There’s no shortage of scammers and fraudsters trying to take advantage of you and your clients.  Here’s what to watch out for and some ways for everyone in the real estate community to stay safe.

As a real estate agent, you’re entrusted with guiding clients through the sale or purchase of their home, which is likely their most valuable possession. Scammers understand the high stakes involved, which is why real estate fraud can be so devastating. A single fraud scheme can not only derail a closing, but it can also result in massive financial costs.  

For those reasons, it’s essential to recognize the most common real estate scams so that you and your clients can be proactive in avoiding them. Position yourself as your client’s first line of defense by educating them on early warning signs such as forged documents, unverified identities, and companies demanding large upfront deposits on a short timeline. Doing so can safeguard the transaction and reinforce the trust and confidence your clients have placed in you. 

1. Wire fraud

Wire fraud occurs when someone is tricked into sending funds to a fraudulent bank account. In real estate, this commonly happens during the closing process when large amounts of money are being transferred (typically hundreds of thousands of dollars). Wire fraud is incredibly risky because once the funds have been transferred, it can be virtually impossible to recover. 

Wire fraud usually occurs when a scammer gains access to the email account of a key player in the closing process. This is typically the title company or individual responsible for sending out wire instructions. Once the scammer has gained this access, they will send an email to a client with wire instructions to the fraudulent account.

From the client’s perspective, they typically have no reason to question the legitimacy of the email if they see that it had come directly from the closing or title company they’ve been working with all along.

According to a report by CertifID, fraud has become increasingly rampant over the years. It surveyed a wide range of title companies, and out of those that responded, 17% indicated that they had sent funds to an incorrect account as a result of fraud, with half of those having done it multiple times. Additionally, more than 1 in 4 home buyers and sellers reported receiving some form of suspicious or outright fraudulent communications during the closing process.

All that to say: scammers know that even one successful attempt is a goldmine given the high dollar amounts involved, so it’s important that you and your clients stay vigilant.

The most important thing to keep in mind is to verify the identity of the person sending you the instructions and to confirm the instructions with them. As an example, when I personally closed on my home in Texas in 2022, I decided to take time out of my day to physically drive to the title company’s office. I verified the office address using the company’s website, met with a representative at the title company, and had them physically hand me the wire instructions.

That all might seem like a bit much, considering I could have also called using a verified phone number from the company’s website. However, considering that wire amounts often run into the ranges of several hundred thousand dollars, I think it’s well worth the peace of mind of knowing that the funds are being wired to the correct recipient.

2. Mortgage relief

Mortgage relief is a scheme that targets homeowners in danger of losing their homes due to non-payment of their mortgage obligations. Scammers will typically pose as foreclosure specialists who can negotiate reduced payments or fees with the homeowner’s lender. In exchange, the homeowner would just have to pay an upfront fee. Instead of providing the promised services, however, the scammer will simply take the money and run. 

Scammers can find potential victims through publicly available data, such as mailing lists and foreclosure notices. Less commonly, they may go door-to-door knocking, send emails & text messages, or even send snail mail that is designed to look official. Scammers will then offer a description of the services they allegedly offer, before asking for payment.

Mortgage relief scams might happen more frequently than you think. According to the Federal Trade Commission, thousands of reports are filed each year — but the figure could actually be higher, as many may go unreported due to embarrassment or fear of losing their home.

In one notable case, the FTC sent more than $1.2 million in refunds to consumers who lost money to Consumer Defense in a deceptive mortgage modification scheme. Going back even further, a 2022 report made by the Office of the Inspector General said that over 1,000 victims lost around $3.8 million to scammers offering to provide assistance with FHA loans.

The simple answer here is to verify who is offering the services. Don’t take their word for it, and don’t feel pressured into giving cash upfront before you’ve done your research and due diligence. Legitimate companies rarely guarantee results, pressure you for upfront payment, or require that you cease communications with your mortgage lender.

