Beware of Predatory Real Estate Speculators

Predatory real estate buyers often swoop down after a natural disaster. fizkes/Shutterstock

It’s bad enough to go through the pain of a natural disaster; now you must go through the aftermath. Trying to rebuild is difficult and not always possible. That’s when the scammers move in. They take the form of real estate speculators.

These predatory buyers try to buy your land for below market value. They take advantage of those going through natural disasters to line their own pockets. But how do you know if you’re dealing with a predatory real estate speculator, and how do you protect yourself and your property?

Predators Offer to Buy Distressed Real Estate

Predatory real estate buyers often swoop down after a natural disaster. Their object is to convince or coerce owners into accepting unfavorable contract terms. They also use various tactics to change agreed-upon purchase agreements.

There are several types of predatory real estate speculators. The two most common types are the low-baller and the schedule-stretcher

Low-Baller Takes Advantage of Homeowner

Low-ballers take advantage of homeowner’s distress. In California’s natural disaster, some homeowners may not have insurance or adequate limits to rebuild.

In the case of California’s homeowners, many have valuable land but no house. These low-ballers will swoop in and make offers on the land that are far below market price. They hope that the homeowner will be desperate enough to take a low offer.

The low-ballers’ prices may be low, but they usually deliver on the promise of cash and will make every effort to close escrow on time.

Schedule-Stretcher Stretches Closing Out

This predator demands extensions to the escrow period. They come up with many reasons to delay for as long as possible.

Their objective is to keep the property off the market as long as they can. That way, potential buyers who are legitimate will move on to other properties. The speculators then demand a lower price because they claim demand for property has cooled.

They blame it on the bank by saying it has reduced the amount they are willing to lend because of the decrease in demand.

California Governor Bans Predatory Real Estate Buyers for 3 Months

Modeled on a similar order issued by Hawaii Gov. Josh Green, California Gov. Gavin Newsom issued an executive order to protect the wildfire homeowners from exploitation.

The order safeguards residents of Los Angeles County’s hard-hit zip codes. It makes unsolicited and less-than-fair market value offers to purchase the properties in these zip codes unlawful. This order is in effect for three months from the date of the order, Jan. 6, 2025.

It also directs government and law officials to give the public notice of their rights under the order and contact information. The order states that additional information regarding resources and rights must be made available to the wildfire victims.

California law makes it a misdemeanor to violate a governor’s order during a state of emergency. Disobeying the order is punishable by a fine of up to $1,000, imprisonment for up to six months, or both.

Protect Yourself From Predatory Real Estate Buyers

Protect yourself from predatory real estate buyers even if you’re desperate and want to sell. Implement strategies to counter their tactics. You could also just ignore any unsolicited offers for your property.

The number-one tactic to protect yourself from predatory real estate speculators is to consult with and hire a reputable real estate agent. You'll want someone with experience in your area and your property type.

A good real estate agent will help guard you against predators. Your agent will represent you and try to find the best buyer for you. It’s wise not to sell without an agent.

Whether you go with a real estate agent or want to do this on your own, if you choose to sell, know your property’s value. Much of the property in California that has been affected by fires comes at a premium price.

Determine Property Value

To determine what your property is worth, use the sales-comparison approach: Research recent sales of similar vacant land parcels in your area. You'll need to consider factors such as size, zoning, and potential development. Once you know this, compare it to your property.

For a more accurate assessment, consult with a professional appraiser who can analyze market data and provide a detailed valuation. Once armed with this knowledge, you can evaluate pending offers and choose the one that meets your financial needs.

Sell on the Open Market

Not listing your property on the open market limits competing buyers and results in weak offers. An example of an “off-market” is the Multiple Listing Service (MLS). Predators troll off markets like the MLS to find distressed properties and take advantage of the sellers.

Guard Yourself Against Predatory Real Estate Buyers

There’s always someone ready to take advantage of natural-disaster victims. For those who lost homes but still have valuable land, predatory real estate speculators may try to buy these parcels at cut-rate prices.

Be cautious when dealing with unsolicited offers. The prudent move would be to work with a reputable real estate agent.

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