Prior to the onset of the early 2000s, homeownership was viewed more as a necessity rather than an investment one can make. However, as property prices began skyrocketing, the real estate investing opportunities became crystal clear. With real estate finance companies and private players alike jumping at the opportunity, however, so did the potential for real estate scams. Here are six such scams and how to avoid them.
Owning a house is still a distant dream for many, making renting the next best option. With properties being listed online, it has created a feeding ground of scamsters who list properties that don’t exist in order to extract a security deposit. Alternatively, the bait and switch is also a popular method, wherein you are convinced to pay a premium for a low-quality location.
In order to avoid rental scams, do not make any payments online without further interactions, and it would be best to visit the property before you sign any agreements.
Venturing into real estate finance can be tricky, and oftentimes you might find that someone is selling you a house they don’t even own. Scamsters could sell you a house using false documents and transfer the ownership without the real owner’s permission. It is easy to see why this can cause problems for the owner and buyer. With a push to dematerialize property ownership certificates (somewhat like how stocks are stored in Demat accounts), there should be little room for ownership disputes going forward but always ensure that you are on the lookout for this.
If you are looking to venture into real estate finance or buy a home, chances are you might look for an agent to go through. In the absence of a trusted broker, there are a number of ways you could be convinced by a fraudulent broker into transferring money. Remember that your broker’s job is not to create a disconnect between buyers and sellers, but to facilitate seamless interactions.
Oftentimes homeowners are unable to pay their loans and are about to have their homes foreclosed on or seized by the bank. Scammers prey on this fear, offering real estate finance options, such as altering the terms of the loan agreement or postponing foreclosure in exchange for a fee. Read the terms of your agreement carefully, and do not trust anyone over the phone unless you are able to verify their identity. You should only interact with your bank through official channels only.
This one is especially tricky because institutions like real estate finance companies are involved. If you are venturing into real estate investing, you could come across this scam where loan amounts are spent towards other objectives that are not approved. It is recommended that you get your loans exclusively through trusted vendors such as Piramal Finance.
From loan flipping to fudging real estate loans, India has seen many homeowners on the receiving end of the devious and deplorable actions of homeowner scamsters, and you must watch out even when you have to move furniture.
A moving company might move your furniture based on a quote, only to raise the price after having moved all the furniture in an attempt to corner you into paying extra. Alternatively, an even more disgraceful form of the scam involves moving companies taking a deposit and/or collecting the furniture, only to disappear with a single track.
Make sure that you get multiple quotes from your movers and packers, try to rely on recommendations from friends and family, and do not pay any additional amounts no matter how much they insist. Generally, companies that ask for large cash deposits are red flags.
India still finds itself steeped deep in real estate scams, with there being a multitude of loopholes in the law. With a little due diligence, however, you can avoid six of these scams. Ensure that you double check all agreements and quotes (you can use the Piramal Finance EMI calculator to get a rough estimate so you know you are not getting scammed with high EMI rates) and that you get your loans through reputable vendors only.
[Also Read: A Complete Guide to Real Estate Financing ]