Buying or selling a home in California should be exciting, not terrifying. Yet, the risk of real estate fraud is very real, turning dreams into financial nightmares. Scammers are getting smarter, using complex schemes like real estate escrow fraud to target unsuspecting homeowners. At Deldar Legal, we’ve helped countless Californians fight back. We want to arm you with the same knowledge we use in court. This article breaks down the biggest real estate frauds and gives you clear steps to protect your investment before it’s too late.

What Are the Biggest Real Estate Frauds in California?

The Staggering Impact of Real Estate Fraud: A Look at the Numbers

The dream of homeownership is one of the biggest financial and emotional investments a person can make. Unfortunately, this high-stakes environment creates opportunities for criminals. The numbers paint a stark picture of just how widespread this issue has become. According to the FBI, real estate scams are a significant threat, with a recent report from the National Cybersecurity Alliance revealing that nearly 10,000 Americans lost over $145 million in a single year. This isn’t a minor issue affecting a handful of people; it’s a widespread problem causing devastating financial harm to families across the country, including right here in California.

The risk becomes even more tangible during the closing process, a time when buyers are most vulnerable. Research from Bankrate highlights that a shocking one in four individuals has faced a fraud attempt while finalizing their home purchase. When these scams succeed, the consequences are severe. In cases of wire fraud tied to title transactions, the average victim lost $72,000, and tragically, only about 28% of that money was ever recovered. For most families, a loss of that magnitude is life-altering. These aren’t just statistics; they represent shattered dreams and futures thrown into uncertainty. When you’re facing such a devastating loss, understanding your legal options is the first step toward recovery.

When Someone Steals Your Property’s Title

Title fraud occurs when a fraudster uses false documents to pose as the property owner, transferring the property to their name, and then securing loans or selling the property. According to California Penal Code section 115 PC, filing or recording forged documents related to real estate transactions is illegal and can result in severe penalties.

Understanding “Title Pirates” and Forged Deeds

You might hear the term “title pirates” and wonder what it means. These are individuals who commit title fraud by illegally taking ownership of a property. They accomplish this by creating and filing forged deeds, often using fake signatures and phony notary stamps to make the documents look legitimate. These scammers dig through public records to find properties that are easy targets—like vacant homes, vacation properties, or homes owned by the elderly—and gather the information needed to create a convincing fake deed. Once this fraudulent document is recorded, they can act as the legal owner, allowing them to sell your property to an unsuspecting buyer or take out large loans against it, leaving you with the devastating financial and legal fallout. The FBI’s Internet Crime Complaint Center (IC3) received over 11,700 complaints related to real estate fraud in a single year, with victims losing more than $400 million.

The danger doesn’t stop with forged deeds. A common tactic tied to real estate transactions is wire fraud. In this scenario, scammers will hack into the email accounts of real estate agents or title companies. They then impersonate these professionals and send last-minute emails to the buyer with altered wiring instructions, tricking them into sending their down payment or closing costs directly into the fraudster’s bank account. Because these transactions happen so quickly, the money is often gone before anyone realizes the mistake. This highlights just how critical it is to be vigilant. Always verify wiring instructions over the phone using a trusted number before sending any money, and regularly check your property’s title for any changes you didn’t authorize.

Deceptive Mortgage and Loan Practices

Loan fraud in the real estate sector often involves falsifying information to obtain a mortgage. Under California law, this can include lying about income, assets, or debts on a loan application. This is a form of mortgage fraud, punishable under various statutes, including fraud and theft under the California Penal Code.

Predatory Lending and Loan Flipping Schemes

Predatory lending is a serious problem in California, with some lenders preying on homeowners who are in a tough spot. A particularly nasty tactic is “loan flipping,” where a lender convinces you to refinance your mortgage over and over again. As Bankrate explains, these lenders often encourage you to borrow more money each time, all while charging high fees that get rolled into your new loan. This leaves you with a much larger mortgage and monthly payments you might not be able to afford. These schemes often target the most vulnerable, especially older homeowners who have built up significant equity over the years, putting their financial security and their property at immense risk.

