Entering into the real estate business can be a financially rewarding endeavor. Whether you’re starting out as a new investor looking to flip your first house, or simply looking to invest your money in a home you and your family can call home.

Real estate can be an excellent way to invest your money and comes with many financial benefits, however, you should also be wary of deals that seem too good to be true. Scams in the real estate industry come in many forms, and you should know how to avoid them as they can be financially and emotionally devastating.

The following are six scams that occur in the real estate industry today, that you absolutely want to avoid.

Real Estate Practitioners Without License

You should make sure to ask a real estate agent, broker, or developer if he/she has a license before making any transaction. A real estate practitioner that has no license or doing transactions with an expired license can be a real problem.

Don’t fall easily when you read positive testimonials about such real estate practitioners in their social media pages. If they don’t have a license, you can’t be sure how competent or ethical they are at their work. You should always ask for a license before it’s too late.

Bogus Real Estate Lawyers

In addition to unlicensed real estate practitioners, you should also be on the alert for fake lawyers or title companies. There are scammers in the real estate industry who may be posing as someone they are not.

Always do your own research to verify if a real estate lawyer or title company is who they say they are. For instance, if the seller provides you contact details for the real estate attorney or title company that will be handling the closing make sure and search reviews and information about the company through a 3rd party.

Getting tricked by a fake real estate lawyer or title can cost you money, so you should see to it that you can prevent a con artist from taking advantage of you. These following red flags can also help you to avoid that.

  • The seller doesn’t know about the lawyer.
  • The lawyer communicates without the seller’s knowledge.
  • The lawyer doesn’t have an online presence.
  • The lawyer doesn’t have any reviews or isn’t known by any local real estate professionals

Rental Scam

Always use a trustworthy website when you’re looking for a rental online. You should double check if the rental is legitimate because there are online scammers who will post a property for rent, ask for money in advance as a security deposit, and then run away with the money once they received it.

These online swindlers often go after renters who are new to the area or looking for shorter term rentals. You should make sure that you ask questions and visit the property before you make a down payment. It’s also advisable to ask for legal documents related to the property to ensure that it’s legit.

Property Damages Cover-Up

Without your knowledge, unethical sellers cover up damages or any unsightly features of the property just to seal the deal quickly. Don’t be deceived by looks, and you should see to it that there’s paperwork confirming routine inspections on the property.

You should be wary of unexpected cosmetic changes or taped-off sections of the property because it may be that the seller is trying to sweep structural problems under the rug. Make sure the property is in excellent condition before you sign any deal.

Loan Fraud

Financing your real estate purchase may be a challenge if it’s an investment property, or asset type conventional banks don’t lend on, such as raw land. This may require you to seek unconventional sources of funding, which opens up a number of potential scams you want to avoid. As with any other aspect of purchasing real estate, do your research. If the financing being offered seem to be good true, be careful that it’s not a scam.

Bogus loan companies often ask for an upfront fee in exchange for discounted loan rates from their victims. If the loan company request you for your personal or bank information, it’s wise on your part to do your research about the company before you make a deal.

You should also look for references or testimonials from past clients about the quality and legitimacy of the services being offered by said loan company. Make sure to double check a loan company working independently from a reputable broker or traditional bank for your financial security.

International Wire Transfer

We’re now more connected than ever because of the internet. In real estate, for instance, a property buyer can now invest in real estate investments overseas easily. For sure, this development is positive in a lot of ways, but it also has its downside. Scammers and hackers can now do their fraudulent activities online.

In 2017, the Federal Bureau of Investigation reported an almost $1 billion of fraudulent wire transfers from real estate scams and hacks. Of course, it’s a serious problem, and real estate investors out there should be careful with international transactions to prevent that from happening.


Real estate can be a lucrative business, but you should be careful about scammers and fraudulent transactions in this industry. If many people get rich because of real estate, others have lost their money because of real estate scammers. So always be on the alert!