If you have questions, work directly with your mortgage lender using verifiable contact information from the lender’s website. Similarly, you can consider a HUD-approved counselor depending on the type of loan you have.

3. Loan flipping

Loan flipping is a predatory practice where a lender convinces a homeowner to continuously refinance their mortgage loan without any material benefit. Each time this happens, additional fees are charged in the form of either closing costs, higher rates, or less favorable repayment terms. Homeowners might be tricked into only seeing the short-term benefits, with the long-term risks being masked. This type of scam can result in homeowners losing equity and an inability to reduce debt in the long run. 

Note that this is different from a typical mortgage loan refinance that offers material benefits in the form of gaining access to home equity, a lower permanent interest, or reduced monthly payments for the life of the loan. 

This type of scam may be difficult to spot because it can be carried out by legitimate mortgage companies or loan officers. In many cases, homeowners with a significant amount of equity are targeted, as they’re often more easily able to secure mortgage loan approvals. Scammers often hide the downsides of proceeding with a refinance, highlighting only the positives.

This type of scam usually happens more frequently when there is a significant change in loan rates. Elderly homeowners are at a higher level of risk since they’re viewed to be more vulnerable and susceptible to deceptive marketing practices. In June 2024, the FBI released a statement revealing that it had seen $1.6 billion in losses from January to May from elderly abuse and related fraud, an increase of $300 million from the year prior.

Be aware of any lender that asks you to repeatedly refinance in a short period of time. This is especially true if there’s no clear benefit of refinancing. Make sure you understand all of the fees and terms involved with a refinance, and get an unbiased, independent, third-party individual to review it if you’re uncertain. For something like that, you can always consider consulting with a trusted financial advisor.

4. Moving scams

A moving scam occurs when a moving company deviates from the originally agreed-upon terms. This can take the form of drastically raising prices and refusing to give back personal belongings until the fees are paid. It can also occur if a moving company simply disappears with no trace of the homeowner’s belongings. 

Scammers can entice victims by offering incredibly low prices, along with vague terms & conditions, or requiring large upfront deposits. Once they’ve picked up the homeowner’s belongings, they’re in a stronger position to hold the items hostage until they milk the homeowner for every bit that they want.

According to a report by ABC27 in 2024, moving scams are estimated to cost consumers more than $1.5 million dollars. And it’s on the rise, as that represents a figure that’s 42% higher than the previous year. Data from Docshipper supports this increasing trend, as it references an increase in moving fraud of 35% since 2024, with victims losing an average of $2,800 per incident.

Moving scams tend to peak in spring and summer when individuals are most likely to be relocating.

Verify that the moving company being used is properly licensed and insured before booking or paying any fees. Also consider reading customer reviews from multiple reputable websites. Getting multiple quotes also ensures that the fees you’re being given are within the industry norms. Any outliers when it comes to costs should raise some red flags.

5. Rental scams

A rental scam is a scheme in which scammers trick others into paying deposits and other fees to secure housing. However, in actuality, the property either doesn’t exist, wasn’t authorized by the property owner, or otherwise isn’t available for rent. 

Scammers can take legitimate rental listings and copy them, changing key details like the contact information or rental price, to make it more attractive, and then post it on alternative websites. Once a potential victim has made contact with the scammer, they may try to pressure for a quick payment or deposit to secure the property. Once the payment has been provided to the scammer, they may simply vanish without delivering keys or access to the property.

As reported by Rently, in 2023 alone, the FTC showed more than 10,000 rental scam cases were reported. The Better Business Bureau (BBB) also showed a 45% increase in rental scam complaints when conducting a two-year lookback.

Never send money or provide sensitive personally identifiable information before verifying the property exists and is actually available for rent. You can do this by scheduling an in-person tour of the property, allowing you to verify the property owner and whether they actually have access to the home. Be wary of prices that seem too good to be true, landlords who refuse to meet in person, or anyone trying to pressure you into making a payment quickly.

