The Biggest Scams Targeting Seniors in Real Estate

Seniors are often targeted by scammers in the real estate market. This is because they may be more vulnerable to scams due to their age, experience, or financial situation. Some of the biggest scams targeting seniors in real estate include:

• Reverse mortgage scams: These scams involve convincing seniors to take out a reverse mortgage, which is a loan that allows homeowners to borrow money against the equity in their home. The scammer may pose as a legitimate lender or government official, and they may promise the senior that they will not have to repay the loan until they die. However, reverse mortgages can be complicated and expensive, and seniors who are not careful can end up losing their homes.

• Home improvement scams: These scams involve convincing seniors to make unnecessary or overpriced home improvements. The scammer may pose as a contractor or home inspector, and they may pressure the senior into signing a contract without reading it carefully. Seniors may also be targeted by door-to-door salespeople who offer to make home repairs.

• Straw buyer scams: In a straw buyer scam, the scammer recruits a senior to buy a property on their behalf. The scammer may pose as a real estate agent or investor, and they may promise the senior that they will make a profit on the deal. However, the senior is often left holding the bag when the scammer defaults on the loan.

• Elder financial abuse: This is a broad term that encompasses any type of financial exploitation of an older adult. It can include scams, but it can also include things like taking advantage of a senior's dementia or isolation.

• Investors low-balling senior home sellers: Investors who are looking to buy homes at a discount may target seniors who are selling their homes. They may make a lowball offer, hoping that the senior will be willing to sell for less than the market value. This can be especially predatory if the senior is not aware of the fair market value of their home or if they are under financial pressure to sell.

• Wire Fraud: In a recent AARP article, they highlighted a case in 2017, Joyce and Benjamin F., a retired teacher and school principal, were set to downsize in Sparta, New Jersey. They found a perfect townhouse near their children and grandkids and wired $91,500 for the purchase. However, at the closing, they realized they had fallen victim to a scam when the seller's rep denied receiving the payment. Despite their frantic efforts to reverse the wire transfer, their savings and borrowed money were lost, leaving them grappling with the consequences six years later. This devastating scenario is increasingly common, as real estate wire transfer fraud is on the rise, part of the broader business email compromise category. Reported losses from such scams have surged from $676 million in 2017 to over $2.7 billion in 2022, with industry experts emphasizing that wire fraud now poses a significant threat to real estate transactions and the global economy, making it a top concern for those in the industry.

If you are a senior, or if you know a senior who is thinking about buying or selling a home, there are a few things you can do to protect yourself from scams:

• Do your research. Before you make any decisions about your home, be sure to do your research and understand all of your options.

• Get everything in writing. Before you sign any contracts, be sure to read them carefully and get everything in writing.

• Talk to a trusted advisor. If you have any questions or concerns, talk to a trusted advisor, such as an attorney or financial advisor.

It is also important to be aware of the signs of a scam. Some common red flags include:

• The scammer is asking for money upfront.

• The scammer is pressuring you to make a quick decision.

• The scammer is asking for personal information, such as your Social Security number or bank account number.

• The deal seems too good to be true.

If you think you may have been the victim of a scam, contact your local law enforcement agency immediately. You can also contact the following organizations for more information and assistance:

• The Federal Trade Commission (FTC): 1-877-FTC-HELP (1-877-382-4357)

• The National Association of Consumer Advocates (NACA): 1-800-777-7283

• The AARP Fraud Watch Network: 1-888-394-2277

By being aware of the risks and taking precautions, you can help protect yourself from scams.

In addition to the tips above, here are some other things you can do to protect yourself from real estate scams:

• Get a second opinion from a trusted advisor before making any major decisions about your home.

• Be wary of anyone who promises you easy money or a quick fix.

• Never give out your personal information over the phone or online unless you are sure who you are talking to.

• If you think you may have been the victim of a scam, report it to the authorities immediately.

By following these tips, you can help protect yourself from the biggest scams targeting seniors in real estate.