How To Avoid Real Estate Scams

Real estate is rife with scammers preying on those needing to sell or in financial distress. Don’t let yourself become a victim.


The FBI recently reported that there were more than 11,300 victims of fraud involving real estate, rentals, or timeshare properties in the US and the damage caused was over $149 million in losses. We’ll give a short overview of some of the most common real estate scams but you should read further to learn how to avoid them.

Have you seen those handwritten “We Buy Houses” signs dotting intersections and telephone poles? Call the number and you could end up losing a lot of money out of your pocket. You may think you could never fall for one of these rackets, but many do every year.

The “We Buy Houses” strategy is just one way homeowners can lose money on their house. There are more scams out there trying to take your hard-earned cash. Let’s walk you through the most common scams and what you can do to avoid them.

Common Real Estate Scams


Wire Fraud Scam

Homebuyers are targeted as they begin the process of buying a home. Criminals will hack into an email and/or other forms of communication. The goal is to gain access to bank accounts, social security numbers, or other sensitive information. By having the markers of your identity they can intercept transactions and steal thousands of dollars from homeowners.



Loan-Flipping Scam

Loan-flippers are predatory lenders that convince homeowners to repeatedly refinance their homes. They make money by charging high fees and points on every transaction. The promise to the homeowner is a reduction in their term or monthly payment, but will end up with high payments they can’t afford and a drain on their home's equity.



Foreclosure Relief

If you have fallen into financial distress and have gotten behind on your mortgage payments, you are a target for this scam. Because of the financial hardships many have faced due to the COVID-19 pandemic, foreclosure scams are on the rise. Knowing there is true pain and a need to relieve financial pressure, these scammers swoop in.



Equity-Stripping Scam

This scam also targets those facing foreclosure. A scammer will promise to pay off your delinquent mortgage by purchasing your home. You get to stay in the home as a renter. You will even have the option to buy back the house when you are financially stable again. Unfortunately, what really happens is the scammer will cash out the existing equity of the home and then disappear.



Home Inspection Scam

Maybe you are thinking of selling or buying your house. Either way, at some point you will need an inspection completed. Inspections are critical to the real estate process, and scammers know this. They’ve figured out how to insert themselves in the process to make a little extra cash.



Rental Scam

This scam doesn’t really affect homeowners, but we threw it in here in case you decide to sell your home and need to rent. When you look for an apartment, you will probably start online before you start seeing a rental property in person. Online is where these scammers lurk. Scammers will list properties online that don’t really exist to trick borrowers into sending them money.



Moving Scams

You need a moving company so you go online to find one. While online, you fill out a form for a moving company estimate. Shortly they send you an estimate. Maybe the estimate is for $5,000 to ship your property from your current home in California to your new property in Arizona. The company shows up and the price is now $10,000. Or they never show up and pocket your deposit.



Title or Deed Scam

This scam can be particularly dangerous. Title or deed fraud involves the involuntary transfer of ownership without the current homeowner being aware of the transfer. The scammer will try to transfer the property ownership to another person or use the title to borrow money using the property as collateral. What makes this fraud so damaging is that you could lose your home in the process.



Mortgage Fraud Scams

Scammers often take advantage of the confusion that happens when you are taking out a mortgage and the mountains of documents that need to be signed. They promise “no string attached” loans, often with low interest rates and no closing costs. But it is a simple bait and switch. Once the loan is finalized you discover higher interest rates and undisclosed fees.


The Hidden Secrets Behind the “We Buy Houses” Signs

One real estate tactic pulls thousands of dollars out of the pocket of sellers. The process is called wholesaling. While completely legal, many wholesalers employ unscrupulous tactics to pressure homeowners to sell their home well under the value of the home.

There’s a good chance you’ve never heard of a wholesaler when it comes to real estate. In fact, the term itself is a little confusing. Outside of real estate, wholesaling suggests purchasing goods in bulk and then distributing and re-selling those goods for a profit.

Wholesaling in real estate is a little different. The concept still applies. An individual promises to find houses at a discount and resells those houses to investors. It can be a legitimate business, but the tactics some wholesalers use can be dishonest at best.

The vast majority of wholesalers have no intention of buying your house!

The simplest way to circumvent wholesalers and avoid losing out on money is to sell your house to the end buyer. SleeveUp Homes will buy your house directly from you as-is for cash. You won’t be paying any agent commissions or closing costs and we will pay for the full value of your house.

If you are interested in how wholesalers operate, here’s their plan:

They get your house under contract at a much lower price, then sell or assign that contract to a true investor. The investor is really the one who is buying your house. The wholesaler is just the middleman. Let’s put some real numbers to it, so you can see it in action.

