Many first time home buyers are attracted to “For Sale by Owner” properties for a variety of reasons. Home buyers can often get a better deal on properties sold by the owner by avoiding realtor fees and they get to deal directly with the seller to hammer out a sale agreement. There’s also the added bonus of moving the sale along more quickly. However, while there are perks to buying a home directly from the home owner, there are significant risks when due diligence isn’t taken that buyers need to be aware of as well. If you’re considering buying a home directly from a home owner, be sure to watch out for these common scams.
The Too Good To Be True Scam
Sites like Zillow, Craigslist and RealEstate have made it easy for first time homebuyers to browse thousands of homes that fall into any and every price range and neighborhood. After spending hours researching different homes, you probably have a good idea of what’s competitively priced for the area and what’s high or low. The “Too Good to Be True” scam relies on showing home buyers a great deal on a property and then engaging in bait and switch.
Maybe the property isn’t as it’s claimed, or maybe they’re showing outdated photographs. In some situations, the scammers are actually trying to sell a higher priced or lower quality property. They’ll claim that the property you’re calling about is already sold, but offer to show you another home. Just remember that while there are some great deals, you need to go into these situations with a healthy amount of skepticism. If the seller wants personal information or money, run in the other direction.
The Foreign Owner Scam
With the globalization of today’s workforce and poor job outlook in many areas, it’s not surprising that some home owners need to leave their homes behind to find work elsewhere. This plays right into a popular real estate scam where the “owner” claims to be working overseas when contacted about a for-sale-by-owner home. Graciously, they’ll offer to fly back to show you the home, but they’ll also request a 1% refundable deposit to ensure the potential seller is interested.
Simply put, you should never give a seller any money unless the property has been thoroughly inspected and found to belong to the alleged seller. Conduct an Internet search for the listing on other websites to make sure all the information matches and go to the county or city assessor’s website to ensure the owner information is correct.
Deed Forgery Scam
Scammers will go to ridiculous lengths to steal money from homebuyers. In the most brazen scam, they will even commit forgery. The Deed Forgery Scam starts with a nice piece of property at a great price. The “seller” will give tours of the property and claim they are moving away for business and need to sell as quickly as possible. Once the buyer has negotiated a price, signed the paperwork and settled in, they’ll find out that the “seller” was actually a scammer. The property was never theirs in the first place.
With so many houses left empty due to foreclosures or owners moving for work, there are plenty of empty houses ripe for scammers to “sell” to their victims. Before signing any paperwork or providing any money, engage the services of an attorney to do a check on the property. Even if the home isn’t listed by a scammer, there’s always the chance that there are liens or past taxes on the property. Attempting to save money by taking the do-it-yourself approach to home buying can backfire on the purchaser big time, and end up being not worth the risk.
For-sale-by-owner homes can be a good deal for first time home buyers, but there are many ways to get burned in the process. When searching for these types of properties, exercise caution by never sending money prior to closing, ensuring the property and owner information is correct, and hiring a lawyer for closing.
Ken Myers is a father, husband, and entrepreneur. He has combined his passion for helping families find in-home care with his experience to build a business. Learn more about him by visiting @KenneyMyers on Twitter.