How to Spot Real Estate Scams?
Real estate is a property that consists of land and other complexes constructed on it. Real estate is the most important sector as it deals with many complexes such as houses, offices, theatres, factories, hospitals, studios, etc. People trade for real estate properties just like cryptos and foreign exchanges. But for this, we need a real estate agent or brokers.
They act as a mediator between property sellers and buyers. They are responsible for ensuring that the transaction between the property seller and purchaser goes well without any hurdles. Unfortunately, despite all this, real estate scams are taking place, and people fall prey to these scams. People themselves are responsible for protecting their properties against these scams. The repercussions of the real estate scams are dangerous. Therefore, people should remember to be responsible for their properties and protect themselves from these scams.
Characteristics of Real Estate
Below are the characteristics of real estate.
- While there is a vast amount of land on earth, the land for constructing any complex is limited. For example, building an apartment containing five floors requires a few acres of land for construction.
- Building anything on the allotted land affects the value of that land and its usage.
- Money invested in constructing something on the allocated land is a lifetime investment. In addition, any returns obtained on that investment are long-term and relatively stable.
- Locations are essential in the case of real estate because people prefer certain geographical areas. For example, a person may construct an independent house in a posh locality with dry climatic conditions.
- The location of the land is immovable.
- It is non-destructible and permanent.
- Each land has its unique specialty.
- The stability of a property depends on the construction material, location, soil condition, amount of land allocated, etc.
Categories of Real Estate
Real estate categories are as follows:
Residential real estate
Independent houses, apartments, duplexes, etc., are included in the residential estate. These properties can be either old or new. The value of the residential complexes depends on the construction material, location, climatic conditions, soil conditions, area, etc. For example, their value might be less if apartments or independent houses are constructed at a low-cost location. In contrast, their value is high if they are in a posh locality.
Commercial real estate
Commercial real estate is constructed for commercial purposes. Offices, colleges, schools, shops, etc., come under commercial real estate. Even then, the value of commercial complexes depends on geographical features, social features, etc.
Industrial real estate
Industrial real estate is properties constructed for industrial purposes. For example, factories, warehouses, nuclear power plants, steel plants, etc., come under this category.
Unfortunately, all these categories are prone to real estate scams.
Considerations before purchasing a property
In order to avoid real estate scams and make the best decision for your real estate purchase, here are several aspects to consider.
- Location is critical if you are purchasing a property. For example, check the flat’s site if you buy a flat in an apartment. If the location is in a posh area, the flats will be costly, and if these are situated in areas of low-cost price, then their cost will also be low.
- Check and set the budget before purchasing a property. The property’s value depends on the area, climate, and quality. Suppose you have less budget and want to buy a flat, then you should check for houses within your budget.
- The most crucial point is to arrange your finances before starting the property hunt. It is because the payment for the property purchase is very high. You may quickly get a home loan, but there exists a lot of documentation and other formalities in this process. Never go for a property purchase that is out of your budget. If you do, then you will be in serious trouble.
- The quality of property construction also matters when coming to property purchase. If the construction of a property is of higher quality, then its price is also more. But if the quality of a property construction is low, then its value is also less. For example, you come across an apartment situated in a posh locality that is beautifully constructed. You also check if it is sea-facing and has many gardens and playgrounds. It shows that the quality of construction is good and its flats would be costly.
- You should consider power and water supply in a property purchase. It is because you may have the chance of suffering from frequent power cuts and water problems. Even though you may stay in a gated community or an independent house, if you have frequent power cuts or losses of water supply, it would be very problematic.
- You should never forget to verify the builder because if the builder turns out to be fake, it’s a loss for you. In fact, real estate scams are common occurrences in this domain. Otherwise, it will be good for you, and you can proceed with the property purchase.
- Before purchasing, you should also ensure that the property’s seller has a right to sell and the property’s name is under the seller’s name.
- Before buying a property, especially flats, you should also ensure that the previous owner has cleared the dues like electricity bills, water bills, maintenance costs, etc. For example, while purchasing a flat from the owner who cleared all the dues like water bill, electricity bill, etc., you will be free from the burden; otherwise, it would fall on you. Some real estate scams pass on these expenses along with the real estate purchased.
Spotting real estate scams
Knowing the warning signs of real estate scams is necessary as it would benefit you. The warning signs of these scams are as follows.
- While buying a house, some people may request you to send money through a wire transfer to an account you don’t know or ask you to pay a lot before signing the papers. Please do not do it, as it indicates real estate scams.
- Some people may promise significant returns on investment in a property. Remember that it is a scam, as no real-estate investment will guarantee more returns on investment.
- When you are in a real-estate deal and come across a person trying to sell the house with no paperwork, take this seriously because formal paperwork is present when the homes are for sale.
- When the seller wants to sell a property quickly before waiting for the buyer to close the deal, it is a fraud from the seller’s side. If the buyer purchases the property in a hurry, then it would be a massive problem for the buyer.
- It is not acceptable if the property owner has no property documents at the time of sale. It means the purchasers should go through the property seller’s legal documents or via advocates.
- Property sellers operating real estate scams don’t permit you to visit the property once before purchasing. Any property seller would genuinely ask the buyer to visit the site once before purchasing it.
- Sellers may post about their properties being on sale, and the low cost may be on real-estate websites or social media. They may also mention that it is in good condition. It is likely to be a fraud because it is done to attract ignorant real-estate investors and swindle their money
Prevention of real estate scams
Several preventive measures mentioned below help people save themselves from real estate scams.
- Educate oneself about real estate scams and its warning signs. If you do, you’ll be safe, and real estate scammers won’t have any chance of scamming you.
- Never acknowledge the properties sold for lower prices than those in the real estate markets. Remember that all properties are sold based on the prices in real estate markets.
- If you ever come across a property available for rent, remember to check if that offer is genuine. For example, you see an online ad showing that a flat is available for rent. But the owner does not permit you to visit the flat once. Afterward, when the time comes to move into the house, it turns out the flat is non-existent.
- Check whether the property owner and the property are real. With rise in real estate scams, it is crucial to verify these things in a real estate deal, especially for a buyer.
- Remember never to purchase a property in a hurry, as it would be risky, and the buyer would have to face huge losses. If you ever encounter a seller desiring to sell the property quickly, ignore it.
- When purchasing a property, visit the site physically. If the property seller does not permit you to visit, simply ignore it.
- Make sure to ask for the legal property documents from the seller. After that, verify them or with the help of your lawyer. With the help of those legal documents, you can proceed to the formal procedure of owning a property.
- It is essential to check your budget before purchasing a property because if you end up with a property purchase out of your budget, then it is dangerous.
People interested in real estate investment should know about real estate scams and their warning signs. It is vital as it would help them stay safe from these frauds. People should also educate themselves about the strategies used by scammers to defraud people. They should also remember to never purchase a property without seeing it physically and sign the property documents without reading.