In recent years, the real estate market in Australia has seen a surge in property investment scams, leading to significant financial losses for unsuspecting investors.
With the rise of technology and sophisticated fraudulent activities, it is becoming increasingly difficult for individuals to spot these scams and protect their investments.
In 2019, the Australian Competition and Consumer Commission (ACCC) warned the public about scams involving fake “rent-to-buy” properties.
Scammers would advertise properties on websites such as Gumtree or Facebook Marketplace and ask potential renters to pay a deposit and rent in advance.
Once the payment was made, the scammers would disappear without providing access to the property.
In 2020, the Australian Securities and Investments Commission (ASIC) warned the public about fake property investment opportunities that were being promoted online.
The scammers would create fake websites and social media pages to promote investment opportunities in non-existent properties.
They would then ask investors to pay a fee for access to the “investment opportunity,” only to disappear with the money.
In 2021, the ACCC reported that older Australians were being targeted in property investment scams.
Scammers would call or email the victims, posing as real estate agents, and offer them “once in a lifetime” investment opportunities in properties that were not for sale.
The victims would then be asked to transfer money to the scammers, who would disappear with the funds.
Examples of property scams
Scammers are very diabolical and creative when planning their operations and there are a lot of new ways that they devise, which get more complex and can sometimes elude detection.
While not every scam can be described in detail, here are some of the most common ones to look out for:
The “Inflated Appraisal” Scam
In this scam, the fraudster provides an inflated appraisal of a property to convince the investor to invest.
This can lead to the investor overpaying for the property and suffering significant financial losses.
The “Phantom Property” Scam
In this scam, the fraudster offers an investment in a non-existent property and takes the money from the investor without delivering on their promise.
The “Rental Guarantee” Scam
In this scam, the fraudster promises a guaranteed rental return on the investment property.
However, the rental income never materializes, leaving the investor with a worthless property.
Property investment scams not only rob individuals of their hard-earned savings, but they also shatter their trust in the real estate industry.
In some cases, these scams can cause severe financial stress, leading to bankruptcy and other financial difficulties.
Moreover, the consequences of falling for these scams can be long-lasting and damaging to one’s credit score and financial future.
To protect yourself from property investment scams, it is crucial to educate yourself on how to spot them and take preventative measures.
Here are some tips on how to spot and avoid property investment scams:
Do Your Research
Before investing in any property, it is important to research the company or individual offering the investment opportunity.
Check their credentials and track record, and ensure that they are licensed and registered with the relevant authorities.
Verify the Property Details
Be wary of investments that seem too good to be true. Check the location, price, and other details of the property and ensure that they are accurate.
Be Wary of Pressure Tactics
Scammers often use pressure tactics to convince individuals to invest quickly.
Be cautious of investments that require an immediate commitment and be sure to take your time to evaluate the opportunity thoroughly.
Ask for Proof of Ownership
Request proof of ownership from the seller, such as a title deed or other relevant documents.
Seek Professional Advice
If you are unsure about an investment opportunity, it is advisable to seek professional advice from a financial advisor, real estate agent, or lawyer.
How to report a suspected property scam
Steps to Take When Suspecting a Property Investment Scam in Australia:
Report the Scam
If you suspect that you have fallen victim to a property investment scam, the first step is to report it to the relevant authorities.
You can report the scam to the Australian Competition and Consumer Commission (ACCC) via their Scamwatch website.
Seek Legal Advice
If you have suffered financial losses as a result of a property investment scam, it is advisable to seek legal advice from a consumer lawyer or solicitor.
They can help you understand your rights and assist you in pursuing compensation, whenever possible.
Gather Evidence
Keep any evidence of the scam, including emails, receipts, and any other relevant documentation.
This will be helpful in pursuing legal action or making a report to the relevant authorities.
Notify Your Financial Institution
If you have made any payments to the scammer through a bank or other financial institution, it is important to notify them as soon as possible.
They may be able to assist you in withholding funds about to be released to scammers or possibly assist authorities by providing information about an attempt to withdraw funds in the apprehension of suspects.
Where do you report such cases?
if you suspect a property investment scam in Australia, it is important to take immediate action by reporting it to the relevant authorities and seeking legal advice.
Australian Competition and Consumer Commission (ACCC)
The ACCC is the primary agency responsible for investigating and prosecuting property investment scams in Australia. They can assist individuals in reporting scams and provide information on how to protect themselves from scams.
Australian Securities and Investments Commission (ASIC)
ASIC is the government body responsible for regulating the securities and financial services industries in Australia.
They can investigate and prosecute property investment scams that involve false or misleading information about a property investment.
Australian Federal Police (AFP) or your local police
The AFP is the national law enforcement agency responsible for investigating and prosecuting serious crimes, including property investment scams that involve fraud or theft.
By following these tips and being aware of the various types of property investment scams, individuals can protect themselves from financial losses and secure their investments.
Remember to always do your research, verify the details, and seek professional advice before making any investment decisions.