It's possible to buy a home online. But online property listings can cost you time and money if you don't know the dangers. This article provides tips on how to peruse online property listings for home sales and rentals safely.
Online property listings: what could go wrong?
Fifteen years ago, this writer wanted to move to a different state. So he went online to check listings. After reading hundreds, he thought he'd found the ideal place. It was where he wanted to be and had the accommodation he was looking for. And it was cheap.
Back then, interior photos on listings were rare. So it wasn't suspicious that there was only one grainy shot of the exterior. It looked a bit shabby but nothing worse. What would it cost to fix up? Maybe $20,000, if he was lucky. Perhaps $30,000 or $40,000. All doable. So he spent more than $1,000 on flights and accommodation on a long-weekend visit with his partner to view.
A ruin with a happy ending
You've guessed. When he arrived, the place was a ruin. There were gaping holes in the roof and in some second-floor bedroom floors. Pigeons flew in and out during the inspection. The place stank and the owner was a hoarder. Forty thousand dollars? This writer would be lucky not to spend $100,000+ on this money pit.
Luckily, there is a happy ending. On hearing the story, the hotel receptionist put him in touch with a local real estate agent who found him the home he still lives in. But he was within a hair's breadth of losing more than $1,000 in expenses and a precious extended weekend.
Related: Uncovering the Top Ten Home Defects Before You Buy
Issues with online property listings
Two important things have changed for online property listings since that happened. First, interior shots have become commonplace, bordering on mandatory, certainly if sellers want their ads to be taken seriously. And, secondly, Photoshop and its imitators have become ubiquitous.
True, the seller of the ruin would have had to have been a creative and IT genius to make his property look livable. But many homeowners see filling cracks on-screen rather than in reality simply as smart marketing. When you buy a home online, you should trust the pictures to the same extent you do when you date online.
Words matter, too
And you should be similarly skeptical about words in sellers' ads. Chances are, they won't outright lie (though don't rely on that). But they may well stretch the truth. After all, it is an ad.
Look out, too, for what's not said. For example, if you're seeking a home somewhere hot and humid, and the listing doesn't mention HVAC or central cooling or air conditioning, don't assume it must be there because of the property's location. If the listing doesn't mention it, contact the owner and ask. You could save yourself time and money.
Renters at higher risk
As a homebuyer, you're at much less risk of outright cons than renters. Those are expected to hand over wads of cash or instantly make wire transfers to strangers. If you're looking for a rental, be extra vigilant. Remember Craigslist scams in which con artists advertised too-good-to-be-true-rentals? For properties they did not even own? And pocketed deposits from many hopeful would-be tenants? Or worse, assaulted and / or robbed tenants who came to view the property?
- Don't view property alone
- Don't go into sketchy areas to find a bargain
- And don't hand over money to a stranger without seeing the interior of the property and verifying ownership
- If you want to work with an individual landlord and not a property management firm, take care. Verify the landlord's identity
- Check with your county clerk's office and make sure this person owns the property
- Look at it with Google Street View, your county assessor's web site or input the address into any search engine. If it's ever been listed for sale, there are probably pictures of it. Make sure the photos match those in the ad
The hallmarks of a scam include a ridiculously low price, a landlord who can't show you the interior of the property, and a request for deposit without you seeing the property.
Related: Why You Need Title Insurance for Your Home
Buyers have protections -- if they use them
When you're buying, your transaction is typically "policed" by a number of professionals -- including your mortgage lender and title insurer.
Their job is partly to protect you from criminal and unethical activity, and most do their best to do so. But they can't protect you from your own stubbornness. So listen to their advice. And don't be talked into handing over an earnest money deposit to anyone but a licensed escrow or title officer (or attorney in certain parts of the country).
Of course, it's often possible to buy a home without using a single professional. If you're dealing directly with the owner, make sure she really is the owner. She might be the house sitter, for all you know. Check public records to find the legal owner (county clerk's or assessor's web site). Ask for photo ID and write checks or make wire transfers only to accounts in the legal owner's name. Don't believe convoluted stories about why that's not possible.
Buying sight unseen
You may decide to buy a house online without seeing it first-hand. Many investors do this. But if you do, there are some rules that might save you from a costly mistake:
- Get an appraisal from a licensed appraiser
- Commission a home inspection by a licensed home inspector
- Use a real estate agent
- Retain an attorney
- Check out the credentials and reputations of your team
- Don't rely on the recommendation of one to find another. Rings of corrupt professionals are rare but they're not unknown
Nothing beats a personal inspection by a buyer. But if you absolutely cannot conduct one, at least protect yourself in every way you can. Yes, all those professional fees will add up. But they're likely dwarfed by the amount you could lose. In fact, using these professionals provides good protection even when you can see the property yourself.
Related: Tips for Buying Distressed Properties
Foreclosure listing scams
If you're looking for a bargain, foreclosure listings can be tempting. And the right one can be profitable and worth the extra trouble. But, there are scammy foreclosure online property listings. Some of these include:
- Fraudulent listings: Inaccurate property prices, size, condition, features, bedrooms, etc.
- "Phishing": Some companies may force you to give them private information to use a list. Then they steal this information and commit an identity theft or sell your private data
- Marketing fraud: Some agents and others post fraudulent information (too good to be true properties) to market themselves and get you to use them for a transaction
Thwart foreclosure scammers by checking the property address in the public records. If it is truly in foreclosure, that will show up. As will the number of bedrooms, size, previous sales, etc.
Some checks
What can you do to help yourself avoid falling for misleading ads? Here are a few ideas once you're interested in a couple of online property listings:
- Use Google Maps to see what's close and what's far -- You'd probably prefer the former was a mall, restaurant or hospital and the latter was the airport or railroad
- Use Google Street View -- Explore the neighborhood and see what the home looked like before the owner splashed on some paint, mowed the grass and planted some tubs. That could tell you how cared-for the home's been
- Check public records (usually on the county's website) to identify the legal owner and to see past sales
- Carry out online research on the neighborhood -- What's the crime rate, what are the local schools like ...
- See how long the home's been listed -- If it's a long time, why?
When you buy a home online, just 30 minutes' research can save you a heap of time and money.
