Real estate scams (and how not to fall victim)

Real estate scams are one of the fastest-growing forms of fraud in Canada. Because they target many Canadians’ largest assets (their homes), real estate scams can also have a devastating impact on their victims’ lives, mental health and financial wellbeing.

The following are some of the most common types of real estate scams in Canada, along with some tips on how you can spot them – and what you can do to keep yourself from becoming a victim.

The most common types of real estate fraud in Canada

While there are many different types of scams targeting homebuyers and sellers, the most common forms of real estate fraud that tend to occur in Canada include:

·      Title fraud—criminals impersonate or steal the identity of a legitimate homeowner to either take out a new mortgage in their name, or sell their property and keep the proceeds for themselves.

·      Mortgage scams—buyers provide false or incorrect information on a mortgage application to secure financing or get a better rate.

·      Foreclosure fraud—scammers offer to help homeowners who are going through financial difficulties with financing or other assistance, only to end up stealing the equity they’ve built or tricking them into signing over the title to their property.

·      Rental scams—fraudsters pose as landlords to trick renters into handing over a deposit to a property they don’t own, and which they never intended to rent out.

·      Reverse mortgage fraud—criminals convince a homeowner (typically seniors) to obtain financing through a reverse mortgage, and then get them to “invest” the money in bogus investments or other get-rich-quick schemes.

·      Wire fraud—online fraudsters use sophisticated techniques to intercept sensitive emails and provide a fake link or wire transfer instructions to scam buyers, or trick them into transferring the closing funds or other payments to them instead of to the actual seller.

The biggest warning signs of a scam

Some scams can be harder to spot than others. But be extra careful if you encounter any of the following red flags:

·      High-pressure sales tactics that try to force you to make a decision on the spot, close on a property quickly, or hand over your personal or financial information to someone you don’t know.

·      Requests to keep real estate transactions confidential or to avoid talking about them to friends, family members, or even your financial advisor.

·      Deals that seem too good to be true, like a listing price that’s 20% below the average or an interest rate that’s two points lower than any competing mortgage loans.

·      Sellers, buyers, or agents who are unable or reluctant to meet in person, refuse to offer any references you can check, or fail to provide the proper identification.

How to protect yourself

To avoid falling victim to a real estate scam – and protect yourself, your family, and your financial future – always make sure you:

·      Verify everything and everyone you deal with.

·      Keep your personal and financial information secure and confidential, and never share it with anyone you don’t fully know and trust.

·      Get title insurance to protect yourself against title fraud.

·      Work with a licensed REALTOR®, broker, lender and other professionals when buying or selling a home, applying for a mortgage, or refinancing your existing mortgage loan.

·      If you suspect you may be the victim of a scam, report it to the police and contact your financial institution, the major credit bureaus, and the Canadian Anti-Fraud Centre immediately. If you aren’t sure, talk to your financial advisor, a trusted friend or family member, or ask your REALTOR® for advice.

Find out more

To find out more about real estate scams, email us your questions or contact us to schedule a free consultation.