundreds or even thousands of dollars in fees, leaving them without real help or recourse.

Since the onset of the COVID-19 pandemic, the economic challenges faced by homeowners have made them even more susceptible to foreclosure relief scams. Despite government intervention and increased support from banks, some scammers exploit the fear and urgency felt by homeowners who are struggling. Scammers may offer to negotiate with the lender on the homeowner's behalf for a fee or even suggest paying the scammer directly to handle the situation.

Recognizing Warning Signs of Foreclosure Scams

Identifying the red flags of foreclosure relief scams can help homeowners avoid becoming victims. Here are some common warning signs:

1. Upfront Fees: Legitimate foreclosure assistance programs do not require large upfront fees. Scammers often ask for immediate payment, claiming it’s necessary to initiate help.
2. Pressure to Avoid Communication with the Lender: Scammers may advise homeowners not to speak with their lenders. This tactic isolates the homeowner and gives the scammer more control.
3. False Government Affiliation: Many scammers impersonate government agencies or claim to be part of federal programs. Always verify any claims of government affiliation through official channels.
4. Too-Good-to-Be-True Promises: Be cautious if someone promises guaranteed results, such as halting foreclosure or significantly lowering mortgage payments. Genuine mortgage relief is complex, and no one can guarantee specific outcomes.
5. Direct Payment Requests: Some fraudsters ask homeowners to make mortgage payments directly to them while they “negotiate” with the lender. This should be a major warning sign, as legitimate assistance will never involve paying a third party directly.

The Importance of Open Communication

One of the biggest challenges for homeowners facing foreclosure is the fear of speaking to their lender. This fear can stem from concern that contacting the lender may accelerate the foreclosure process. However, open communication is critical. Ignoring communication from your lender or avoiding calls may limit your options, while timely discussions can open doors to assistance programs or modified payment plans.

Scammers often capitalize on this fear by instructing homeowners not to communicate with their lenders, creating a barrier to real solutions. Engaging directly with your lender shows a willingness to resolve the issue, which can improve your chances of finding a workable solution.

4. Understanding Rental Scams

Rental scams are increasingly common, especially with the convenience of online listings on platforms like Craigslist and social media. Scammers often create fake property ads, sometimes even using stolen or doctored images from legitimate listings. They aim to deceive unsuspecting renters into paying upfront for a property they don’t actually have the right to rent or even show. In these cases, the scammer has no legitimate connection to the property or the real owner and is simply looking to extract quick cash.

The Federal Trade Commission (FTC) and the FBI have both issued warnings about rental scams due to their prevalence. The FTC even dedicates a section of its website to educating consumers on rental fraud, while the FBI has reported an uptick in scams that particularly target budget-conscious renters searching for bargains.

Why Rental Scams Are So Prevalent

The appeal of online listings, particularly for those searching for affordable housing, makes rental scams an easy and lucrative tactic for fraudsters. Many renters are drawn to attractive properties listed at below-market prices, but these “too-good-to-be-true” deals are often exactly that—fraudulent. Scammers capitalize on the urgency and demand in the rental market, knowing that renters may feel pressured to act quickly to secure a good deal.

How to Recognize Red Flags in Rental Listings

To protect yourself from rental scams, it’s essential to be aware of some common warning signs. Look for these red flags when searching for a rental:

• Unusually Low Rent: If the rent is significantly below market value for similar properties in the area, it might be a scam. Scammers often use low rent as bait.
• No In-Person Viewing: If the “landlord” insists that you pay a deposit before you can view the property, this is a major warning sign. A legitimate landlord or property manager should allow a viewing before any payment.
• Requests for Immediate Payment: Scammers frequently push for quick payments, asking for funds to hold or secure the property. Genuine landlords are usually open to formal lease agreements before collecting payments.
• Use of Out-of-Area Contact Information: Be wary if the person you’re communicating with claims to be out of town or overseas, particularly if they’re unwilling to meet in person.

Essential Tips to Avoid Falling Victim to Rental Scams

Protecting yourself from rental scams requires a proactive approach and attention to detail. Follow these guidelines to keep your rental experience safe:

• Never Send Money Before Viewing the Property: No legitimate rental transaction should require you to pay upfront before viewing the property in person.
• Insist on Written Agreements: Get all rental terms in writing. A genuine lease or rental agreement will outline all key details, including the deposit amount, rent amount, lease duration, and any other terms of occupancy.
• Avoid Cash Payments: Whenever possible, use a traceable payment method, such as a check or bank transfer. Cash payments are untraceable and provide no proof if something goes wrong.
• Meet in Person for Transactions: Avoid conducting transactions solely via email or phone. Meeting face-to-face allows you to better gauge the legitimacy of the transaction and confirm that the person has the authority to rent out the property.

5. Bait-and-Switch Moving Scams

A bait-and-switch scam typically begins with a lowball estimate. You might fill out a form, listing all your possessions, and receive a seemingly reasonable quote of around $4,000. But on moving day, the company arrives, assesses the load, and suddenly claims that the cost will actually be closer to $10,000. Sometimes, they might pack up your belongings first and then reveal the price increase, effectively holding your items hostage. In other cases, they might take a deposit and never show up at all, leaving you scrambling for last-minute arrangements.

This problem has become all too common, with over 15,000 complaints about moving companies filed annually with the Better Business Bureau (BBB). The trend is so concerning that major companies like Mayflower and United Van Lines support MoveRescue, a program designed to assist people targeted by moving scams and educate consumers about reputable moving services.

Protecting Yourself from Moving Scams

Avoiding a bait-and-switch scam takes vigilance, research, and sometimes a bit of patience. Here’s a list of steps to ensure a smoother, safer move:

1. Research the Moving Company’s Reputation

The BBB, FMCSA, and customer reviews on various platforms are valuable resources for researching any company. Verify their license number through FMCSA's website, especially if it’s an interstate move, as unlicensed companies are a significant risk. If you notice numerous negative reviews, complaints, or unresolved disputes, look for an alternative.

2. Get Multiple In-Person or Virtual Quotes

The BBB recommends obtaining at least three quotes from different moving companies, ideally through an in-person or virtual assessment. Avoid companies that offer estimates solely over the phone or email without any direct assessment of your belongings, as this is often a sign of a scam.

3. Be Wary of Low Deposits and High Upfront Costs

Legitimate moving companies typically require a small deposit to secure your move date, but they won’t demand the full payment until after the job is complete. Avoid companies that request a large upfront deposit, as this tactic can be a setup for a no-show or sudden rate increase once your belongings are already packed.

4. Request a Binding Estimate

For added protection, request a “binding estimate” from the moving company. Unlike a non-binding estimate that could change based on the actual weight and volume of your items, a binding estimate is a fixed cost that cannot be adjusted unless you add extra items or services to your moving list. This estimate provides greater price certainty and reduces the risk of unexpected costs.

5. Look for Red Flags in Communication

Scammers often operate without proper business processes or professionalism. Pay attention to the company’s communication style. Reputable movers should provide clear, professional responses and detailed information about their services and pricing. If the company avoids direct answers, fails to address concerns, or pressures you to commit quickly, these are red flags.

In today’s real estate market, scams targeting homebuyers, homeowners, and renters are increasingly common. Many victims hesitate to report incidents due to embarrassment, which allows scammers to continue exploiting others. If you think you’ve encountered a scam, or if you’ve already been targeted, it’s crucial to take action to alert the proper authorities.