Downsizing for Retirement? Look Out for These Retiree Real Estate Scams
Written by
Laura Bogart
Edited by
Cory Dudak
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Retirement should be a time of pleasure and relaxation, a chance to enjoy life beyond the work-a-day world. To ensure that they have extra income available during retirement, many seniors look to downsize their homes or take out reverse mortgages that help them consolidate debt, cover medical bills and generally have more money available to cover daily expenses.
Unfortunately, some fraudsters target seniors with real estate scams designed to take the varnish off their golden years. However, with some advance warning about common scams, retirees can protect themselves and their property.
Staying One Step Ahead of Reverse Mortgage Scams
Sometimes, scammers will contact homeowners with an “investment opportunity” that seniors can take advantage of by withdrawing equity via a reverse mortgage. After promising a big windfall, these scammers conveniently fail to deliver, costing their unfortunate marks massive sums of money. Another common reverse mortgage scam involves scam artists painting themselves as realtors who encourage homeowners to take out a reverse mortgage for the money to invest in “fix-and-flip” properties that often don’t exist.
According to SmartAsset.com, homeowners should be wary of people who contact them out of the blue about a reverse mortgage when they haven’t expressed any previous interest, make offers with fuzzy details or that seem too good to be true, or don’t seem willing to take no for an answer.
Beware the Repairs
Fraudsters initially gain trust by showing up at a senior’s doors with rental contracts for home repair equipment, before eventually coming back with another opportunity to help them supposedly consolidate their debt. Notably, they promise homeowners that buying more equipment or having more renovations done will help them get money back.
Seniors are pressured into signing documents that they might not understand, but are, in fact, high-interest mortgages. After funds from the mortgage are deposited in that homeowner’s account, the faux contractors ask for a check or wire to pay for the renovations. While reporting on how this scam impacted seniors in Ontario, Canada, the CBC shared that many victims were stunned to receive notices that new mortgages in their names were about to come due.
When Searching for a Dream Home Becomes a Nightmare
In one heartbreaking and headline-making case of fraud, hackers targeted a retired schoolteacher and her daughter as they searched for a townhome. By sending spoof emails that looked identical to the real emails the pair received from their lender, title company and realtor, the scammers were able to convince them to send them nearly $200,000 — the retiree’s entire life savings — to supposedly close on the home.
To avoid befalling a similar fate, seniors should double and triple-check all email addresses, URLs and spelling in any correspondence they receive. Good online safety practices, like setting up two-factor authentication on accounts and refraining from sharing personal information on social media, can also make it harder for hackers to guess passwords. When in doubt, always call or verify payment requests at a bank or broker’s office in person.
Seniors who have been targeted by scams have resources available to help, and can contact the National Elder Fraud Hotline (1-833-372-8311) for assistance.
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