Not everyone who shows interest in buying a property is a legitimate buyer. In some cases, the person may be trying to take advantage of you or commit fraud. In other cases, they might just be wasting your time with no intent to buy.
Purposes of Fake Property Buyers
First, let’s talk about what the goals of these fake buyers are. It’s not necessarily as obvious as a fake seller, who is trying to get money out of their victims. In most cases, this type of buyer makes cash offers on properties and then disappears without a trace.
- General annoyance: Fake buyers who put up money for a property they know they can’t provide often are simply causing an annoyance for home sellers. This means a substantial amount of time working with the fake buyer that could be spent elsewhere;
- Free items: In some cases, in order to impress and woo prospective clients, real estate agents will provide a variety of free items/gifts. A fake buyer can take advantage of that, especially with luxury properties they can’t afford;
- Impressing others: In some cases, the fake buyer is trying to create an inflated impression of their finances;
- People are just doing their research and want a free consultation from you.
14 Steps to Help You Avoid Fake Real Estate Buyers
Follow these steps to determine if your potential buyer is just wasting your time.
1. Difficulty talking about finances
When you start talking about money issues, like what their budget is, and whether or not they’ve been pre-approved for a mortgage, most people will be upfront and give you a straight answer. If you have a client who dodges all your questions about finances and budgets, there’s a good chance they don’t have the money to go through with a purchase. They might be fake cash buyers and not at all serious about buying property.
2. The client is indifferent to location
Most people have a pretty good idea of where they want to live. While some people are open to living in any neighbourhood if they can find cheap houses for sale, others have neighbourhoods or parts of town they either want to live in or want to avoid. If your buyer says they have no preferences at all about location, that’s a red flag. At the very least, they haven’t done the research required for such a major purchase. At the worst, they’re wasting your time and have no intention of buying.
3. They don’t want to follow the process
Most homebuyers realize that real estate transactions follow a process. If you realize your client is unaware of this process, you can educate them. Often, this is when you can tell if the buyer is genuine. If they are, they will make an effort to learn and follow the process you’ve outlined. If the buyer is not serious and is looking to waste your time then they will likely continue to not follow the process.
4. Be careful with cash payments
A fake buyer will often make a cash offer on a home and then vanish, never to be heard from again. Some of these people make the offer thinking the money will materialize. When it doesn’t, they disappear. This negatively affects everyone involved, including agents and the people selling the property.
5. Double-check rushing clients
A buyer who is trying to push through a sale can be a red flag. Yes, they may have a good reason for a quick purchase. But often, it’s a sign that the buyer is trying to run a scam of some sort. To weed out the scammers and fakers without getting rid of legitimate buyers, you can double-check references and documentation to make sure everything adds up.
6. Double-check online-only talkers
Many people begin their real estate journey online by looking at listings to narrow down their choices. If you have a buyer who is active online and through email but declines an in-person viewing or meeting, it’s best to double-check their credentials. Doing additional checks will help to weed out people with bad intentions.
7. Confirm all documentation
Don’t take documents at face value. Verify that they are legitimate. Taking this extra step will help to avoid the possibility of falling victim to a fraudster or fake buyer.
8. Insist on a deposit
Requiring a deposit for all transactions will quickly weed out fake buyers. The reason is simple: a person who has no intention of going through with the purchase won’t pay a deposit that they may not get back.
9. Ask for proof of funds
Often, a fake buyer doesn’t have the required money to go through with the purchase. You can eliminate fake buyers early in the buying process by asking for proof of funds. A buyer who comes up with constant excuses or stalls unreasonably likely doesn’t have the money for the purchase and can be considered a fake buyer.
10. Don’t change anything without evidence
When a request to make a change is made, be sure to document the changes or request evidence of the change.
11. Don’t offer to make a new purchase
A common scam is to offer to make multiple purchases. When this happens, refuse the request, as they are likely a fake buyer. At the very least, do extra research and request proof of funds before going ahead with additional purchases.