Safeguard Your Investments: 6 Property Scams You Must Avoid!
Engaging in property investments in Indonesia, including Bali, inevitably involves certain risks. One of the risks in property or real estate investment is property scams or property fraud. Many scam activities occur during property transactions. Therefore, as an investor, you should exercise extra vigilance to mitigate potential risks.
This article will provide anything you need for tackling scams in real estate – types, indications, and how to avoid property scams.
What is Property Scams?
Real estate or property scams are occurrences conducted by scammers to get advantages over someone who is involved in property transactions. Meanwhile, those engaged in property transactions end up experiencing losses.
If you have decided to start a property investment journey in Indonesia, you must be aware of this issue since everyone who is involved in property investment can be the victim.
The most general way how scammers carry out their actions is by creating fake listings and impersonating a company or real estate agent. They target you with unrealistic and too-good-to-be-true offers or prices.
After the scammers get money from the victim, they disappear and cannot be contacted.
6 Property Scams You Must Avoid
Here are six property scams you must avoid, such as:
1. Property Flipping
Property flipping is a first example of scams in real estate. This is a strategy where someone buys a property intending to re-sell it for a much higher price without any renovation or improvement.
Property flipping is not inherently illegal in Indonesia unless the property owner misrepresents the true value and condition of the property.
Scammers typically focus on individuals interested in investing in Indonesia property, but are unfamiliar with Indonesian property market and laws. This tactic encourages buyers to invest in properties without conducting thorough due diligence.
2. Wire Fraud
Wire fraud is a practice in which scammers pose as a property agency, aiming to deceive you into transferring funds intended for their closing costs to the scammers’ accounts.
This type of property scam can occur in mortgage wire fraud to escrow wire fraud.
You must be extra careful with wire fraud because it’s very challenging to detect. Scammers frequently use software that replicates a property agency’s phone number and email address.
Once you have transferred your funds to them, retrieving the money is nearly impossible.
3. Property Ownership Scam
They often assert ownership using forged land titles, deeds, and certificates. To expedite their action, they target abandoned, unoccupied, or properties that have been owned by foreigners. The scammers deceive buyers and tenants into making payments for a property they do not possess legal rights to.
When the legal property owner comes, the buyers may face eviction and become embroiled in legal conflicts. Consequently, the buyers face a heightened risk of experiencing financial losses and encountering legal complications.
4. Deed or Title Scam
Deed or title scam is a serious scam since the property owners would spend a lot of money to solve this scam. In the worst case, lose their property.
This property fraud works by transferring the property ownership to another individual or using the property as collateral for borrowing money without the legal property owner’s knowledge.
5. Rental Scam
One category of property scams that requires caution is the rental scam. Most buyers like you search property listings on the internet. Knowing this fact, scammers could take a chance by creating fake property listings online to trick you.
These scammers often present fake properties for rent and request a high deposit from you. When they already get it, they will disappear – leaving you without the property and money.
6. Zoning Fraud
The last type of property scams is zoning fraud. In this scheme, scammers alter the zoning status of a piece of land illegally to permit a development project that would otherwise be prohibited under its actual land zoning status in Indonesia.
Zoning fraud can manifest in various forms – misrepresenting the land’s zoning status, suborn local government officials, or document falsification. Engaging in such practice poses a significant risk, resulting in a decline in both property and neighborhood values.
5 Indications of Property Scams
Before you learn how to avoid scams in real estate, you should learn the indications of them. Understanding these signs is highly recommended for those who are first-time property buyers. Here are five indications of property scams, such as:
1. Pressure to Take Immediate Action
The first sign or indication of property scams is there pressure to take immediate action. Scammers tend to pressure property buyers with a sense of urgency or scarcity to make them take action.
2. Too Good to Be True
If someone claiming to be the property owner provides you with a property with extremely below market value or other unrealistic attractive offers, do not be happy – you must be careful.
Those too-good-to-be-true offers are a strong indication that the transaction you are involved in is a scam. Resist the temptation to pursue those offers.
3. Lack of Documentation
Real estate or property transactions in Bali always involve a lot of documents – certificates, deeds, etc.
If you are looking for a property to rent or buy for HGB title, ensure that the proper documents from the property owner are prepared well. This action you must take before transferring your money, even for a dollar or rupiah.
If someone claiming to be the property owner cannot prepare the documents property, that is a huge red flag.
4. Requests to Wire Money
The fourth sign of property scams is the solicitation for property buyers to directly wire money to an individual who claims to be the property owner, under the pretext that the money is intended for a deposit or down payment.
5. The Details Do Not Add Up
Since property is highly regulated in Indonesia, the details must be attached to the agreement document. If you find an incomplete, contradictive, or vague document, never give a deal. This sign is a strong signal of property scams.
How to Avoid Property Scams?
Nobody wants to be the victim of property fraud. After you understand the types and the indications of property scams, the question is, how to avoid them?
The following are the ways of avoiding scams in real estate, such as:
1. Exercise Caution with Money Transfers
Do not proceed with money transfers unless the details of the property are transparent. Ensure that the documentation is complete, the offers are realistic, and you have engaged in face-to-face negotiations with the property owner.
For high-value property transactions, consider involving professional and trustworthy third parties.
Research is the foremost and first step you must take before conducting any property transaction. Check the market trends in the area you aim for and the average price of the type of property you want to have.
The Internet is a great place to start. You can check real property listings on professional property agency websites.
Also, do not forget to be critical. You can check the property owner’s background and seek help from a legal professional to make your property transaction seamless.
3. Do not be Tempted by Unrealistic Offers
Everyone loves benefits, including you. However, in a property transaction that involves a lot of money, being realistic is a must.
Do not be tempted by offers that sound too good to be true. If you receive an unrealistic but good option, it’s a sign of property scams. Ask yourself, and follow your instincts.
Stay Informed and Guarding Against Property Scams
Investing in property can be a lucrative choice. But, it’s important to be cautious, as there are irresponsible people who want to profit at the expense of others.
To safeguard yourself from potential scams, it’s crucial to familiarize yourself with the definition, various types, indications, and preventive measures associated with property scams before venturing into property investment.