How to avoid Real Estate scams in the Philippines

How to avoid real estate scams in the Philippines

As I shared in last week’s article, even a legitimate deal or business model can be turned into a scam. First-time homeowners and real estate investors alike have also been victims of real estate scams too.

Whether you are a real estate investor, buyer or broker, a huge amount of effort in due diligence is required in order to safeguard your hard-earned investment and effort.

What is a scam?

A SCAM is a dishonest or fraudulent scheme by a person or group. It is a gimmick or racket using dishonest methods to acquire something of value. And like all industries, the real estate industry in the Philippines is not immune to the existence of these schemes.

Recommended Read: The Dangers of In-house Financing

Here’s a rundown of the most common real estate scams:

Title Fraud - This not only targets home buyers but also real estate developers and banks. This is done by scammers to convince you to buy seemingly affordable properties. They will use any means, such as using old titles and copy information to create a fake title, add so-called supporting documents that would make it seem legit.

Predatory Lending - This can be from too good to be true offers from loan sharks or via ‘In-house’ financing. I mentioned this before but in-house financing options are technically not loans. These are extended payment terms (installment) with above-average interest rates and these are not regulated.

Absence of Full Disclosure -

Non-Disclosure of Specific Information – This happens when you are purchasing a property through a developer which provides limited information and undocumented commitments. An example would be not disclosing that the location where the property is situated is flood-prone (or problematic water supply).

Pre-selling – This happens when you are purchasing a property through a developer wherein the project does not exist yet but only commit a turnover timeline. There are legitimate big developers who do this too but this practice can be taken advantaged by shady developers as well.

Property Sale Scams - 

Unauthorized owner/agent – For example, you are told that the property is for sale by a said owner, then upon checking that person is not the real owner nor an authorized person to do such a transaction. Also, “colorum” agents are usually the reason for most of the real estate transaction issues in the country.

Double Sale – This happens when a property is sold to two (2) different persons (both have no knowledge about the double sale), without the issuance of documents to buyers who are in good faith.

Assumed Rental or Sale with Assumption of Mortgage -

Fake Rentals/Property/Foreclosure listings - They take advantage of the online real estate marketplace by copying/stealing legit property listings, re-posting them elsewhere and posing as the agent or landlord who is selling/leasing the property. They collect the deposit/down-payment and then is never heard of again.

Recommended Read: Lazy Real Estate Investment - Condotels

Here are ways you can safeguard yourself against property fraud
  • Make an actual property site visit/inspection.
  • Only deal with PRC licensed agents/brokers and reputable developers.
  • Always pay the property through a check or manager’s check as these provide written documentation of the receipt of payment.
  • To check title authenticity, find the Certified True Copy of the title from the Register of Deeds.
  • Secure your personal data and never give away your personal info to an unknown source, including bank account or credit card details to an unknown source over the internet.

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How to avoid Real Estate scams in the Philippines How to avoid Real Estate scams in the Philippines Reviewed by Vernon Joseph Go on Tuesday, June 18, 2019 Rating: 5

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