This deception isn’t limited to refinancing. Scammers are constantly finding new ways to trick people out of their money during real estate transactions. The National Cybersecurity Alliance warns that fraudsters will try to get you to send money to the wrong accounts or pressure you into signing up for terrible loans with hidden terms. These tactics can lead to devastating financial losses for buyers and sellers who are just trying to make an honest deal. That’s why it’s so important to stay vigilant and ask questions throughout the entire process. Being aware of these deceptive practices is your first line of defense in protecting your investment.

The Dangers of Real Estate Escrow Fraud

Escrow fraud involves the misappropriation of funds supposed to be held in trust during the real estate transaction process. California’s Financial Code and Business and Professional Code provide regulations and penalties for mishandling escrow accounts, emphasizing the importance of secure and lawful transactions.

Wire Fraud and Business Email Compromise (BEC)

This scam is particularly cruel because it targets you during one of life’s most exciting moments: closing on a property. Scammers impersonate your real estate agent or title company, sending a convincing email with “updated” wiring instructions for your down payment or closing costs. This tactic is called Business Email Compromise (BEC), and the National Association of REALTORS® identifies it as one of the fastest-growing cybercrimes in the country. The goal is to trick you into sending your funds directly into a criminal’s account. By the time the error is discovered, the money is often gone for good.

The statistics are alarming. In 2023, the FBI reported that nearly 10,000 Americans lost over $145 million to these real estate scams. It’s estimated that about one in every 20 home buyers and sellers becomes a victim of this fraud. Your best defense is simple: always be skeptical of last-minute changes to payment instructions. Before you ever wire money, pick up the phone and call your agent or escrow officer using a number you know is legitimate—not one provided in the email. This quick verification call is the most effective way to stop wire fraud before it happens.

Don’t Fall for These Common Rental Scams

Rental scams have surged with the rise of online real estate listings, making them one of the biggest real estate frauds today. Scammers often post fake listings or hijack legitimate ones, tricking potential tenants into sending money for properties that aren’t available for rent. This fraud is tackled under California’s comprehensive real estate and consumer protection laws.

False Promises: Foreclosure & Loan Modification Scams

These scams target homeowners struggling with mortgage payments. Fraudsters promise to secure loan modifications or prevent foreclosure for a fee, without any intention or ability to deliver. The California Homeowner Bill of Rights provides specific protections against such predatory practices.

Bait-and-Switch Moving Scams

The stress of buying or selling a home is enough without having to worry about the move itself. Unfortunately, this is a prime opportunity for scammers. Bait-and-switch moving scams are a common problem where a company gives you an attractively low quote to secure your business. As Bankrate notes, they then “demand a much higher price upon arrival or after packing your belongings.” In the worst-case scenarios, they might hold your possessions hostage until you pay the inflated price, or simply take your deposit and never show up at all. Always research moving companies thoroughly, read reviews, and get a binding estimate in writing before you commit. A legitimate company will be transparent about all potential costs from the start.

Spotting the Red Flags of a Real Estate Scam

Fraudsters rely on deception and high-pressure tactics to succeed. They create situations where you feel rushed, confused, or too intimidated to ask questions. Fortunately, their methods often follow predictable patterns. Knowing what to look for is your best defense against becoming a victim of a real estate scheme. According to the National Cybersecurity Alliance, scammers are experts at tricking people into sending money to the wrong accounts or signing up for bad loans. They are skilled at making their requests seem urgent or official, but a few key warning signs can help you identify a fraudulent situation before it’s too late. Trusting your instincts is crucial; if something feels off about a transaction, it’s worth taking a step back to investigate further. Protecting your investment starts with recognizing these common red flags.

Pressure to Act Immediately

One of the most common tactics in a scammer’s playbook is creating a false sense of urgency. They might tell you that another offer is on the table or that a deal is only available for a very limited time. The goal is simple: “Scammers want you to move fast so you don’t notice red flags,” as House Beautiful points out. This pressure is designed to make you panic and skip important steps like property inspections, title searches, or having an attorney review the documents. In California’s competitive real estate market, it’s easy to feel like you need to act quickly, but a legitimate transaction will always allow for proper due diligence. Never let anyone rush you into making one of the biggest financial decisions of your life.

