Real estate scams are a huge issue in today’s real estate market where con artists are eager to rip off desperate homeowners keen to get that dream home quickly. An effective way to avoid fraud is to work with reputed real estate agent or even better, deal directly with credible developers. Sometimes fraud and legitimate opportunities can look the same but note that anything that sounds too good to be true must be investigated. Here we look at how to spot red flags and fraudsters.
One: Sounds too good to be true
It’s an old saying which holds true today, especially in real estate. If any property or agent is offering exciting returns or offers, you need to be extra vigilant. If it sounds too good to be true; your instinct is right. There are many builders in the market who are only there “to make hay while the sun shines” – buyers must beware such builders. No investment offers returns quickly – do not be in a hurry to choose any investment that promises big returns.
Two: Builder wants a deal right away
Usually, a builder in a great hurry to sell the property will insist you make the down payment right away. Such builders will offer a price below the existing market price and will show urgency in closing the deal. Note that such builders will warn you of loss of the deal or property if you take a long time to verify documents or fail to pay.
Three: Vague documentation
In a fraud transaction, the builder will bear pressure on you to provide payment without signing any documents. They will insist that paper work is on its way (it will never come) and that you don’t wait to make the payment. In a regular transaction, the buyer will be asked to sign documents ranging from title deeds to the agreement of sale as legal proof of the deal. Documentation will include approvals from various local authorities, clearances and registration certificates – these will help buyers check the credentials of the builder. They also help buyers ascertain true ownership and check if any loans have been taken against the property. At any time, a builder or a seller is hesitant to show you documentation; that should be a red flag for you. Moral of the story: Due diligence is must if you want to protect your hard earned savings. Do not let lack of time, distance or the lure of a good deal blind you to obvious flags.
Conduct your own research about the builder’s previous projects. Find out if builder is under any litigation and look up online forums to know more about them. If it is a small builder, in a Tier 2 or Tier 3 city, investigate closely for approvals. Many small developers, especially in non-metro cities, may not have the necessary approvals or documents for the property that they are selling.
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