Courtrooms are an expensive place to resolve real estate scams
An ounce of prevention is worth a pound of court.

Spotting real estate scams is an essential skill for investors. Here are tips and resources to help you spot and avoid common cons.

Get-rich-quick schemes

John Reed, a U.S.-based author and property investor, has assembled a Real Estate B.S. Artist Detection Checklist. While Reed’s checklist focuses on people selling get-rich-quick books and dodgy investment seminars, it also contains information that will be helpful when dealing with real estate agents and developers.

Reed focuses on the United States, and I don’t agree with everything he says. For example, professional editing is an important part of making a book credible. (Can you trust the facts and figures in a book full of typos?) But there is a lot of valuable advice in Reed’s list.

International real estate scams

Laws and customs differ from country to country. As a result, buying across international borders creates many opportunities for fraud. For instance, escrow agents are used for residential transactions in the United States, but not in Hong Kong, where solicitors hold client funds. In Japan, cash is still used for large transactions. Defect disclosure rules also vary widely.

National, state and city real estate boards are a good place to learn about local standards and practices. But remember, real estate boards exist to promote the property industry, not to protect consumers.

Scams claiming to allow non-citizens to own land in Thailand, the Philippines and Indonesia are common. Imagine standing before a judge and demanding reparations because you were bilked while trying to break the local property laws.


National consumer protection agencies are a good source of information. The U.S. government, for example, maintains a page explaining housing scams. Similar resources are available in other countries.

If your home country has robust consumer-protection laws, adjust your expectations when buying property in a developing nation. And don’t assume your interests are protected because you are buying through a well-known international agency. In Hong Kong, for instance, agents selling overseas property are not regulated by the Estate Agents Authority.

Off the plan purchases often fail when developers run out of money. Fraud and misrepresentation are also common.

Finally, there’s no free lunch. If a property is cheap, there’s usually a good reason. Knowing the value of comparable homes is an excellent way to avoid a deal that’s too good to be true.

Click here for more articles about international property.

Christopher Dillon is the author of the Landed series of real estate books. He has been a commercial and residential landlord in Hong Kong and Tokyo. Landed Global, which includes examples and data from over 110 countries and territories, is available from Amazon.

This post was published on May 29, 2011, and updated on February 15, 2023.

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