6. Disaster contractor scams

This type of scam typically happens following some sort of natural disaster, with a contractor approaching a homeowner with the promise of repairing or rebuilding the property. Secretly, however, they may never actually intend to follow through with the repairs or may do so, but with shoddy workmanship. 

Scammers will commonly try to put pressure on the homeowner to reserve their spot by paying some sort of upfront cash or deposit. Ultimately, they’re also relying on the homeowner’s urgency and desire to get life back to normal, making it fairly easy to fall prey to this scheme.

News of specific areas that have been hit hard by certain disasters travelsfast, as it’s often covered by news outlets both locally and nationwide. From this perspective, it’s fairly easy for scammers to know which neighborhoods to target.

Last March, for instance, my specific neighborhood in Dallas, TX, was hit hard by a hailstorm. Nearly every single home in my homeowner’s association was in need of major roof repairs. For months following that incident, both my neighbors and I had contracting companies frequently knocking door-to-door trying to sell their roof repair services.

According to a survey conducted by the Association of International Certified Professional Accountants (AICPA), 37% of Americans have experienced some sort of fraudulent activity after they were impacted by a natural disaster. Of that, 28% of respondents reported that the fraud consisted of contractor, insurance, and vendor fraud.

Don’t feel pressured to select a contractor immediately. Don’t pay any money upfront, and always take the time to verify that the contractor is properly licensed and insured. Door-to-door solicitors, while not always a result of scammers, should be taken with a grain of salt. It’s also recommended that you shop rates with multiple contractors to really ensure you’re not getting overcharged.

How to report a scam

It’s an unfortunate reality that real estate scams continue to be a growing problem in today’s market. From wire fraud to fake rental listings and more, clients can easily become targets if they don’t know what to be looking for. As a real estate agent, you can play a role in reducing their likelihood of falling victim to these fraud schemes by not only educating them on common scams but also by reporting suspected fraud to the appropriate entities. 

If you or a client encounter a potential scam, here are the steps that can be taken:

  • Report to the Federal Trade Commission (FTC): The FTC website allows you to report fraud incidents, something that can allow it to potentially take next steps in better protecting the community against fraud, scams, and bad business practices. 

  • Report to your local or state office: On top of reporting it at the federal level, your local state board may have another specific entity responsible for reviewing and addressing fraud schemes. Residents of Texas, for example, can file a complaint online with the attorney general. 

  • Contact local law enforcement: This applies especially if the fraud was local. You can contact your police department to have a police report filed for them to conduct an investigation. 

  • File a report with the Federal Bureau of Investigation (FBI): The FBI runs an online internet crime complaint center, IC3, and is primarily used to report cyber-enabled crime. 

  • Notify your banks or credit card companies: If you or a client is directly impacted by fraud or any type of scam, the applicable banks or credit card companies should be contacted as soon as possible to determine if funds can be recovered. 

Frequently asked questions (FAQs)

Nothing’s impossible, but it can be extremely difficult. It also depends on the method in which you sent the funds. Wired funds, for instance, can be incredibly difficult to reverse, especially if the scammers have already moved the money. Funds sent via credit card, on the other hand, could allow you to take advantage of your credit card company’s consumer protections to recover the lost funds.

Yes. In fact, it can be incredibly easy to do so. Scammers can simply steal photos of your property and list it on another website with their contact information. Should this happen, you may get unexpected visitors expecting to be able to move into the property.

Yes. Public records contain a lot of personally identifiable information, such as names, signatures, copies of signed documents, mailing addresses, and more. This information can be used as part of identity theft and social engineering schemes. It can also be used to impersonate you, forge documents, and commit deed fraud. To minimize your risk, you can sign up for credit monitoring services and limit the amount of other personal information you share online.

Bringing it all together

Real estate scams aren’t going anywhere. In fact, they’ve become much more commonplace over the years. But by staying informed yourself and educating your clients, you’ll be able to provide much more value than just helping them buy or sell a home. You’ll be able to help them better protect their finances, possessions, and overall peace of mind. And in an industry built on relationships and trust, that’s a great way to stand apart from others.