Common Real Estate Scams And How To Avoid Them

During the housing bubble scams commonly manifested among fraudulent brokers issuing predatory loans or, as home flipping reached a feverish pitch, real estate gurus charging tens of thousands for get-rich-quick courses. When the bubble burst, many of those same swindlers set their sights on cash-strapped folks facing foreclosure.

But as housing recovers and technology evolves, real estate scams have not subsided. Rather, despite government initiatives on both the federal and state level, they’ve blossomed into more elaborate and sophisticated ploys.

Rental Scams

The scam: Most renters search for homes and apartments online.  Scammers take advantage of internet listing data of actual homes for rent or sale and repost them as their own on popular sites like Craigslist. The scammer may ask for a security deposit or broker fee upfront.  The most common scam is to ask for a fee for a phony credit check.  This scammer will collect this fee from sometimes hundreds of people and then simply disappear.  If prospective renters do hear anything at all back from the “agent” again, it will be to issue a denial of their “application”.

How to spot it: Be wary if you’re asked to wire any money upfront, especially if you’ve never met or signed a contract.  Some scammers have actually gained access to homes, advertising and showing them at alluringly low prices, so don’t let your guard down just because the “agent” has walked you around a home.  Finally (do we really have to say this?), if the person responding to your inquiry is out of the country, but asks you to wire any fees to someone, don’t walk, run!

Read more about rental scams on the FTC’s website.

Loan Modification Scams

The scam: Millions of homeowners have faced foreclosure in the last five years and millions more are still underwater on their mortgages.  The sheer desperation of these borrowers have led them to be prey for those running loan modification scams. A number of scams fall into this category: fake foreclosure counseling, forensic loan auditing, non-existent class action lawsuits, leaseback programs and fraudulent “government” modification programs.  Most of these scams begin with a simple phone call to a distressed homeowner, promising a lifeline in the form of a foreclosure related service.  In almost all cases you will be asked for fees to get the process started. In the fake leaseback deal, you surrender the title or deed to your home.

How to spot it: Again, be wary of telephone callers asking for fees upfront. Scammers have gotten better over the years and know that it may take 3-4 telephone meetings before you feel comfortable paying a fee. Foreclosure counseling is provided for free from agencies approved by Housing and Urban Development, a government agency.  Before accepting any loan modification, contact a reputable lender to investigate your options and compare the offers. Most large lenders, like AmeriSave, are approved to offer government housing programs like the Home Affordable Refinance Program (HARP).  AmeriSave, having been in business for over 10 years and continued to operate while the housing bubble burst, is a direct lender that has refinanced hundreds of thousands of homes.

Check current mortgage rates here.

Read more at Loan Modification Scam Alert.

Workshop Scams

The scam: Get-rich-quick schemes have been around since houses were built out of mud and stone. With historically low mortgage rates more people have renewed their interest in investing in real estate.  Many self-proclaimed real estate investing experts hold educational seminars promising to divulge the secret of making millions through real estate investing with a course that costs little to no money.  You leave the course, having spent more cash on an advanced course that offered nothing but mystery and vague tips.  Your options for recourse are few, as when you enrolled in the course, you signed a release that prevents you from taking legal action.

How to spot it: Not every workshop or real estate expert is a con-artist. Avoid being scammed by doing your homework. Ask your investment advisor, read up online and check out the company’s Better Business Bureau rating.

Real Estate News: No Housing Bubble In Sight

The following article appeared in Mortgage Professional America on July 17th, 2013.

Some are saying that the sharp rise in mortgage interest rates in June, driven by bond market responses to the Fed, is leading to a bubbling housing market. But CoreLogic shares a more optimistic housing recovery outlook in its July MarketPulse Report.

CoreLogic Chief Economist Mark Fleming, Ph.D., and Deputy Chief Economist Sam Khater say the market is not experiencing a housing bubble. Instead, the recent rise in mortgage rates is helping to slow the pace of current appreciation, preventing another bubble.

“Rates would have to rise appreciably higher to cause a housing market downturn,” the economists wrote in the report.