Unusual or Last-Minute Payment Requests

Be extremely cautious if you receive any communication about changing payment details, especially for a down payment or closing costs. A classic wire fraud scam involves a fraudster hacking into an email account and sending you new wiring instructions at the last minute. The National Association of REALTORS® warns, “Be very careful if someone asks to change wiring instructions you already have.” These fraudulent requests often look very convincing. Before you ever send money, verbally confirm the wiring instructions by calling a trusted phone number for your real estate agent or escrow company. Never use a phone number provided in a suspicious email.

“Too Good to Be True” Pricing

Whether you’re looking to buy or rent, an unbelievably low price is a major warning sign. Scammers use these phantom deals to lure in victims. They might list a beautiful home in a desirable California neighborhood for far below market value to attract a flood of inquiries. As the old saying goes, “If a deal seems too good to be true, it probably is.” These listings are often used to collect personal information for identity theft or to trick you into paying a deposit for a property that doesn’t exist or isn’t actually for sale. Always compare prices to similar properties in the area to get a sense of the legitimate market rate.

Refusal to Meet in Person or Show the Property

A legitimate seller or landlord will have no problem meeting you in person or arranging for you to see the property. If the person you’re dealing with constantly makes excuses, claims to be out of the country, or refuses to let you tour the home, you should walk away immediately. This is one of the biggest red flags in a rental or sales scam. Scammers often use photos from legitimate listings to create their fake ads, so they can’t actually show you the property because they have no access to it. Insisting on an in-person meeting or a live video tour is a simple way to verify that the person and the property are real.

Instructions Not to Contact Your Lender

Your real estate agent, lender, and attorney are all part of your team, working to protect your interests. A scammer will try to isolate you from these professionals because they know your team will likely spot the fraud. According to Bankrate, “A big warning sign is if someone tells you not to talk to your lender.” This is a massive red flag. Any request to keep secrets from your advisors is a sign that something is wrong. Open communication with your team is essential for a secure transaction. If you’ve been the victim of a complex fraud scheme resulting in significant financial loss, it’s important to understand your legal options by speaking with experienced attorneys.

Actionable Steps to Prevent Real Estate Fraud

The first step in protection against the biggest real estate frauds is awareness. Be vigilant in verifying all documents and identities in any real estate transaction. Ensure all agreements are in writing and consult with a legal professional when in doubt. Additionally, regular monitoring of your property records can alert you to any unauthorized changes.

Always Verbally Verify Wiring Instructions

One of the most financially devastating scams involves wire fraud. Scammers will impersonate your real estate agent, title company, or attorney, sending you a last-minute email with “updated” wiring instructions for your down payment or closing costs. These emails look incredibly convincing. The single most important thing you can do to protect yourself is to pick up the phone. Before sending any money, always call a trusted number you already have for your agent or title officer to verbally confirm the instructions. Do not use the phone number listed in the email you received. Once you wire funds to a fraudulent account, the money is often gone for good.

Practice Strong Cybersecurity Habits

Your digital security is a critical part of protecting your real estate transaction. Scammers are using sophisticated tools to access email accounts, create fake documents, and steal identities. You can build a strong defense by practicing good cybersecurity hygiene. Use strong, unique passwords for your email and financial accounts, and enable two-factor authentication wherever possible. Be skeptical of unsolicited emails that ask for personal information or create a false sense of urgency. A few simple security measures can make it much harder for criminals to target you during one of the most important financial moments of your life.

Verify Professional Licenses

The professionals you work with should be your first line of defense against fraud, so make sure they are who they say they are. Before committing to an agent, check their license status with the California Department of Real Estate. When selecting a title or escrow company, do your own research instead of simply trusting a recommendation from an unsolicited source. If you ever need to confirm information, call the company’s main office using a phone number you found on their official website, not one provided in an email. This simple verification step ensures you’re communicating with a legitimate professional and not an imposter trying to intercept your transaction.

