You might have heard the words “Best deal ever!” or “Risk-free investment” from ads everywhere. Though they do sound nice and seem to give you the world, there are still precautions that need to be heeded when it comes to investments.
Scams are everywhere. Unfortunately, the world of real estate is not an exception. Educating yourself on how to figure out and avoid investment scams can be handy when it comes to your future. Protecting yourself requires vigilance and observance, and of course a whole lot of knowledge about the subject matter. To help you become aware of the different scams happening in the world of real estate today, we collected the most common property investment scams, and how you can avoid them.
1. Mortgage Fraud
This type of investment scam is about the omission or misinterpretation of some parts of the contract in order to get ahead of the bank. Mortgage fraud can be committed by both borrowers and professionals. There are two types of mortgage fraud: fraud for housing and fraud for profit. Fraud for housing is the crime committed by borrowers. The borrowers omits relevant details about their income or employment, just so they can attain a loan and get the house. Meanwhile, fraud for profit is when the industry professional omits important information about the client just so they can maximize their profits on the loan transactions.
How you can avoid it: Be honest about the information that you give to the bank or to any other loan company. Meanwhile, if you want to avoid scammy professionals who are only in it for the money, then you better do your research. Check out our portal to see our roasts of expert professionals who will definitely never rip you off.
2. Forged Land Titles
Fake land titles are classic investment scams. Many people in the Philippines have been victimized by fake land titles, causing them to lose the property that they already paid for.
How you can avoid it: A quick check up on the land title that you’re holding wouldn’t hurt. Let a third party expert check your land title. Or check it yourself! Read this article to find out how you can check the authenticity of your land title on your own.
3. Predatory Lending
Predatory lending is about giving unfair and abusive options to the borrower. Mainly, this type of investment scam benefits the lender more than the borrower. Predatory lending also happens in other sectors like health insurance and banking/finance. Loan sharks often prey on the uneducated and poor, those who have no means in knowing which deals are better for them. Predatory lending actions involve risk-based pricing, loan packing, loan flipping, negative amortization, and abnormal prepayment penalties.
How you canÂ avoid it: Make sure that the lender that you’re talking to is reputable and has a great background. Meet him or her up and never settle for over-the-phone transactions. You should also take time to read the papers that the lender is trying to sign you up.
4. Online rental scams
The internet can be wonderful in many ways. Unfortunately, there are still people who are trying to use the power of the platform to scam others. One of the most popular example is online rental scams. Renter goes to sites like Craigslist, sees an ad and convinced by whatever the “landlord” is telling him. Little did the renter known that the ad is fake and that the landlord is just a scammer in disguise. It’s so easy nowadays to get a picture of a property and post it as yours on un-managed sites like Craigslist. The fake landlord will now ask you to send your deposit right away. After you send the deposit you’ll never hear from him again.
How you can avoid it: Again, vigilance is key in not getting scammed. Do research and when it comes to payment, always do it in person. Don’t worry, going online to search for a place to rent is still safe. Try to search in our portal to see reliable renters that you can definitely trust.
5. Home Improvement Scams
Beware of too good to be true contractors who come knocking on your door telling you that they can repair the this and that of your house in just a minimum amount. First, they will ask for your payment, do a bit of work on your house, then never come back, leaving the project unfinished and your precious money in their pockets.
How you can avoid it: Don’t believe on random contractors coming on your neighborhood. It’s still be better if you acquire the help of contractors who you personally know.
Research and vigilance are vital when it comes to avoiding these pesky scams. Stop being a victim and start making changes! Click here to find out ways on how you can further avoid investment scams now!