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The FBI reported nearly $180 million in real estate fraud losses in 2021 alone.

Scammers are having a field day in the real estate industry today, launching more sophisticated tactics and ripping innocent and unsuspecting victims out of their hard-earned money. There are different types of scams out there. If you’re buying or selling property in the New York real estate market, this guide will help you understand, so you don’t lose money by dealing with fraudsters posing as professionals. 


Downpayment and escrow wire fraud

Wire fraud in the New York real estate market can happen in many ways. Here are two examples:

The real estate attorney or any other person involved in the transaction may have had their email account compromised. Scammers may set up fake websites or use spoofing tactics to spoof a particular phone number or email to make their messages appear like it’s coming from the authentic source. 

Many homebuyers have lost six figures to wire frauds, and many have missed out on purchasing their dream homes after being ripped out of their downpayment or escrow funds. But something is almost always off about these emails, and if you’re vigilant enough, you may be able to avoid falling victim to this. 


How can you avoid falling victim to wire frauds?

  • Stay ever-vigilant and try to verify any suspicious request or correspondence
  • Follow up on email requests with voice verification via known phone numbers or other channels
  • Avoid reacting to email requests immediately, especially those purportedly from your title company, your realtor, or attorney, urging you to take actions asap.
  • Check with your bank to see if it’s possible to put additional steps in place to ensure that wire transfers do not get authorized without a voice verification or other means of checking from you. 
  • Speak to a local attorney!


Fake or phony property listings

Matt Daimler, a New York general manager and vice president of Zillow Group, the group that owns Zillow, Trulia, StreetEasy, etc. says, “If a listing appears too good to be true, it probably is.”

This type of scam involves the use of a bait and switch and targets both prospective home buyers and renters. In most cases, you’ll see a very attractive listing online and ask to see it, but the realtor will tell you it’s no longer available and then offer to show you some others. Brokers can even hold open houses and collect non-refundable application fees from many prospects before vanishing into thin air. 


To avoid this type of real estate scam, here are some precautions you can take:

  • If a listing appears too far below a neighborhood’s market rate, something may be off.
  • Monitor the listing! Exercise caution if the listing has been on and off the market.
  • If an attractive listing has been on the market for months, perhaps, something could be wrong, and you should tread carefully.
  • Request for a direct address to help assure its authenticity. Doing this can help with your research and investigation of the property.
  • More importantly, work with a credible and reputable realtor in your area. Call my office and Carol or I would be happy to recommend one.


Foreclosure rescue fraud

Foreclosure rescue scammers target homeowners with mortgage payment challenges who are facing imminent foreclosure. These scammers often take advantage of public records to find their targets. They may pose as government agents or officials from government housing assistance programs. 

These scammers often make bogus promises to help these desperate homeowners save their homes from foreclosure for a hefty upfront fee. In most cases, these homeowners are left in far worse financial shape. 

How can you avoid foreclosure rescue schemes?

  • Understand that only your loan servicer can modify your current loan terms. 
  • Try working with a HUD-accredited counselor if you’re considering what steps to take to manage your situation.
  • Beware when someone who calls themselves agents of the government or agents of a housing assistance program tells you not to talk to your lender about their plans to help you avoid foreclosure.


Predatory loan flipping

Loan flipping is a predatory lending practice in which the lender induces the borrower to refinance their existing mortgages repeatedly. The lender usually persuades the borrower to borrow more money each time while they charge high fees for the new loan and sometimes include a prepayment penalty on the old loans. 

Seniors with impaired memory are often the ideal target for these fraudulent mortgage brokers. These seniors usually don’t know they are being taken advantage of. And because they tend to have significant equity in their homes, they are also the perfect targets for these loan scammers. 

How to avoid loan flipping scams:

  • People with memory or cognitive issues should involve trusted friends or relatives in making significant financial decisions such as mortgage refinancing.
  • Individuals should be wary of predatory lenders who are always trying to seek them out even when they’ve not asked for their help. 
  • Work with known and credible banks and lenders
  • Request, analyze, and question the fees, costs, and penalties associated with your mortgage refinancing. 


What to do if something feels suspicious

For your real estate transactions, however, do try to work with credible realtors and professional lenders who are registered members of both local and national trade associations, etc. 

Scams are being perpetrated across different industries and places and not just in the New York real estate sector alone. If you feel anything is suspicious at any point, whether you’re buying or selling real estate in New York, it’s advisable to not open links in suspicious emails or respond to the messages. You’ll be better off reporting it to your local police department right away. You can also report any suspicious activity of fraud, identity theft, and other financial scams to the FTC

If you’re working with a real estate attorney, share any doubts you may have about anything during the process. The chances are that he or she may have more experience in the real estate market and can spot a fraudster or a scam a mile away.


This information, based on New York law, was provided courtesy of The Law Office of Christopher J. Arrigali, P.C. It is intended to inform, not to advise. No one should try to interpret or apply any law without the assistance of legal counsel. Please click here for the full disclaimer.


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