Every year, real estate scams cost buyers, sellers, renters, and landlords billions of dollars in the United States—yes, billions with a "B." However, by familiarizing yourself with these scams and their warning signs, you can greatly reduce the risk of falling victim to them.

At Flotilla Real Estate Partners, we get many calls from the public asking about rentals they've seen online (particularly Facebook) that turn out to be scams using actual listings for sale on the MLS! In addition, we've seen real-world cases of clients being scammed out of down payments, earnest money, and closing costs by malicious actors posing as title companies.

Today, we're sharing the most common real estate scams that you need to be aware of to protect yourself and your clients. Here are the five most common real estate scams and what to watch out for....

1. Down Payment Wire Fraud

Down payment wire fraud is one of the most financially devastating scams out there. Here’s how it works: A scammer hacks into the email account of a title company, mortgage company, or even your own email as a real estate agent or broker. They silently monitor the email correspondence and wait for a closing date to be set. Then, they create a fake email account that looks like it’s from someone involved in the transaction. They send an email with fraudulent wiring instructions, directing the buyer to send their down payment—often tens or hundreds of thousands of dollars—to the scammer’s account.

Once the money is wired, it’s extremely difficult to recover. Spotting the warning signs of this scam can be challenging, so preparation is key. As an agent, buyer, or seller, know the protocol for wiring instructions. Ensure you know where the communication is coming from and when to expect it. This way, you can identify any discrepancies if something feels off. Better yet, link your bank directly with the closing company to execute the transfer without your involvement. This can safeguard your hard-earned money.

2. The Facebook & Craigslist Rental Scam

The Facebook & Craigslist rental scam is a frustrating one for listing agents and can be costly for would-be renters. Scammers often scrape property details and listing photos from websites like Zillow and then create fraudulent rental ads on Facebook Marketplace and Craigslist. When someone inquires about one of these rentals, the scammer demands a showing fee or an application deposit, even though they don’t have access to the property.

Remember that reputable landlords will never ask you to pay anything just to see a property. You should never be asked to pay a deposit that’s not tied to a lease. If someone insists on a deposit just to get your foot in the door, they’re scamming you.

3. The Foreclosure Relief Scam

The foreclosure relief scam is particularly cruel, preying on homeowners who are already in a vulnerable position. When you’re behind on your mortgage payments and the bank has started the foreclosure process, it can be a terrifying time. So, when someone comes knocking, offering foreclosure relief, it may seem like an answer to your prayers. Unfortunately, it’s often a scam.

Foreclosure actions are public records, so scammers can easily find out who is facing foreclosure. While it’s not illegal to go door-to-door offering foreclosure relief services, those who take this approach are often doing so with nefarious intentions. If someone asks for a cash payment upfront for their services, always verify their legitimacy. Visit their website, check reviews, and look at their social media presence. If they can’t back up their claims with community verification, they’re likely scammers, and you should not give them any money.

4. The Invisible Home Scam

The invisible home scam typically surfaces in a hot market where buyers are at a disadvantage. Here’s how it works: The scammer pretends to be a real estate agent claims to have a home that’s coming to the market but can’t divulge the full details yet—perhaps the exact address or other verifiable information. They might show you fancy listing photos and describe features like the number of bedrooms, bathrooms, and finishes, but they don’t provide any details that you can cross-reference.

Desperate buyers might be tempted to put in an offer on this so-called property, but this is where the scam unfolds. The fake agent requires a good faith deposit to show the seller that the buyer is serious. If someone tries to sell you something without giving you all the necessary details, they’re scamming you. Walk away, and report them to the authorities. This scam needs to be stopped.

5. Lipstick on a Pig

The "lipstick on a pig" scam occurs when a home seller knows about a critical defect in the property but covers it up and doesn’t disclose it on the seller’s disclosure statement. This happens frequently with issues like water damage, mold, or fire damage. The scam escalates when the seller gets a home inspector in on the con, promising them a payout in exchange for a fraudulent pre-sale home inspection report.

To be clear, it’s not illegal or a bad idea for home sellers to get an inspection done before listing their property. However, it becomes a scam when the seller or their agent discourages the buyer from getting their own home inspection or outright denies them the opportunity. If someone refuses to allow a home inspection as part of the contract process, they’re likely trying to scam you. While you can waive an inspection period to be competitive with your offer, never allow a seller or agent to prevent you from conducting your own inspection.

As real estate professionals, it’s our responsibility to protect our clients from these scams. Be proactive, stay informed, and always verify the details. You can always contact your Flotilla Real Estate Partner if you're unsure about anything in the transaction process!

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