Never Send Money for a Rental You Haven’t Seen

In California’s competitive rental market, it can be tempting to act fast to secure a place. Scammers exploit this urgency by posting fake rental ads on social media and other sites, often using photos from legitimate listings. They’ll ask you to send a deposit or the first month’s rent to “hold” the property, promising to mail you the keys. The rule here is simple and absolute: never send money for a property you haven’t toured in person. A legitimate landlord or property manager will always arrange for a viewing. If you can’t see it yourself, ask a trusted friend to go for you. Insisting on an in-person visit is the easiest way to avoid a rental scam.

Seek Help Directly From Your Lender for Foreclosure Issues

If you’re facing financial hardship and are worried about foreclosure, you may be targeted by “foreclosure rescue” scams. These fraudulent companies prey on vulnerable homeowners, charging exorbitant fees for false promises to modify their loans or save their homes. Instead of paying a third party, your first call should be directly to your loan servicer—the company you send your mortgage payments to. They can discuss legitimate options with you. You can also get free or low-cost guidance from a HUD-approved housing counselor. These professionals are trained to help you understand your options and work with your lender, providing a safe and reliable path forward.

What Are Your Legal Options After Real Estate Fraud?

Victims of real estate fraud have several legal avenues in California, including civil lawsuits and criminal charges against the perpetrators. The specific course of action depends on the nature of the fraud and the evidence available. Deldar Legal can help evaluate your situation, guide you through the legal process, and work to recover your losses.

What to Do Immediately If You Suspect Fraud

The sinking feeling in your stomach is real. Discovering you may have been targeted by a real estate scam is a shocking and stressful experience. The financial and emotional fallout can feel just as devastating as a physical injury, and it’s easy to feel paralyzed. However, the moments immediately following your suspicion are the most critical. Acting with speed and precision can make a significant difference in whether you can recover your funds. Time is not on your side, especially when wire transfers are involved. Here’s exactly what you need to do, right now, to give yourself the best possible chance of mitigating the damage and starting the recovery process.

Contact Your Bank to Recall the Transfer

Your very first call should be to your bank’s fraud department. Do not wait. Explain that you believe you have been the victim of wire fraud and need to stop or recall the transfer immediately. Banks have established protocols for these situations, but they can only act on information they receive. The sooner you report the fraud, the higher the likelihood that they can intercept the funds before they are withdrawn by the scammer. While a recall is not always successful, it is your most immediate and powerful tool. Have your account information, the transaction details, and any communication with the fraudster ready to provide to the bank representative.

File a Complaint with the FBI

After contacting your bank, your next step is to report the crime to federal law enforcement. The FBI’s Internet Crime Complaint Center (IC3) is the primary agency for handling these types of cyber-enabled financial crimes. You should file a complaint on their website, IC3.gov, as quickly as possible. According to law enforcement, there is a critical 24 to 72-hour window where they have the best chance of tracing and recovering stolen funds. Your detailed report provides the FBI with the necessary information to initiate their Financial Fraud Kill Chain process, which can freeze the fraudulent transaction before the money disappears for good.

Where to Formally Report Real Estate Fraud

Once you’ve taken the urgent steps of contacting your bank and the FBI, it’s important to create a formal record of the fraud with other consumer protection agencies. These reports are crucial for several reasons. They help law enforcement identify patterns and build larger cases against criminal networks, which can prevent countless others from becoming victims. They also create an official paper trail that can be essential if you pursue civil litigation to recover your losses. Taking the time to file these reports strengthens the overall fight against fraud and solidifies your own position as you seek justice and financial recovery for the harm you’ve suffered.

Federal Trade Commission (FTC)

It’s completely normal to feel embarrassed after being scammed, but reporting the incident is a powerful step forward. The Federal Trade Commission (FTC) is the nation’s primary consumer protection agency, and it collects reports on scams to share with law enforcement agencies across the country. You can report the fraud online through their simple, secure website. Submitting a report to the FTC ensures the details of your case are entered into a database used by investigators to track down scammers and shut down their operations. Your story provides a critical piece of the puzzle, helping authorities protect your community from future harm.

