{"id":2733,"date":"2022-06-05T09:28:22","date_gmt":"2022-06-05T09:28:22","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/real-estate-scams-on-the-rise-in-2022\/"},"modified":"2022-06-05T09:28:22","modified_gmt":"2022-06-05T09:28:22","slug":"real-estate-scams-on-the-rise-in-2022","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/real-estate-scams-on-the-rise-in-2022\/","title":{"rendered":"Real estate scams on the rise in 2022"},"content":{"rendered":"

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Key takeaways<\/p>\n

Property settlement scams are becoming more and more common now that house prices are at record-highs.<\/p>\n

You should stay vigilant as there are many types of property scammers today.<\/p>\n

Before making any significant investment make sure that you get independent advice.<\/p>\n<\/div>\n<\/div>\n

Have you heard the horror stories about unsuspecting property buyers falling victim to redirection scams?<\/p>\n

They buy a property and secure the deal by transferring their entire hard-earned house deposit<\/a><\/u> to what they think is a conveyancer or real estate agent.<\/p>\n

By the time they realise it\u2019s in fact a scammer hacking email accounts it\u2019s too late.<\/p>\n

The funds are gone.<\/p>\n

And these property settlement scams are becoming more and more common now that house prices are at record highs.<\/p>\n

\"Property<\/p>\n

The Australian Competition and Consumer Commission’s (ACCC) Scamwatch receives on average about two reports per week of payment redirection scams in real estate, ABC News <\/a><\/u><\/em>reported.<\/p>\n

March 2022 saw 14 reports alone \u2014 the highest figure in 15 months.<\/p>\n

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“Twenty-five reports were made this year, which is an increase of 25 per cent on the same period in 2021, and losses this year are up 186 per cent to $1.8 million,” <\/em>an ACCC spokesperson said.<\/p>\n<\/blockquote>\n

NSW, which has the nation’s most expensive property market, accounts for three-quarters of the $4.3 million lost through this scam around the country from January 2021 to the end of March 2022, according to news providers.<\/p>\n

And Chris Tyler, chief executive officer of the NSW division of the Australian Institute of Conveyancers (AICNSW) also told ABC News <\/em>that buyers aren\u2019t the only ones being targeted by the scams.<\/p>\n

Fraudsters have even used payment redirection to scam the stamp duty a conveyancer had intended to transfer to state revenue.<\/p>\n

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“Because property transactions are so high in value, all the parties in the transaction are being targeted: The real estate agents, the mortgage brokers, the conveyancer,\u201d <\/em>he said.<\/p>\n

“Half the time the deposit could be a couple hundred thousand dollars.”<\/em><\/p>\n<\/blockquote>\n

Scams also happen with rental properties<\/span><\/h2>\n

Consumer Affairs Victoria warns<\/a> of a rental swindle where scammers advertise rental properties on well-known property websites.<\/p>\n

When you express interest, they say they are overseas or interstate and that you must conduct the transaction online.<\/p>\n

Also, scammers may show you through a property, when they have no right to rent it to you.<\/p>\n

The scammers may try to appear genuine by providing photos, real addresses of properties, land title deeds, and even scans of stolen passports.<\/p>\n

They scam you by asking for a month\u2019s bond and rent to secure the property. If you pay by money transfer, there is very little chance of recovering your money.<\/p>\n

Scammers may also ask for personal details such as bank and credit card numbers and driver\u2019s license details, which they use for credit card and identity fraud.<\/p>\n

But there are other types of tricks that catch out unwary investors.<\/p>\n

Here are 6 common property scams<\/a><\/u> to keep an eye out for.<\/p>\n

\"Property<\/p>\n

1. Adviser or property marketeer?\u00a0<\/strong><\/p>\n

Often novice investors are keen to get into property because they believe that property is a good investment \u2013 but they\u2019re daunted by the whole process.<\/p>\n

It all seems too complicated.<\/p>\n

But then someone comes along and offers to \u201ctake care of everything<\/em>\u201d giving our beginning investor a feeling of relief.<\/p>\n

A one-stop shop sounds convenient, but be wary.<\/p>\n

Many so-called advisers are really property marketers representing developers so they can’t really be on your side, can they?<\/p>\n

Now while this isn\u2019t really a scam, I\u2019ve seen many unsuspecting beginning investors commit to overpriced, underperforming properties meaning they miss out on the profits they could have made.<\/p>\n

Protect yourself by getting advice <\/a><\/u>from an independent property strategist.<\/p>\n

And if you do buy from a property developer ensure you get an advice lawyer who has no connection to the company selling the property, a finance broker who represents you, and either a valuer or independent confirmation of the property’s value.<\/p>\n

