Although in many regions, the hot housing market has softened somewhat, high home values have driven a significant rise in real estate scams. According to the FBI, many seniors are the target of crimes involving real estate because they often have paid off their mortgage and are financially stable.
American losses from scams involving real estate increased from $36 million in 2019 to $50 million in 2020. Seniors fall victim to swindlers that may be family members, a new acquaintance, a lender, an appraiser, a realtor, or an investor. Reverse mortgages are often used by scammers to extract money from older adults who may not be knowledgeable about how a legitimate home equity conversion mortgage works.
Seniors and loved ones should watch out for real estate red flags, especially ones that involve taking out an unnecessary loan. Older adults should never sign any paperwork without having it checked out first by a trusted and qualified lawyer.
Not only do these real estate scams result in a financial loss for many seniors, but refinancing or investing deals that wind up as fraud can seriously damage one’s credit report. Real estate professionals dealing with elderly adults, especially those who show any signs of cognitive impairment, should ensure they are represented by a family member or friend the senior trusts.
Real Estate Red Flags
- Communication always takes place over the phone, or by email or texts. You should be able to speak directly, in person, with any real estate professional.
- Unsolicited offer to sell with a pre-existing buyer.
- If another person does all the talking and won’t allow the elder to speak.
- Is the senior cannot explain why they are making a sale, investment or refinancing.
- Proceeds of a sale are directed to anyone other than the senior. Scammers often use fake power of attorney to steal money.
- If there is pressure to move very quickly – this is a tactic fraudsters use to push through a questionable deal. Sometimes scammers use the excuse of having an out-of-town buyer who is leaving shortly.
- If the contact information listed doesn’t check out properly.
Source: Miami Herald Real Estate News
Read more about preventing elder real estate scams by following this link to a recent FICO Fraud Protection & Compliance blog post.