Many fall as victims of real estate fraud especially when investing in developed lands, this fraud occurs as a result of buyers insufficient awareness and incomplete information about the real estate market and the prevailing prices.

In order to avoid being caught in a real estate fraud situation, buyers should posses enough awareness about the right ways to evaluate a land before signing the contract.

For this reason, we prepared a guide of three simple yet essential steps that every buyer on the verge of purchasing a property should follow to guarantee a safe and fulfilling purchase.

1- Comparing between different property prices

This is the easiest and most basic way to detect a real estate fraud. As a buyer, it is essential for you to compare the selling price of the desired property with other lands. This comparison can be done on the following terms:

A- Property Type (residential or commercial)

B- Property Condition (damages and repairs needed)

C- Whether or not the property is under construction (in case of vacant lands)

This method is mostly used to evaluate developed lands by comparing them and conducting a study of the factors that might affect the property price:

Property value factors

1- Location

2- Condition and age of the property

3- Features and specifications of the property itself.

4- Services provided by the property

5- Size.

6- Quality of the interior designs and decorations styles

7- Competent authorities licenses

8- The property title deeds

Note: The same factors should be considered when assessing vacant lands

Finding exact similar properties is impossible, however, when comparing between more than one property; the comparison should mainly target the weaknesses, strengths and characteristics of each property, all of which a buyer will identify based on his needs and wants.

And for an accurate estimation of the price, a calculation of the surrounding properties prices per square meters will assist in identifying the property’s market value.

2- Assess the cost price while considering a reasonable profit

Here a buyer should resort to a real estate professional for assistance. A realtor with expertise will not only help you avoid real estate fraud, but also guide you to the best deal. This is usually done using the following steps:-

A- Exclude any built properties and determine the price of the vacant land in the present time.

B- Identify the costs required for developing the land in real time while considering any damages to the existing property, then deduct the consumption value from the development costs.

C- Determine the current value of the property by subtracting the consumption costs from the developing costs.

D- Add the current value of the property to the price of the vacant land and you will get an estimation on the actual price of the desired investment.

3- Compare between the expected revenue and selling price

hidden costs

Estimating the market value for a property can be difficult especially if there are no similar properties to compare against. However, it is crucial to implement this step to avoid being the victim of real estate fraud

An easy way to calculate this would be to subtract the value of the property’s annual income (in case its a mall, hotel or rentals) from its maintenance and operating fees. This will help you reach a proper estimate of the market value of your desired property.

4- Title Frauds:

This type of real estate scams is more common than what most people like to think. Title Frauds are dangerous and, most of the times, it is detected after the damage has been done.

To put it simply, a third party who has access to your personal sensitive information create fake property ownership documents signed by your name. Using these documents, the scammer requests a mortgage on the aforementioned property. Needless to say, the scammer disappears before paying any of the due installments, leaving you accountable for the unpaid amounts.

The only way to avoid this is to be extremely cautious with your personal sensitive information and whom you share it with. This caution should be even more extreme when it comes to your credit card information.

These are some essential steps that will help you dodge the most common forms of real estate fraud. If there is one general piece of advice to give, however, then it would be to take all the time you need, specially when it comes to choosing a new home. When it comes to real estate investments, take all the time to consider the characteristics, pros, cons and alternatives of the property you would like to invest in.

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