Instead, housing affordability is near its height due to historically low interest rates and home prices.

Home prices were less affordable as pricing boomed in the middle of the decade. In fact, the affordability index reached a low point in June 2006 when prices reached their apex, meaning the national median-income family could no longer afford the national median-priced home. Despite recent increases in prices, all but two states are affordable today, and most states are near their recent affordability high points, according to the report.

“While the rational or irrational nature of buyers’ expectations is not clear in housing today, CoreLogic believes there is still a long way to go before housing again becomes unaffordable,” the economists said in the report. “Even with the most recent prices gains and interest rate hikes, CoreLogic still observes high levels of affordability by historic standards.”

Four Ways To Reduce Home Electricity Costs During Summer Months

During the summer months, many people experience a sudden and unwanted uptick in their monthly energy bills. The change almost always occurs due to increased use of the air conditioning system, which uses a considerable amount of energy. Here are three tips to help homeowners keep their homes cool without breaking the bank.

1. Close all doors and windows when the air conditioner is running: Although it might seem obvious, all too many people forget to close up their house before they start using their air conditioning systems. Because even the slightest leak can have a significant impact on the energy efficiency of air conditioning, it is absolutely important to make sure all doors and windows are shut completely. You can close the vents in rooms that you don’t use regularly, like guest bedrooms, to cool other rooms more quickly.

2. Outfit your windows with heavy drapes: To keep the heat from the sun out of your house, consider hanging heavy drapes over your windows, especially the ones that face the sun for large portions of the day. Heavy drapes block out the sunlight and prevent it from heating up your house during daytime hours. As a result, your home will stay cooler and you will direct less electricity toward the use of your air conditioning system.

3. Turn off your lights: During daylight hours, turn off all artificial lights in your house and, if possible, illuminate your house with natural light. By doing this, you will decrease electricity usage for lighting purposes and mitigate some of the heat produced by light bulbs. However, you should exercise caution when opening up windows on sun-facing sides of the house; the direct sun exposure can heat up your home and require additional use of the air conditioning system.

4. Install a programmable thermostat: Cooling costs account for roughly 50% of a home’s monthly electricity usage.  Programmable thermostats will help control your energy usage by only cooling the house when you’re home.  This thermostat from Nest makes using a programmable thermostat easy by taking the programming out of it!  Nest learns your schedule and the temperatures you like and does the rest.  It even has sensors that know when you’re home or not.  An added bonus: you can control it from your phone or computer while you’re away!

Three Ways To Improve Your Credit Score

All too often, low credit scores keep individuals from obtaining loans, credit cards, and other forms of financing. Over a long enough period of time, there are ways for individuals of all incomes and debt levels to repair their credit and get back on their feet.

1. Obtaining a credit card is perhaps the simplest way to develop a good credit score, as it establishes reliability and creditworthiness in the eyes of the credit bureaus. Although you do not need to carry a balance in order to have a good score, using a credit card or two and paying off the balances on time can help you gradually boost your credit score. For individuals who do not qualify for a credit card, many banks offer secured credit cards, which contain a balance equal to the deposit made.

2. Another relatively simple way to improve your credit score is to pay off existing credit card balance. For a large number of people, credit card debt represents the primary factor in a low credit score. To repair a damaged credit score, you should start by repaying all credit cards and other revolving accounts. In general, credit bureaus grant higher scores when they see a large difference between available credit limits and the amount of credit actually used.

Tips:

  • If you have more than one card, paying off the one with the lower balance first will allow you to put that money towards the payment on the higher balance card.
  • Check your interest rates and focus your attention on the card with the highest interest rate.
  • Call the card issuer and negotiate a lower rate based on the length of time you’ve been a customer and your solid payment history.

3. Whether or not you pay your credit card bills in full every month, charging a large percentage of your card’s credit limit represents a red flag for credit bureaus. As such, you can increase your credit score by limiting purchases to 30 percent of a card’s maximum limit. Many credit card companies offer text or email alerts at user-specified amounts, which can help you keep track of your monthly spending.