How to Avoid These Common Real Estate Scams

Real estate is one of the most lucrative businesses with heavy margins and returns. According to a survey, most millionaires and billionaires became so by investing in real estate. Real estate is one market that offers a level playing field for investors of all magnitudes. The real estate sector of Pakistan is also flourishing and is very dynamic in Southeast Asia. The real estate sector is lucrative, which is one reason that the scams pulled in this sector are massive. Because serious money is involved in real estate transactions, real estate scams always have a magnitude that incurs severe damage to the affected. Pakistan’s real estate sector has also witnessed some mega scams in the past. Here are a few tips to avoid real estate scams:

1. The first and foremost point is to examine the property you want to buy physically. This is extremely important as you must ensure your property exists before finalizing any deal. For instance, if you are looking to invest in Bahria Town Phase 8 in Rawalpindi, you should first visit the property yourself to examine its factors and ensure that it exists on the ground. Sometimes, people are scammed by sellers into buying plots that exist only on paper while paying the total price for the property. Therefore, your visit is essential to avoid situations like these.
2. Another factor that you should consider to avoid getting scammed in terms of real estate investment is to practice extreme caution when investing in new real estate projects. It’s a fact that most real estate developers start floating out inventory before getting approved by their respective land regulation authorities. To avoid this trap, you should do all your research and homework before buying any stocks or inventory in new real estate projects. For instance, if you want to invest in Chakri – Islamabad belt, Blue World City Islamabad is a good option because Rawalpindi Development Authority duly approves it. Or you can also check with the office of Rawalpindi Development Authority or RDA to check the status of a real estate project before making any investment in the society. For now, any real estate project – residential or commercial – is deemed illegal if the respective land regulator does not approve it. For investments in Islamabad, you can check with Capital Development Authority, and Lahore societies can be vetted by LDA – Lahore Development Authority.
3. It is also worth mentioning that if you are leasing your property for rent, you must take all credentials of your tenants and submit them to the police for intimation and verification. For instance, if you are looking to rent out a recently purchased home in Park View City, Islamabad, you must formally agree with your tenant and register them with the nearest police station. This is important because if anything goes wrong and your tenant is involved, then in case you have not submitted their credentials, you can get in great trouble. Therefore, it would help if you also practiced similar caution when letting out your commercial property.
4. Another scam or trap new real estate investors can easily fall prey to is bogus documentation. Unfortunately, most land-related issues are still manually done in transfer offices. Therefore, as a new or veteran real estate investor, you should practice extreme caution when buying real estate and vetting documentation. The best practice is to collect a copy of the documentation of the property you will buy when doing token. Once you have the document copy, you should take it to the society or real estate project’s office and verify it as a record with mutation available in the transfer office. If the society office gives you the correct feedback about the authenticity of the documents, then you should go ahead with the deal. Otherwise, you should avoid such deals and get your token back.
5. Another scam in real estate is called the “dealer margin” scam in the real estate market of Pakistan. In this scam, the involved dealers do not let the buyers and sellers meet and get the transfer done without having a crucial meeting between the owner and purchaser. This is usually done when dealers say they have their token done for a plot or property. To avoid this scam and know the correct amount on which the deal is made, you need to discuss face-to-face meetings with the purchaser or seller – whatever the case is – to keep it transparent and fair. If you are a buyer in the market, then you should ask your real estate agent that you will only go for a deal backed by face to face meeting with the owner. Similarly, if you are an owner of the property, then you should go for a sale that offers a look at meeting with the purchaser.
6. When investing in real estate, to avoid getting scammed, it is essential to run background checks on developers and management of the projects. For instance, if you are looking to invest in Islamabad, you should go for real estate projects that are backed or being developed by renowned developers such as Defense Housing Authority, Bahria Town, CDA, RDA, or HRL. The reputation of the owner and developer of the real estate project matters the most because a society can have a NOC from the land regulators. Still, since the developers have defaulted on delivering projects before, they might also default on this project. For instance, if you are looking to invest in new housing societies along the Chakri Road in Rawalpindi, you should go for Islamabad Blue World City. The reason is that this is the society that HRL is developing. The HRL is a Pakistani real estate conglomerate and urban development company that has created some of the critical projects in Pakistan and has worked for some of the biggest names in the country, such as DHA and Bahria Town. Therefore, this project should be your natural choice when going for investment because not only do they have RDA NOC, but it is also being developed by one of the most reputable developers in Pakistan, called HRL. Most of the other projects near Chakri Road either lack the NOC from RDA / CDA, or the developers do not have enough credibility.