Avoid These Common Real Estate Scams And Keep Your Investments Safe
As the real estate sector attracts a large amount of money in upcoming properties in India, it has become a playing ground for scamsters. Some of the scams are innovative and well-marketed. Scamsters target large cities and small towns alike and play on group dynamics of people in close quarters like employees of an organization, or tenants of a building and sometimes even women’s groups, to convince them.
Some of the common real estate scams that con artists have pulled off successfully are:
Emu farming: This a very popular scam where investments were sought for upcoming properties in India like farms to raise the Emu. Fraudsters would sell it as a new form of investments and talk of early bird gains.
Teak plantation: A number of people have been taken for a ride by promising huge returns on investments in teak plantations and such other investments. Scamsters even take a certain number of people on junkets to visit the places, who in turn become spokespersons of the project apart from being investors.
Impersonators: Fraudsters take the names of reputed builders of upcoming apartments in India or name their enterprises close to that of existing ones. Some even print fake business cards to look convincing. Make sure you ask probing questions about the company; if they are false, they might falter. Make sure you visit them in their offices.
Crowdfunding: A large number of online investors were fooled on forums on the internet. Attractive real estate in remote areas is one of the scams that were pulled off. The government has stepped into controlling this form of funding from anonymous investors to nameless entities. The Securities and Exchange Board of India or SEBI said entities that seek crowdfunding should be listed with them. While making investment find out if the entity is certified by SEBI.
How can you identify scams? Here are a few time-tested pointers that might come in handy.
Make sure you get the deed of ownership cross-checked by a lawyer. Con artists are very good at making water-tight papers and can be detected by an experienced lawyer who has spent considerable amount of time in the sector. Such legal consultation can come at a price, but it is worth it as it can save you from suffering a huge dent.
Do not pay the upfront amount too soon. Con artists tend to hurry the investors to seal the deal. If the builder seems to be more eager than necessary, it should ring alarm bells in your head.
Cross-check the reputation and track-record of the builder many times over. Make sure that the builder has a proper address and is referred by good number of former customers. If it is a first-time builder, do not hesitate to check the bank records through your own sources.
Too good to be true! Cheats play on the greed of the investor. Grandma’s rule is that if something is too good to be true, it probably is. If the builder is promising 50-100% returns within five years or some such timelines, there is every chance you might get nothing out of the investment. Genuine builders never promise more.
(The writer has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)