The first rule of real estate, if a deal sounds too good to be true, then it probably is, like all industries, the real estate sector attracts its share of scammers hoping to con would-be buyers and renters out of their hard-earned savings. Fortunately, there are ways you can safeguard yourself against property fraud, To help you spot the fraudsters,
here’s a rundown of the most common real estate scams plus some advice on how you can avoid getting ripped off.
8 common real estate scams
The Wire Fraud
This is one of the most common real estate scams that are out there on the internet, you hop on online, trying to find some good real estate deals to buy your new house or land, then after finding the house of your dreams online and pressing the button to buy, you would receive an email asking for the information of you as well as a full or partial payment through the email to a bank account, this is probably a scam, trusted websites and trusted ads do not require you to pay without signing real estate contracts and following the legal Saudi measures.
How to avoid the wire fraud scam?
- Never send money online to someone, things like this go through legal departments in Saudi Arabia and authorities.
- Always try to verify the identity of the person you are dealing with and confirm that they are a licensed real estate agent.
- View listings on a trusted real estate website like our website Bayut KSA.
The out of country scam
In this common real estate scam , the prospective landlord or current owner says they are out of country and unable to show you the property before you sign the lease or contract. They usually promise to send you the keys in the mail once the deposit has been paid in advance.
How to avoid the “I am out of country” real estate fraud ?
- Always insist on inspecting the property yourself.
- If the landlord or agent says this is not possible because they are out the country or unavailable, then walk away from the deal.
Requests for personal details
Somebody contacts you from out of the country and inquires about buying or renting a property you have listed. In the process, they usually then request your personal information or banking details, the scammers then steal your identity or rob money from your account.
How to avoid personal information scams?
- Never provide your bank account details or personal identification details to an unknown source over the internet.
- Never provide your credit card verification code to anyone.
Loan sharks and predatory lending
The elderly, low-income earners, and inexperienced homebuyers are the principal targets of this type of real estate scams . In predatory lending practices, home loan scammers take advantage of the most vulnerable by enticing them to sign up for mortgages with excessive fees and high-interest rates. People who are tricked into paying more than they can afford risk ending up with a bad credit rating and can even lose their home.
How to avoid getting scammed by loan sharks ?
- Do your research about the lender and don’t be fooled into signing on for a bad deal, nothing is worse than loan sharks scamming people for high interest rates.
- Set a budget and do not exceed it. Do not let anyone convince you to borrow more money than you can afford to repay.
- Report anyone you suspect of engaging in predatory lending to the Saudi Arabian authorities.
Title fraud otherwise known as identity theft, this type of property fraud can be extremely devastating. Essentially it is a form of identity theft in which the scammer poses as the homeowner and uses fake documents to transfer the property into his or her name. They then get a new mortgage against the property, take the cash for themselves and leave the homeowner liable for the repayments.
How to avoid Title fraud ?
- Ask your home insurance provider about title insurance, which provides the best protection against this type of fraud.
- Secure your data and never give away your documentation to an unknown source.
- Title fraud or identity theft of another person is a crime in Saudi Arabia punishable by law, therefore make sure to report them to the Saudi Arabian authorities.
The perfect house
At the first glance everything seems like it’s perfect, the deal is going smoothly, the house looks in real life in perfect condition, the seller seems legit, but here is the issue and this is one of the most common real estate fraud around the world not only in Saudi Arabia,
It is all covered up, some home-owners try to cover up the defective parts of their houses before selling it, like stubborn infestation of insects, extremely moldy rooms through paint and furniture, drainage issues or leaks as well as land issues, many buyers discover that after buying the real estate and living in it.
How to avoid this real estate scam ?
- Make sure to bring third trusted parties (company or governmental party) that the Saudi Arabian government has authorized for real estate inspection, to fully inspect the property before buying or wiring any type of money.
- Include in the contract that any defects appearing in the real estate you bought, caused, or were there before the date of your contract, will be paid fully and refunded by the original owner.
Pressured to Buy or rent
If you ever feel that you are very pressured by the owner or agent to buy that property, they give you 0 time to review the contract or look through the house or through the neighborhood, and they pressure you using terms like, we do not have much time, if you do not buy it now It will be sold tomorrow, or any similar language, often the case that is a common red flag for real estate scams .
How to avoid the pressure to buy something?
- Simply walk away, you should never feel pressured to buy property, as it costs a lot of money as well as a matter that you better take good time to think about before buying or renting one.
Project developing real estate scam
This one is common among real estate investors as in people who buy real estate for future investment, someone might give you unauthorized information that a certain old neighborhood is going to be re-built or constructed as a governmental project, which means that the property will shoot up high in the sky with its’ future prices, as it might become a hotspot, then they would try to sell you that piece of land for a higher price as it would be a worthy investment, if this information is fake you would end up buying old or falling apart real estate and lose your money.
How to avoid this sort of real estate scam ?
- Never buy a property based on word of mouth only, try to make sure of that information beforehand or get your information from trusted sources only.
This was our list of 8 common real estate scams around Saudi Arabia, please know that those are illegal and the government is working super hard to decrease them and punish those responsibly, please use only trusted sources when buying or renting out real estate like our website Bayut.Sa is one of the most trustworthy websites out there.
If you like this article, please read more through our Bayut KSA blog, as well as similar articles, like your guide to rent in Saudi Arabia, as well as our article on how to know if your neighborhood is walkable or not?
If you want more information or you need help, please contact us through the comment section below.