2. Marketing pamphlets<\/strong><\/p>\n

Watch out for those pamphlets in your mailbox or those unsolicited emails that promise the world.<\/p>\n

\u201cGuaranteed income,<\/em>\u201d it assures you.<\/p>\n

\u201cRisk-free investment.<\/em>\u201d<\/p>\n

Or even, \u201cBecome a millionaire in 3 years.<\/em>\u201d<\/p>\n

If it sounds too good to be true it probably is.<\/p>\n

\"Property<\/p>\n

3. Seminars and webinars<\/strong><\/p>\n

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For many years prior to Covid, I used to present seminars and I regularly conduct webinars to educate property investors.<\/p>\n

BUT, we don\u2019t sell properties at the back of the room \u2013 in fact, we don\u2019t sell properties at all and never have.<\/p>\n

But that\u2019s not how everyone operates.<\/p>\n

I\u2019m sure you have received an invitation like in the past:<\/p>\n

Come to our \u2018free\u2019 seminar or attend our free webinar and hear about how they can deliver you financial freedom in six easy steps.<\/em><\/p>\n

They\u2019re often highly sophisticated sales operations with everything conveniently available to tempt inexperienced investors to buy on the spot.<\/p>\n

You may even find they have mortgage brokers ready and waiting in-house to assess your financial situation and approve your loan.<\/p>\n

You\u2019re pressured to make decisions instantly or risk losing out.<\/p>\n

My advice would be to give these schemes a wide berth.<\/p>\n

Often these seminars or webinars on residential property are fronts for developers wishing to offload stock to investors.<\/p>\n

Sure they may promise huge rental returns and great properties, but you have to ask yourself the question: if the properties are so great why are they not brought to market where more people can fight over them and potentially up the sale price?<\/p>\n

The truth is, that many properties sold this way are often priced well above their worth.<\/p>\n

\"Property<\/p>\n

4. Off-the-plan property<\/strong><\/p>\n

Buying a property off-the-plan<\/a><\/u> means signing a contract to purchase before the property has been built.<\/p>\n

You\u2019ll usually be offered incentives such as reduced stamp duty, tax and depreciation benefits, rental guarantees, and below-market prices.<\/p>\n

The problem with a lot of off-the-plan stock is that you are investing in an unknown stock and all of the risks are yours.<\/p>\n

You put a deposit down on a property at a value that has been determined by the developers, even though that property may not be ready for a few years.<\/p>\n

As we all know, a lot can happen in the residential property market at that time.<\/p>\n

The contracts lock you in, you have very little room to get out of the contract, and yet often the developer can back out at any time.<\/p>\n

There are many unknowns \u2013 what will the market be like when the development is completed, what will the standard of finish be will there be other competing developments?<\/p>\n

With all these uncertainties you should be paying a discount for \u201coff the plan\u201d properties however you usually pay a hefty premium which includes the developer\u2019s margin and marketing costs.<\/p>\n

A word of warning, too, about rental guarantees.<\/p>\n

If a developer has to offer this kind of inducement to sell their new development, then ask why?<\/p>\n

\"Property<\/p>\n

5. House and land packages<\/strong><\/p>\n

Entire new suburbs are mushrooming all around Australia with house and land packages being offered to first home buyers.<\/p>\n

But there is also a whole industry of property marketers built around selling these properties to unsuspecting investors.<\/p>\n

The lack of scarcity in these estates, the demographics of young families who are very interest-rate and jobs sensitive, and the lack of tenants for these locations often mean that you’ve been sold a dud.<\/p>\n

Unfortunately, you may not realise you\u2019ve been taken advantage of until years later when the value of your property is still below your original purchase price.<\/p>\n

6. Overseas investment<\/strong><\/p>\n

Australia is one of the more expensive residential property markets in the world and as people are priced out of capital cities, some are beginning to look overseas.<\/p>\n

But the internet is littered with stories of people who have lost a fortune investing overseas following various property spruikers.<\/p>\n

It is hard enough to get your due diligence right in a familiar culture, let alone in a foreign country with a foreign residential property market.<\/p>\n

You may be tempted to buy that run-down home in Sicily, which is worth a car space in Sydney, but if something seems too good to be true, it generally is.<\/p>\n

\"Property<\/p>\n

In summary<\/span><\/h2>\n

Sure, knowledge is power and while it\u2019s often said that experience is the best teacher, in my mind you have too much to lose getting it wrong in property investment.<\/p>\n

Before making any significant investment make sure that you get independent advice from someone who takes a holistic approach and who has nothing to sell other than advice.<\/p>\n