The pressures of buying or selling property can be never-ending. While you may be looking for a property that best suits your needs or you’re an eager buyer, looking out for possible real estate fraud is an essential step. 

Real estate fraud is when one person or party commits fraud within the buying, selling, or renting process. It is possible for real estate fraud to happen at any stage, including during appraisals, closings, or foreclosure procedures. This can lead to jail or prison time for the illegal doer. Since possible fraud can occur for buyers and sellers at any time, there are many instances to look for that can constitute fraud. 

Deed Fraud

While not common, deed fraud can lead to people unknowingly selling their homes or buying a home that is not actually on the market. 

Deed fraud happens when the real estate title is recorded or transferred illegally without the true owner’s consent. The person trying to take the property will most likely use false identification, forge a signature, or notary stamp to create the look of a proper deed transfer. Once the illegal deed is created, the “owner” may take it upon themselves to try to sell the property or rent it out.  

To avoid this situation, it is essential to do due diligence when purchasing or selling a property to find unknown sold titles, fake titles, or outside buyers. The use of a real estate attorney can be helpful. It is important to go to the proper authorities to resolve the problem if it happens. 

Straw Buyer Scheme

While the term “straw buyer” may have originated from a scarecrow being made out of straw, it has a deeper meaning. Like a scarecrow, the people who conduct straw buyer schemes are considered to be fake people. 

A straw buyer scheme entails a person purchasing real estate under their name for another person. If the buyer is doing this because the giftee has poor credit or can’t afford it themselves, this becomes an illegal act. Essentially, if a person with good credit purchases a home for someone with bad credit and has no intention of living there or paying the mortgage, this person becomes a “straw,” and those acts can constitute mortgage fraud. This could lead to unpaid mortgages and companies unsure who to track down, resulting in “fake people” since the person who signed for the home is not the person living there. 

Illegal Property Flipping

Flipping property has become a huge trend and hobby for many people. However, while purchasing a property, renovating it, and selling it at a higher price is not illegal, there is a boundary line to keep in mind. 

In some cases, property flipping becomes illegal when a seller raises the price based on renovations they have claimed to complete but never did. The inflation of price can also come from the property appraiser and real estate broker purposely estimating the home too high, leaving the buyer in the dark about the accurate price of the property. Lastly, if a bank were to lend money for a property for more than its actual value, it can lead to possible illegal flipping in the background. 

Hiring your own property appraisal or real estate attorney before purchasing a home makes it more likely to stay in the clear from illegal property flipping. They will be able to give you the proper cost of the house and see if any unlawful doings have been conducted prior to you. 

The last thing you would want to encounter when trying to purchase or sell a property is any faults in the legal process. If you or someone you know is in the process of buying or selling a property or want to learn more about what to look out for, give us a call at (913) 320-3830, or reach out to us at to discuss your situation.