There are scams and tricksters out there making the process even harder for buyers. As if buying a house wasn’t tough enough!
Estate agents have earned a negative stereotype. While they may have some tricks up their sleeves to achieve their sales figures, there are far worse operators who are attracted to property.
Read on and discover some of the costly property scams and how to avoid them.
Estate agent tricks of the trade
While estate agents can be a source of fair and honest property advice, they can employ some high-pressure sales tricks, especially with unsuspecting buyers. But don’t panic, and remember to stick to your guns and do what’s best for you.
Very often, estate agents will try to get buyers in a frenzy to secure a sale. From booking more than one buyer on the same viewing, to phantom offers from mysterious buyers, these can just be sales tricks to generate higher offers and the fear of missing out!
But buying a house should be what’s right for you. Hopefully, you know what you can afford and have researched the local market well enough to know what you are looking for. Armed with this, you’ll be less tempted to make knee-jerk reactions.
Noticing red flags
Also, be cautious of estate agents that push their in-house mortgage advisor, you are not obliged to use them, and is probably commission-driven on their part. Far better to seek independent advice from a mortgage advisor. Your choice shouldn’t affect your success in securing the property.
New build holding deposit scams
An exciting new development often drums up enthusiasm in the local press and amongst potential buyers, especially in popular, city locations.
Some fraudsters realise this and may exploit these competitive markets by setting up as an agent for the new scheme. They may acquire basic certification to work as estate agents or open up a small office to add to their credibility.
Very often though, they’ll arrange to meet you in hotel lobbies or coffee shops near to the scheme. Then using high-pressure sales tactics, they convince eager (often first-time) buyers they must act immediately or miss out!
Understanding this type of scam
The buyer is asked to pay a holding deposit to secure a property and take it off the market. But these deposits go straight into the criminal’s account and immediately disappear.
These scams work best if they can get as many unsuspecting buyers to give deposits in as short a time as possible. They will then shut up shop and disappear without a trace but with your money. By the time people realise they’ve been tricked it is often too late.
Beating the con artists
You can take some simple steps to protect yourself:
- Ask to make an appointment at their office
- Ask for evidence of their membership of the Property Ombudsman (TPOS) or similar
- Ask for the name of the directors or owners and the company’s registration number. Then do a search on Companies House and see if it is a genuine business
If they are legitimate, they’ll not have a problem with these kinds of questions. If not, be cautious and walk away. Only hand over money to a reputable company.
Has your new home been hijacked?
Home or property hijacking happens when criminals pose as the actual owners of a property and sell it on without the true owner knowing. Land Registry data showed a leap in this type of fraud from £7.2m in 2013 to £24.9M in 2017.
A closer look at property fraud
Home hijacking can be a tricky scam to spot. The scammer may have moved into the property as a tenant, using false ID to fool the owner. Then they change their name by deed poll to match the real owner’s name, and impersonate the owner to sell it to an unsuspecting buyer.
Things may not come to light until the buyer’s solicitor goes to register them as the new owner with the Land Registry and the real owners are alerted. But by the time the fraud has been spotted, the criminals are long gone.
While there’s no official time frame for a sale, there is usually at least two weeks between exchange and completion. This gives both solicitors time to check everything is correct. But in a hijacking scam, the crooks are likely to want to rush the sale through.
They may put pressure on a buyer to complete quickly, forcing poor judgments in the process.
Ensuring you’re not one of the people who fall for the scam
Ask your solicitor to proceed with caution if the property is mortgage-free or vacant at the time of sale, or if the seller is living abroad or wants a fast completion.
Fortunately, the Land Registry allows owners to sign up to get property alerts if someone applies to change the register of their property. But this is still after the event, and this type of fraud is tricky to spot because the lengths the fraudsters go to.
Checking the property’s title is an essential stage of conveyancing, so having a professional solicitor to protect you is key.
Deposit fraud scams
Another conveyancing scam sees fraudsters target buyers and their deposit money. It starts with the criminal hacking your or your solicitor’s email account. They monitor the emails until near exchange and you are about to transfer your deposit money to your solicitor.
It’s then show time – they hijack the conversation and give alternative bank details with a believable excuse for the last minute change. If you fall for it, your money is transferred to the scammer’s account and disappears without a trace.
Often, this occurs just ahead of a weekend, giving the criminals as long as possible before the theft is uncovered. This has earned these scams the name ‘Friday afternoon fraud’. According to the Solicitors Regulation Authority, they accounted for 75 per cent of all cybercrimes reported to them in 2017.
Making sure you’re not the target of property scams
Here are some steps you can take to protect yourself against any kind of scam:
- Be on the lookout for fake listings
- Be aware of fake property owners
- Check your solicitor’s website is secure. This will make it hard for fraudsters to hack their email
- Check email addresses very closely – criminals often make small changes to fool you
- Don’t alert snoopers with the subject line of your emails, especially if discussing payments and bank account details
- Talk to a solicitor you know, on the phone or video call, to confirm if a change of bank details is genuine
- If you’re not sure, don’t transfer the full payment, start with just £1. Once your solicitor has confirmed it’s arrived in the right account, send the money
- Use common sense – does it seem too good to be true? It just might be
Buying a house is an exciting time, and of course, you want to secure your new home. But however keen you are to exchange, don’t accept a change of banking details without first checking with your solicitor. Serious money is involved, so extra caution is invaluable.
Have a good team
Scammers are attracted to property because of its high value. As well as the financial loss, fake property transactions can cause huge distress for homeowners and buyers too.
Spotting property fraud is not an absolute science, and tricks and schemes are continually evolving. Not everyone is out to scam you, but buying property involves large sums of money – taking extra care is sensible.
Vigilance and caution can serve you well, and so does having a good team on your side. Having the right professional to take care of legal matters is essential. Move iQ are happy to connect you with a solicitor who would be happy to hear from you and help safeguard your purchase.