King Solomon’s advice for living a blessed and prosperous life includes many warnings to avoid enticements by the sinful – liars and cheaters determined to undermine efforts to keep to a righteous path. “My son, “he says in Proverbs 1:10, “If sinners shall entice thee, consent not to them.” In the world of investing, the sinful seem especially busy, with schemes and scams new and old designed to ensnare the unwary investor hoping to make money in real estate.
Front Money Schemes
Money up front schemes ask people to front an investment proposal with their own money as a show of good faith or to help make a transaction run smoothly. That’s a key component of the clichéd Nigerian scams, but these kinds of investment schemes can be cloaked in different, very plausible seeming circumstances when real estate is concerned.
A seller with a listing posted online might be contacted by a foreign “buyer” who needs desperately to conclude the transaction fast. Or an “agent” might contact that seller asking them to create an account with their own money in order to speed up a transaction made on foreign currency. Of course, checks written by these individuals are fake – but that emerges only after the account is cleared out.
Another common online scam involves stolen listings. A scammer visits legitimate real estate sites and copies listings, and then posts them to various marketplace sites like Craigslist and eBay. When approached by interested buyers, the scammer asks for a down payment or deposit to hold the property while the transaction is being finalized. After collecting a number of these, the scammer pulls the listing and vanishes.
Third party “brokers” often advertise online or email directly, targeting homeowners struggling with mortgage debt, or those with poor credit who want to buy homes. Often claiming to be lawyers specializing in debt or real estate, these scammers offer to help with refinancing, short sales or credit cleanup. They ask for an upfront fee, collect it and then vanish.
The list of property related scams and frauds is long, and scammers are quick to adapt old schemes to new technology to reel in more victims. And while the Internet has made investing business easier, faster and more direct, it also opens new doors for fraud. Even savvy consumers, used to doing business online, may not question demands for payments, deposits and fees.
Consumer protections do exist – and authorities urge fraud victims to report their experiences to local and federal agencies. But prudent investors can protect themselves but following Jason Hartman’s recommendations to be informed ask questions and keep control of the process – key ways to avoid consenting to the sinful lying in wait with enticements that are too good to be true.
(Top image: Flickr/jjbarr)
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The Solomon Success Team