Retirement real estate fraud alert: Avoiding wire scams and property flipping schemes

Real estate wire fraud is one of the most devastating scams targeting retirement-age consumers involved in property transactions. In this scheme, scammers pose as legitimate real estate professionals, such as agents, attorneys or settlement companies and trick victims into wiring money to fraudulent accounts.

The scam typically begins with the fraudster gaining access to email accounts or networks of real estate professionals involved in a legitimate transaction. They monitor communications to learn details about upcoming closings or property purchases. Just before the closing date, the scammer sends an email that appears to be from a trusted party, providing "updated" wire transfer instructions. The unsuspecting buyer or seller follows these instructions, sending their money directly to the scammer's account. Once the funds are transferred, they are quickly moved or withdrawn, making recovery extremely difficult.

To protect yourself from wire fraud, always verify wire transfer instructions by phone using a known, trusted number before sending any money. Be suspicious of last-minute changes to wiring instructions, and never rely solely on email communications for financial transactions.

Property flipping scams often target retirees looking for investment opportunities. While legitimate property flipping can be a valid investment strategy, fraudulent schemes can leave victims with significant financial losses.

In a typical property flipping scam, scammers purchase distressed properties at low prices and make cosmetic repairs or falsify documents to inflate the property's value. The property is then sold quickly to an unsuspecting buyer (often a retiree) at a much higher price. After the sale, the buyer discovers significant undisclosed issues with the property, resulting in substantial repair costs or difficulty reselling.

To avoid falling victim to a property flipping scam, always conduct thorough due diligence. This includes:

• Hiring a reputable home inspector to assess the property's condition.
• Researching the property's history, including recent sales and renovations.
• Working with a trusted real estate agent familiar with the local market.
• Being wary of high-pressure sales tactics or promises of guaranteed returns.

Rental scams can be particularly harmful to retirees looking to downsize or relocate for retirement. These scams often involve fraudsters advertising non-existent properties or properties they don't own. Common rental scams include phantom rentals, where scammers list fake properties or copy legitimate listings, often at below-market rates to attract attention. Another tactic is hijacked ads, where fraudsters copy legitimate rental listings but change the contact information to their own.

Bait-and-switch schemes are also prevalent, where scammers show one property but try to rent a different, less desirable one. Some fraudsters charge unnecessary fees for background checks or application fees for properties that aren't actually available.

To protect yourself from rental scams, never wire money or pay cash for a rental without seeing the property in person. Research the property and landlord online, and be wary of landlords who claim to be out of the country or unable to meet in person. Using reputable rental websites or working with a licensed real estate agent can also help mitigate risks.

Reverse mortgage fraud targets homeowners aged 62 and older, exploiting a financial product designed to allow seniors to access their home equity. Scammers may pressure retirees into taking out a reverse mortgage and then steal the proceeds or convince them to invest in fraudulent schemes.

Common reverse mortgage scams include contractor scams, where fraudsters posing as contractors convince homeowners to take out a reverse mortgage to pay for unnecessary repairs. Investment scams involve persuading seniors to obtain a reverse mortgage and invest the proceeds in high-risk or fraudulent investments. Deed theft is another serious issue, where criminals forge documents to transfer ownership of the property, then take out a reverse mortgage in the victim's name.

To avoid reverse mortgage fraud, work only with HUD-approved reverse mortgage counselors and lenders. Never sign documents you don't fully understand, and be wary of unsolicited offers or high-pressure sales tactics. Consulting with trusted family members or financial professionals before making decisions is also crucial.

Beyond real estate-specific scams, retirees should be vigilant about other types of financial fraud. These include:

• Investment fraud. Scammers pitch "guaranteed" high-return investments or complex financial products unsuitable for retirees.
• Identity theft. Criminals use stolen personal information to open credit accounts or file fraudulent tax returns.
• Elder financial abuse. Family members, caregivers or professionals exploit their relationship with a senior for financial gain.
• Lottery and sweepstakes scams. Fraudsters claim the victim has won a prize but must pay fees or taxes to collect.
• Romance scams. Criminals build online relationships with lonely seniors, then ask for money for various emergencies.

If you suspect a real estate scam, here are some important steps to take:

• Stop all communication with the suspected scammer immediately. Do not provide any additional information or funds.
• Document everything. Save all emails, text messages and other communications related to the suspected scam. Take screenshots if needed.
• Contact your real estate agent, lender, or title company (if you're working with one) to alert them of your suspicions. They can help verify if the communication or request is legitimate.
• Report the suspected scam to local law enforcement. File a police report with as much detail as possible.
• Report the scam to relevant authorities: Federal Trade Commission (FTC); the Internet Crime Complaint Center; or your state's attorney general's office.
• If you've shared any financial information, contact your bank or credit card company immediately to protect your accounts.
• If you've provided personal information, consider placing a fraud alert on your credit reports with the major credit bureaus.
• Alert the platform where you encountered the scam (e.g., Craigslist, real estate websites) so they can investigate and potentially remove fraudulent listings.
• Spread awareness by sharing your experience with friends, family and on social media to help others avoid similar scams.
• If you've lost money, consult with a lawyer to explore your options for potential recovery.

Remember, it's always better to be cautious and verify information before proceeding with any real estate transaction. If something seems too good to be true or feels suspicious, trust your instincts and investigate further before taking any action.

To protect yourself from these and other scams, maintain a healthy skepticism of unsolicited offers or "too good to be true" opportunities. Safeguard your personal and financial information, and regularly monitor your credit reports and financial accounts. Consult with trusted family members or professionals before making significant financial decisions, and stay informed about current scams and fraud tactics.

By staying vigilant and educated about these various scams, retirement-age consumers can better protect their hard-earned savings and enjoy a more secure retirement. Remember, if an offer seems too good to be true, it probably is. Always take the time to research and verify before making any financial commitments, and don't hesitate to seek advice from trusted professionals or family members when in doubt.