Purchasing a home is one of the most significant financial decisions many people make in their lives. Unfortunately, scammers are always looking for ways to take advantage of eager homebuyers. Local news organizations have even highlighted instances of closing costs wire fraud that cost homebuyers thousands of dollars.
1 Awareness is key to protecting yourself from fraud. Below are common homebuying scams to be mindful of—and ways to avoid them.
Keep an eye out for these homebuying scams
1. Fake pre-approval offers
Scammers often reach out claiming to offer "guaranteed" mortgage pre-approval, regardless of credit history or financial status. These fraudsters may request personal details or an upfront fee before disappearing without providing any legitimate financial service.
Always work with reputable lenders and verify their credentials before proceeding.
2. Deceptive foreclosure relief programs
For buyers considering foreclosed homes, fake relief programs can be enticing. Fraudsters promise to negotiate better deals on distressed properties but instead charge excessive fees without delivering results. If you're interested in foreclosure properties, consult legitimate financial advisors or real estate professionals.
3. Wire fraud during closing
One of the most common scams in real estate transactions is wire fraud related to closing costs or down payments. What is wire fraud? It’s a federal crime in which a bad actor defrauds someone of money using electronic communication, such as through the transfer of funds electronically—and it has many victims. As many as one in four people involved in real estate transactions are targeted by fraud; of those, one in 20 will become a victim of it.
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Many title companies require wire transfers, which makes it easy for scammers to exploit unsuspecting buyers. Fraudsters impersonate a title company representative via email or phone—
a tactic known as spoofing—providing fraudulent wire instructions that divert funds to their accounts.
To avoid wire fraud:
- Verify wire instructions directly with your title company by phone before sending any funds.
- Be cautious of last-minute changes to payment details.
- Look for discrepancies in email addresses or communication patterns.
By staying vigilant and confirming every financial transaction, buyers can significantly reduce their risk of falling victim to this scheme.
At General Electric Credit Union, we understand that navigating the homebuying process can be overwhelming. We’re here to help guide you through it, offering financial tools and resources to
keep your transaction secure. Plus, our team will work closely with you to ensure you
find the right mortgage options. Your dream home should come without the stress of fraud—let’s ensure you find it safely!
