Three Property Scams To Watch Out For
As economic activity has slowly resumed following national lockdown to cure the spread of Covid-19, property buyers and sellers have returned to the market, and so have the scammers, who are hoping to swindle sellers out of their hard-earned money.
As home purchase and rental both involve large amounts of cash, it is extremely attractive to scammers. Therefore, when you come across some too-good-to-be-true property investment offers, such as want to purchase or rent your property without hesitation and agree the asking price straightaway, high investment return guarantee and reserve an affordable housing unit under the table, you may want to slow thing down and think twice, because the next scam victim could be you.
We have listed down the three property scams in Malaysia. If they sound similar to what you are experiencing, you should be on guard.
1. “I have connection”
Affordable housing project, be it initiated by the government or private developer, has sprouting in the last decade as the government is committed to increase Malaysian’s homeownership rate. However, only qualified Malaysians, such as first-time homebuyer with certain household income limits are eligible to make the purchase application. These restrictions have given scammer a chance to scam people who are not qualify to buy but very keen. There are cases reported that some people’s hard-earn money has been scammed by fake agents who claim to have connection to the developer and be able to reserve a unit with a fee under the table. Once the victim transfers the so-called booking fee, the agent will disappears.
Key takeaway: Never trust anyone who claims to be able to reserve an affordable housing project unit when you clearly know that you are not qualified. All the national affordable housing projects purchase applications are subject to government approval and assignment of units is done by an open and transparent ballot. No fees or deposit will be collected before your application is approved and notified by email for ballot details.
2. The fake owner
Don’t hurry in making decisions when your dream property is listed for sale or rent at below market asking price as it could be the bait by the scammer. In 2016, a foreigner lodged a police report that his money was scammed by a fake owner, who listed a perfect condition vacated property for sale in Kota Kinabalu at a very reasonable asking price, claiming that it is a fire sale. Without much hesitation after a quick house tour, the foreigner put down the booking fee and was told to wait for the next procedure. However, he never received the call from the seller again because he is not the owner, but the gardener of the house, which belongs to an expatriate who is based in Kuala Lumpur.
Key takeaway: Don’t be rushed into making a decision out of fear of missing because you may end up losing even more. It is a reasonable request to have a look on the legal documents to make sure you are dealing with the genuine seller. Besides, it is also a good idea to engage a registered and professional real estate agent to be the neutral third party in the transaction process.
3. The Ponzi investment schemes
When you come across a 20% annual return guarantee property investment plan, don’t rush into it before knowing the details, it could be a typical Ponzi investment scam. A typical Ponzi scheme is a fraudulent investment scam which generates returns for earlier investors with money taken from later investors, which is also known as pyramid scheme. In 2014, a marketing investment company offered three investment packages for a mega project located in a new special economic zone in Laos. The company promised a 0.3% to 0.9% monthly return with extra bonuses if investors recruited others into the scheme. The company was blacklisted in Malaysia following several complaints and investigations.
Key takeaway: When an investment scheme promises a handsome return guarantee and extra bonus when you recruit others into the scheme, this is one red flag. If the investment information and company and project background is very limited or hard to access, this is the second red flag. Lastly, when you feel the pressure to reinvest your profits, you should just walk away and find another investment, because a good opportunity investment would sell itself.
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