My own journey in real estate has been an interesting one for sure, with several missteps, partners I should have avoided, and deals that went wrong before I finally met the right people, became better educated, and really got things dialed in.
My first deal was a nightmare where everything that could go wrong did, and ended up costing me over $100,000 dollars. The reality is that it didn’t have to go that way because there were several red flags that I missed at a time when I wasn’t as knowledgeable or experienced as I am today.
Had I been, I would have seen the writing on the wall and avoided this particular “opportunity” like the plague.
So in this article today, I want to share with you the top five red flags I look for in the real estate industry. My hope is that you’re able to learn something from this that helps you to avoid real estate scams and even just ordinary bad deals, saving you time, money, and headaches.
These are the red flags I look out for in anyone I encounter before deciding to do business with them:
Abrupt, frequent, and significant changes in plans
It’s no secret that the real estate industry can sometimes be chaotic, and everyone involved in a transaction may need to adapt throughout its course, but there’s a fine line here.
You’ll probably face numerous insignificant changes as you navigate a transaction. Maybe a lender will request additional documentation or a buyer might ask for an unexpected concession of some sort. These are to be expected. But it’s when you see significant changes—especially at the last minute, that you need to be concerned.
For example if the deal seemed, for all intents and purposes, done, but then the morning of the closing, the other side proposes a major change, like switching title agencies or even the terms of the deal and there’s not a solid reason to justify that change, you’re absolutely right to pump the brakes.
Scammers use the stress of closing to hide their true intentions. When you’re overwhelmed, it’s easier to miss critical details.
Unusual urgency
Urgency is another tool used by scammers because it preys on our fear of loss. We’ve all heard the stories…
“I’d loveI do this deal with you, but ee have to get it done by today, otherwise I’ll have to go with another buyer who is offering more and is ready to close today—all cash.”
99% of the time, that “other buyer” simply doesn’t exist and the seller is using the story to get you to complete the transaction sooner. Sometimes it’s a completely legitimate deal and they just want to get paid faster, but often, they’re trying to use speed hoping you’ll overlook critical details.
Trust your gut. If you feel rushed or pressured, take a step back and reevaluate the situation to see what you might be missing. It’s almost always better to miss out on a deal than it is to get stuck in a bad one.
Inconsistency in story/communications
Consistency builds trust because people know what to expect. Likewise, inconsistency fosters mistrust for the same reason. This is true for both actions and words because it’s a reliable indicator of how they will likely behave in the future.
So if someone is often slow or even late to respond, or if their story changes frequently throughout the transaction, it’s definitely a cause for concern. While it may not necessarily indicate fraud or even dishonesty, it does indicate a likelihood that something will go wrong that could derail the deal.
Slow is one thing, and in many cases, that can be managed. Especially if the person at fault has a supervisor you can address the issue with. But if their story changes often, that’s a different thing entirely. You’ve almost certainly experienced this somewhere in life, even if not during a real estate transaction.
Perhaps you’ve clearly agreed on the terms of the deal, but later, they insist that you agreed to something else. Or they claim they told you something you know they didn’t, or that you told them something that you know you didn’t.
Look, most of us lead busy lives today, so it’s easy for some us to misremember some things and even for some things to slip through the cracks, so some inconsistencies are to be expected, but when it becomes frequent, or you’re sure they’re misrepresenting things, it’s time to slow down and make sure the details are correct. It’s also wise to take detailed notes, and if you communicate on the phone or a video conference, be sure to send a recap email afterwards to establish documentation.
Minimal/no online presence, no references
I don’t expect everyone I work with to be constantly featured in the media as an expert, but any true professional will have an online presence and references.
The first thing I’ll do before I work with anyone is to do a search online to see what shows up. Typically, I’ll expect one or more websites owned by that person, a few social media profiles, and maybe even reviews on whatever third party platforms may be applicable to their specific industry and/or niche. For example, a Realtor will usually have a profile—with reviews, on Realtor.com and Zillow, and probably a Google Business Profile as well.
When I research someone I’m considering working with, I’ll typically go through at least the first three pages of the search results, and if I don’t get that warm fuzzy feeling, I’ll dig deeper.
I also look at their social media activity. This includes who they’re following, who is following them, their posts, and even their comments on other people’s posts. Then I’ll look to see if they’ve been featured in the media. That’s an indication of their credibility because before a journalist will feature someone, they’re going to vet them heavily to ensure they’re really an expert. So if they are featured in the media, or they have a column at a media outlet, that’s usually a pretty good sign.
But if they’re a ghost in today’s hyper-online world, that should be a major red flag.
Highly critical of others in the industry
I’ve found that those who spend a lot of time criticizing others in their industry tend to do so for one of two reasons. (Or both, in some cases.)
The first is that they’re inexperienced and trying to make their competitors seem less attractive to potential clients because they don’t think they can compete. This is a combination of insecurity coupled with a scarcity mindset.
The second is that they’ve developed a poor reputation and feel the need to discredit others as a proactive measure. The idea is that if they make you doubt the credibility of someone else, you won’t believe what that person tells you about them.
Both can be equally dangerous.
It’s also worth noting that if they frequently criticize others to you, they absolutely will criticize you to others. That has the potential to damage your reputation, not so much because anyone believes them, but more because you seem to lack the judgment to discern what kind of a person they truly are.
When you encounter someone like this, be sure to keep them at a distance because one way or another, they pose a risk to every deal they’re involved in.
