Real estate can be a very lucrative line of business and a life-changing financial route. It has continued to rank one of the best where income is concerned. As high as real estate can be, the associated scams can spiral one into deep financial debt.
Stories about Australians losing a lot of money to real estate frauds are heard every day. Novice investors are mostly victims of these misfortunes as they are fueled mainly by profit than knowledge. With too little or no in-depth knowledge about the market, these investors are lured by fake agents promising top-notch investment plans with high returns.
Financial freedom is what people generally crave, and residential property is a sure way to achieve this in the long term breakthrough. However, if the proceedings are not done legally and with extra caution, the results are losses most times beyond the scales.
This idea of money gets investors overanxious, and thus they are susceptible to Ponzi schemes that run not only their property but also their account down the drain. Experts advise that you take note of the following before going into the real estate business:
PAMPHLETS AND POSTERS
You must have seen several “too-good-to-be-true” offers. Pamphlets and posters are regularly filled with evergreen promises of guaranteed income and risk-free investments. Loads of billionaire promises and life-changing opportunities are boldly emphasized. Sometimes, these materials make it to your mailbox, or you come across them along the road of everyday life. Critical attention should be paid before indulgence to prevent scams.
BACKSTAGE CLIENT
If you’ve ever attended a seminar about real estate and property investment, you will be quite familiar with the term “backstage clients.” Have you ever wondered why this “once in a lifetime” proposed deals are brought to you personally rather than the investors market for proper demand and supply law to take its course? These people meet you after the seminar with discounted deals on property sales and the likes. Most of these “agents” don’t even have legal connections to investment companies. Beware of agents with sweet tongue, and contract deals already in place.
PRE-PAID PROPERTIES
This is one of the most common real estate property scams because it seems very sensible. Because these days, there are a lot of services for which we have to pay in advance to enjoy.
Homebuyers are asked to make a down payment before the property is built. Contracts of this kind spread return on at least a 5-year plan. Scams from this kind of deals are usually terrible as you are not conscious of the theft till after a few years when it’s too late to seek help. Incentives such as a reduction in stamp duty and rental guarantees are the usual buy-in strategies. Such an investment is scarcely traceable, and thus very risky and worse. It’s always according to the developers’ terms.
FOREIGN INVESTMENT DEALS
This involves investment in property markets overseas. With Australia standing highly-priced, it is a significant target for investors. Investing in the overseas markets without patiently analyzing and understanding the market structure can land you in the hands of fake investment agents and advocates that will rid you of your hard-earned money.
While fake property agents can pose to be smart con artists, there are a substantial amount of investors that have never fallen prey to their tactics. Below are a few red flags and preventive measures to note to be sure you’re in safe hands.
PRESSURED PAYMENT
As reported by Forbes, Viral Shah, the co-founder of Better.com, stated that “… throughout the process, remember that no one should be pressuring you to make a rushed decision, and no one should have any issue with verifying information or explaining why things have changed…” When this pressure is constant, and you’re being reminded that it is the best deal on the market, then you have to take the hint and a few steps back.
SECURE YOUR DOCUMENTS
Documents, contracts, and other attachments should be done via a safe and secure route. Don’t trust documents sent via emails as the platform is said to be the most vulnerable. Real estate agents can employ transaction management systems such as Instanet to ensure closed communication with better security.
VERIFY DEALS
Endeavor to verify dealers and their deals before making payment. You could place a call to the agent to check if they sent the mail you received. This measure helps to spot loopholes in contracts. Accounts and profiles can also be verified via online platforms.
Pay attention to the little details, such as the name attached to the email address, phone number, signature, and abrupt profile changes. Be sure that the address asking you to send personal details or make payment is the same as the one from the very beginning.
In awe of this, endeavor to indulge in investments through a legal property buyers advocate. These advocates ensure that you don’t fall victim to the growing frauds. Avoid rushed or pressured finances, and also have personal financial intelligence to prevent real estate and property investment scams.