Better Business Bureau (BBB) Scam Tracker

Another valuable place to report your experience is the Better Business Bureau (BBB). The BBB Scam Tracker is a public tool that helps warn others about scams that are active in their area. By sharing the details of the fraud you encountered, you create a public alert that can prevent someone else from falling into the same trap. This act of community service is an important part of turning a negative experience into a positive action. Your report on the BBB Scam Tracker can be the warning that saves your neighbor from the same financial and emotional distress you’ve had to endure.

How a Lawyer Can Help You Recover Your Losses

While real estate fraud primarily involves financial and property issues, it can also lead to personal injury or stress. If you’ve suffered physically or mentally due to real estate fraud, it’s essential to have a comprehensive legal team on your side. Deldar Legal, with a dedicated team knowledgeable in both personal injury and real estate laws, can provide the support you need.

If you suspect you’ve been a victim of the biggest real estate frauds in California or need a personal injury lawyer, don’t hesitate to contact Deldar Legal at (844) 335-3271 for a free consultation. Our experienced team will review your case, provide guidance, and work tirelessly to uphold your rights and interests in the complex landscape of real estate and personal injury law.

Frequently Asked Questions

I’m about to wire my down payment. What’s the single most important thing I can do to avoid a scam? Before you do anything else, pick up the phone. Scammers are experts at creating fake emails that look like they came from your real estate agent or title company, complete with new wiring instructions. The only way to be certain is to call your agent or escrow officer directly using a phone number you know is legitimate—not one from the email—and verbally confirm the account details. This one phone call is the most effective shield you have against wire fraud.

I think I’ve been scammed. What are the first two things I should do right now? First, call your bank’s fraud department immediately and tell them you need to recall a fraudulent wire transfer. Time is critical, and the sooner you act, the better the chance they have of stopping the transaction. Second, file a report with the FBI’s Internet Crime Complaint Center (IC3) at IC3.gov. Reporting the crime within the first 24-72 hours gives law enforcement the best opportunity to trace and potentially recover your funds.

How can I tell the difference between a legitimate deal and a predatory loan or “loan flipping” scheme? A key red flag for a predatory loan is feeling pressured to accept terms you don’t fully understand or being encouraged to repeatedly refinance your mortgage. These schemes, known as “loan flipping,” often involve rolling high fees into your new loan, leaving you with more debt than you started with. A legitimate lender will encourage you to take your time, ask questions, and consult with advisors. If you feel rushed or confused, it’s a sign to step back and seek a second opinion.

Someone is pressuring me to make a decision on a property immediately. Is this normal? No, it is not. While the California market can be competitive, a legitimate transaction will always allow for proper due diligence. Scammers create a false sense of urgency to make you panic and skip crucial steps like inspections or legal review. Any time someone tells you a deal will disappear if you don’t act now, you should see it as a major warning sign. A trustworthy professional will respect your need to make a careful, informed decision.

Why should I call a personal injury firm like Deldar Legal for a real estate fraud issue? The financial devastation caused by real estate fraud is often just the beginning. The stress, anxiety, and emotional turmoil that follow are a very real form of personal harm. We understand that this isn’t just about lost money; it’s about the violation of your security and the impact on your life. Our experience fighting for victims of catastrophic events means we know how to hold negligent and malicious parties accountable and pursue the full recovery you deserve.

Key Takeaways

Confirm All Payment Changes by Phone: Before sending any money, especially for a down payment or closing costs, always call your agent or escrow officer to verbally verify the wiring instructions. Use a trusted phone number you already have, not one from a last-minute email, to prevent wire fraud.
Trust Your Instincts and Slow Down: Scammers rely on creating a false sense of urgency to rush you into making a mistake. If a deal feels too good to be true or you feel pressured to act immediately, treat it as a major red flag and insist on taking the time you need for proper due diligence.
Know Your First Two Calls if Scammed: If you suspect fraud, act immediately. Your first call should be to your bank to stop or recall the transfer. Your second should be to file a report with the FBI’s Internet Crime Complaint Center (IC3) to give law enforcement the best chance at recovering your funds.

The Biggest Real Estate Frauds & How to Avoid Them