How to Protect Yourself from Real Estate Fraud
It used to be fairly simple to buy, sell or refinance property. Not anymore. Real Estate has become a complex system to navigate. There are real estate agents, real estate brokers, mortgage brokers, mortgage lenders, notaries, escrow officers, appraisers. It seems that everyone in town has a piece of the pie.We've been taught to let "the professionals" handle everything, and it certainly makes it easier usually. Unfortunately, the system as it has grown has left itself wide open to fraud, intentional or unintentional. Many of the people involved have never been taught the way to do business so that it is safe for YOU. Their ignorance can cost you money or even your property. Protect yourself.
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Things You'll Need
- A lawyer who specializes in real estate and works for you
- Independent practitioners for everything else
- The ability to say "NO"
Instructions
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How to Avoid Real Estate Fraud
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Do some research and hire a real estate lawyer who has no loyalty except to you. This is the person you will trust to make sure that everyone else is doing their job properly. It will cost a little bit of money but you will save many times the cost in potential headaches.
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It's best not to use the people that are recommended by the other people in the process. A danger signal is, "We always work with so-and-so for appraisals." Or notaries, or mortgage professionals. The legal trend is moving away from this practice in order to protect consumers from just plain ignorance or kickback schemes and outright fraud. This is starting to become required by law, especially in conventional loans, but you may have to watch for networks that are already set up.
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Don't sign anything until your lawyer has approved it. Anything! People have unknowingly signed their property away to the notary who was just there to witness and certify the transactions! Don't trust anyone who isn't working directly for you, with nothing to gain from the sale.
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Realize that most of this has become much too sophisticated for the lay person to navigate alone. Realize also that because of that a system has grown up that works for its own benefit, at the expense of the consumer. Many professionals don't know how to protect you, or don't see it as part of their job.
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Use your lawyer. If you end up losing five percent of the cost of your property to kickbacks between the professionals, that money would have been better spent protecting your interests. You don't want to buy a property if one appraiser values it at twenty percent more than another. Which one is right? Whose interest is it in to have the property over or under valued? This rule is a must whether you are the buyer, the seller or if you are doing a refinance.
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You may be presented with these options by people who are perfectly honest but have been taught that this is the way to do business. Their ignorance of the law is not a defense and does not protect you from unintentional fraud. It's your job to protect yourself even from those who have the best intentions but don't know what is and isn't legal.
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Tips & Warnings
Call your local bar association for a referral to a lawyer who specializes in property and real estate.
Interview a few until you find someone you are comfortable with.
You will probably be encouraged to use "our favorite" or "our recommended" appraiser, broker, banker, etc. DON'T. It will take more work to find your own professionals. It's worth every bit of effort.
In some states, the mere recommendation of a preferred network of professionals can constitute fraud, even if it isn't intended. BEWARE!
Resources
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