Real Estate Fraud: How to Protect Yourself Legally

1 January 2026

Buying or selling a home is one of the biggest financial decisions in life. But what if someone tries to take advantage of you during the process? Real estate fraud is a growing concern, and if you're not careful, you could lose thousands—or even your home itself.

Scams in real estate come in all shapes and sizes, from fake listings to wire fraud schemes. But the good news? You can take steps to protect yourself. In this guide, we’ll break down how real estate fraud happens and, more importantly, how to shield yourself legally.

What Is Real Estate Fraud?

Real estate fraud happens when someone uses deception, false information, or illegal tactics to take advantage of buyers, sellers, or renters. Scammers prey on people who may not fully understand the buying or selling process, and sometimes, even experienced homeowners fall victim.

Some fraudsters manipulate documents, impersonate property owners, or create fake listings. Others convince unsuspecting buyers to send money for properties that don’t even exist. It’s a scary thought, right? But with awareness and legal protection, you can avoid falling into these traps.

Common Types of Real Estate Fraud

Let’s break down the most common real estate scams and how they work. Recognizing them is the first step to staying safe.

1. Mortgage Fraud

Mortgage fraud happens when someone lies or provides false information to obtain a loan. This can involve a buyer inflating their income to qualify for a larger mortgage or a seller misrepresenting the property's value.

There are also scam artists who convince buyers to pay upfront fees for "guaranteed" loans—only to disappear with their money.

How to Protect Yourself:
- Always work with reputable lenders.
- Double-check all documents before signing.
- If a loan offer seems too good to be true, it probably is.

2. Wire Fraud

Wire fraud is a serious scam where criminals hack into emails between buyers, sellers, or real estate agents. They pose as legitimate contacts and instruct buyers to wire money to an account controlled by scammers. Once the money is sent, it’s nearly impossible to recover.

How to Protect Yourself:
- Never wire money without confirming details over the phone.
- Use secure methods of communication when dealing with financial transactions.
- Be cautious of last-minute changes to payment instructions.

3. Title Fraud

Title fraud is when someone steals your identity to transfer your property into their name. Once they do this, they can take out loans against your home or even sell it without your knowledge.

How to Protect Yourself:
- Regularly check the title status of your property.
- Consider title insurance for extra protection.
- Be wary of unsolicited requests to sign property-related documents.

4. Rental Scams

Rental fraud is common in big cities and vacation spots. Scammers list fake rental properties and ask tenants to send deposits before viewing the home. Once the money is sent, the scammer disappears.

How to Protect Yourself:
- Always visit a rental property in person before sending money.
- Verify the landlord’s identity and ownership.
- Avoid listings that require immediate payment or pressure you to act fast.

5. Foreclosure Fraud

Homeowners facing foreclosure are often targeted by scammers promising to "save" their home for an upfront fee. In many cases, these fraudsters take the money and leave the homeowner in an even worse situation.

How to Protect Yourself:
- Consult a reputable attorney or housing counselor before agreeing to any foreclosure assistance.
- Never sign over your deed without fully understanding the consequences.
- Be cautious of unsolicited foreclosure help.

Legal Ways to Protect Yourself from Real Estate Fraud

Now that we’ve gone over the most common scams, let’s talk about what you can do to protect yourself legally.

Hire a Trusted Real Estate Agent and Attorney

One of the best ways to avoid fraud is by working with professionals you trust. A reputable real estate agent and attorney can help you navigate transactions safely.

Look for agents with strong reviews and licenses. If someone pressures you into working with them or avoids paperwork, that's a red flag.

Verify All Documents Before Signing

Scammers manipulate contracts and forge signatures to trick people. Always read every document carefully, and when in doubt, have your attorney review it.

If something feels off—missing details, incorrect amounts, or vague terms—ask questions before signing.

Use Title Insurance

Title insurance protects buyers and homeowners from title fraud, ownership disputes, and hidden liens. While it may seem like an extra expense, it can save you from major financial losses.

Don’t Send Money Without Verifying Details

Before making any payments, confirm with your real estate agent, lender, or attorney that the recipient is legitimate. Call them directly using a verified phone number (not one from an email).

Monitor Your Credit and Property Records

Fraudsters might use your personal information to forge documents or take out loans in your name. Regularly check your credit report and property records to ensure nothing suspicious is happening.

Be Skeptical of High-Pressure Tactics

Scammers often pressure people to act quickly. If someone insists that you must sign a contract or send money immediately, take a step back. Legitimate real estate transactions should never feel rushed.

Report Suspected Fraud

If you think you’re being scammed or have come across suspicious activity, report it immediately. You can contact:
- The Federal Trade Commission (FTC)
- Your state’s real estate commission
- The Better Business Bureau (BBB)
- Local law enforcement

Reporting fraud can help prevent others from falling into the same trap.

Final Thoughts

Real estate fraud is no joke, and it can happen to anyone. But knowledge is your best defense. By staying informed, verifying details, and working with trusted professionals, you can protect yourself from becoming a victim.

When something feels off, trust your instincts. Real estate should be an exciting journey—not a costly mistake. So stay vigilant, keep your documents secure, and never be afraid to ask questions.

Because when it comes to buying or selling a home, protecting yourself legally isn’t just an option—it’s a necessity.