Your house is worth $400,000 in the traditional market, but you need to get out now. You know the house needs a substantial amount of work and $400k would only be the value if it was in pristine condition. The wholesaler will look at your home and cut the value to 70%. Then they will deduct what they think are the repair costs.

So the offer they give you on the home now becomes:

  • $400,000 x 70% = $280,000 - $50K (Repair Costs).
  • For a total offer to you of $230,000.

You need to move, so you take the offer.

Then they turn around and offer your contract to an investor pool for $250k. The investor takes the contract, and after the home closes, the wholesaler will pocket $20K. You basically just left 20K on the table that was taken from your pocket. You could have used that money to pay off debts or help move into your new residence.

What makes this a problem is that unscrupulous wholesalers will go after people who don’t know the value of their property and usually greatly inflate the repair costs. This allows them to create a margin in the price where they can profit.

The other problem is that many will employ high-pressure tactics scaring you into a contract. They will paint an untrue picture of your situation or your property. You will feel backed into a corner with no other options. There will be little to no transparency in how the process works, and you will be under the impression that you are talking to the investor who is buying your property.

Red Flags When Talking with a Homebuyer

There are legitimate real estate investors in the market looking to buy property. If you need to move fast, if your house needs lots of repairs, or you just don’t want to go through the hassle of the traditional sales process, they provide a great option.

However, you need to make sure you are really working with an investor, and not someone who will pull profits out of your house that you could have had. So how do you know when you are working with a reputable investor? Here are some red flags to look for:

1. Lack of Proper Documentation

If the contracts they present to you don’t look right, trust your intuition. Ask questions and make sure all the documentation is correct. Their reaction can tell you a lot. Once you sign, you are stuck. Take some time to review before you make a decision.

Similar to documentation is proof of funds. It is within your right to ask for proof of funds. If they are wholesalers, they won’t have proof. They don’t plan on buying your house. They are going to flip the contract to a real investor.

2. Pressure to Act

If the buyer puts too much pressure on you to act, this is a red flag. This is not just true for homebuyers but for any of the potential scams we listed above. They may say you must “act now” or lose the opportunity forever. Yes, you may get out of the contract if you sign, but it could cost you money. Also, it will delay selling your house. If you need to sell quickly, this could delay the process by weeks or months.

3. Too Good to Be True

If it sounds too good, investigate further. Many wholesalers will promise to turn your house around in a week, but if you look at the contract, they will have 30-60 days to find an end buyer. That gives them an out if they can’t find an investor. Unfortunately for you, they’ve tied up your house and you can’t list or sell it while you are under their contract.

How To Sell Your House Without Getting Pick-Pocketed

If you are looking to sell your house, going off-market to a direct buyer is a great idea. You can sell quickly without having to repair the house, show the house, or muddle through months of waiting. You’ve seen the pitfalls of working with fraudulent investors. Sadly, predatory investors have given off-market buyers a bad name.

This is one of the reasons we created SleeveUp Homes. We saw what was happening in the market and realized many sellers were practically giving away their home and ending up in greater financial distress.

SleeveUp Homes has a background in real estate investing and home construction. Many investors subcontract all their repair work and have no idea what it really costs. To protect themselves they will overinflate the price of repairs to give themselves a cushion. We know what it costs down to the dollar.

Knowing real estate and repair costs gives us the ability to provide the highest investor offers in Southern California. Our offers won’t be beaten by any other investor. We also work with our own closing agents and can close in as little as 7 days, but will work on your timetable. You won’t pay any closing costs or real estate fees. There will be no surprises at the closing table.

Here’s how the selling process works with SleeveUp Homes:

1. Enter Your Home’s Information Into Our Form

Provide your address and as much detail about the home as possible. The more information you give us, the easier it is to give an accurate offer.

2. Schedule a Visit to Your Property

If the offer looks good, schedule a time for us to visit the property. This allows our experts to do a quick inspection of the property to make sure there is nothing that would change the offer.

3. Accept the Offer to Buy Your Home

After our visit, we will present the contract to buy your home. Use that time to ask questions about the timeline or how the closing process will work. Questions are welcomed and we will be transparent in explaining the whole process.

4. Schedule the Closing

Now you are ready to close. We can close as quickly as you want. This is on your timetable. No pressure to hurry the process. Tell us when it is convenient and we will get the date you choose on the calendar.

It’s that simple. We will even give you time to move after the closing. Let us know what you need and will work with you.

If you want to sell fast and are worried about how long the traditional process takes and the commission and fees involved, consider working with SleeveUp Homes.



If you want to sell fast and are worried about how long the traditional process takes, and the commission and fees involved, consider working with SleeveUp Homes.