Tips for Avoiding a Scam on BiggerPockets

BiggerPockets does not have the resources, infrastructure, or legal responsibility to perform a background search on every member. Unfortunately, some users have reported that they have been scammed by supposed lenders here on the site and as such, we felt it important to put this page together for you. We have many legitimate lender members on our site, but as we grow, we are bound to attract a few bad apples.

Here are some ways we’ve identified over the years to help identify a scam. We hope you find them helpful, but please remember they aren’t foolproof and that you conduct business on this site at your own risk.

  1. 1. If it seems too good to be true, it is. If everyone is telling you no, and then one person not only says yes, but with ridiculously low rates and fees, you should be suspicious.

  2. 2.Do NOT give sensitive personal information in your first dealing with anyone. Email address should be the limit of what you supply.

  3. 3. Single digit interest rates are rare, and finding a legitimate lender on BiggerPockets offering a single digit interest rate with no points should make you wary.

  4. 4. 100% financing is suspicious. Think about it. 100% financing means the lender is the one taking all the risks. If they give you 100% of the cost of the purchase, and you find something you don’t want to deal with, you can simply walk away, leaving them holding the bag. 100% financing can exist for people with oodles of experience, but usually not for your first deal ever.

  5. 5. Judge them by their spelling and grammar. If email communications are difficult to read because the mistakes are all over the board and the sentences don’t make any sense, you may be dealing with an overseas [??] scammer. A legitimate lender will have at least passable language skills, and if they are affiliated with a bank, they will be easily understandable.

  6. 6. Talk to them on the phone. Similar to written communication skills, if you have an hard time understanding what they’re trying to say, you might be working with a scammer. [be careful with this one – you don’t want to be accused of bias against legitimate people for whom English is a second language]

  7. 7. Don’t pay upfront fees. There are costs and fees associated with any loan. But a legitimate lender will collect these at the closing table, not upfront. There are few exceptions to this rule. An appraisal is one fee to consider paying upfront, because if the property doesn’t appraise, the lender won’t give you a loan and you may walk away.

  8. 8. Google them. You are borrowing money from someone, make sure they’re legitimate. Enter their name plus scam into google and see what comes back. Just because nothing comes back doesn’t make them legitimate, though. Be wary if Google’s never heard of them.

  9. 9. Ask the BiggerPockets community about them. Start a thread in the forums and ask community members if they know the lender and if the lender’s terms sound right, etc. See if anyone has any experience with the lender.

  10. 10. Western Union is NOT a legitimate way to transfer money for real estate loans. Western Union is a legitimate company, but legitimate lenders do not use them for money transfers.

  11. 11. Check their license.

  12. 12. Don’t accept a deposit from them - especially if it they are offering overpayment, and asking you to refund the difference minus a small convenience fee for you. That doesn’t happen in legitimate business dealings.

What to do if you think you’ve discovered a scam

  1. 1. Don’t give them any money. If you have already given them money, don’t give them anymore.

  2. 2. Report your experiences to the BiggerPockets community. The best place to do this is in the BiggerPockets forums. But stick to the facts of your experience. Defamation and profanity are not tolerated, but your true experiences with the lender are always permitted.

  3. 3. Theft is a crime. Contact the proper authorities.

BiggerPockets does not automatically remove a lender simply because one person reports a bad experience. For more information on when and why we might remove a user, please read our Terms of Use. We strive to give all users the ability to voice their opinions and defend themselves and we have found that public discussion of illegal activity by a particular scammer is sometimes the most effective way to prevent similar scams in the future.

Sometimes people ask why we allow certain users to stay on our site. The reason is that we believe that people should be able to defend themselves when criticized on this site, so we typically remove any thread in which a terminated user appears (though we have no legal obligation to do so). What that means, however, is that terminating a user can actually reduce the amount of helpful information available to the community—if we terminate a user, that might deprive the community of access to threads talking about the user’s abusive practices and other members might become unwitting victims to future abuse by that user or someone who uses similar tactics. The bottom line is that we think the community does a good job of policing itself by publicly calling out those who don’t follow the rules or the law. Our goal is to give you whatever information is out there so that you can judge the facts for yourself and make an independent decision.

Updated 05/08/16