“Beware the ‘Distressed Property’ Scam”

18 February, 2025

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Despite repeated reports and warnings from authorities, the situation of advertising and selling cheap real estate to lure customers to buy land in distant provinces, unclear legal land, or even “ghost” projects is still rampant. So, why does this form of business with signs of fraud still exist and is difficult to control?

Old tricks, new victims

According to Mr. Ta Trung Kien, Director of News Property Real Estate Company, the subjects often take advantage of the time when the demand for buying real estate increases, especially during Tet, to launch a campaign to sell houses at abnormally low prices. Houses in the central districts of Ho Chi Minh City such as District 1, District 3, Binh Thanh, or Phu Nhuan are advertised for sale at prices ranging from 2 to 3 billion VND for an area of 80 square meters, which is 5 to 10 times cheaper than the actual price. In reality, this is a scam to lure buyers to provincial land projects, with promises of high profits.

Mr. Kien cited many people, especially the elderly, who have lost money because they believed in these “sweet” advertisements. These types of real estate companies often organize 16-seat car trips to take customers to view land in the provinces with tricks such as committing to high profits, rare and cheap goods, and refunding deposits if they are not satisfied. However, once the deposit is made, it is difficult for customers to get their money back because these companies have cleverly bound them with unfavorable conditions in the deposit agreement. Deposits ranging from 20 to 50 million VND are often forfeited due to complicated litigation procedures. It is estimated that each “chicken herding” trip can bring them billions of VND in deposits.

Some real estate companies invite customers to consult on Ho Chi Minh City townhouses but then lead them to buy land in the provinces. Photo: LE TINH

Mr. Nguyen Tat Thinh, founder of the HouseZy.vn real estate technology platform, also confirmed that the ads for selling houses in the old District 2 for 4-5 billion VND, or land on National Highway 13 (near Van Phuc urban area) for 1.2-2 billion VND, are just “baits” to attract customers. When they arrive, customers are usually informed that the property has been sold out and are led to more distant areas with promises of high profits.

According to Mr. Thinh, the price of houses in Thao Dien (old District 2, now Thu Duc City) is at least 300-400 million VND/square meter for frontage and 250-300 million VND/square meter for alleyway locations. On National Highway 13, there is almost no land left, and if there is, it is mainly small houses with a price of about 100 million VND/square meter. Therefore, it is impossible for a house in Ho Chi Minh City, especially in the central area with a beautiful location, to cost only 4-5 billion VND. “This information is actually used to lead customers. However, many people are still being scammed into buying land with unclear legal status or paying inflated prices due to psychological manipulation and lack of experience,” said Mr. Thinh.

Mr. Ma Xuan Tuan, Director of the Ho Chi Minh City Real Estate Research and Investment Consulting Center (HOREC), said that this situation has existed for many years, constantly changing to evade legal sanctions. However, the percentage of people being scammed has decreased thanks to the 2024 Land Law, from 30%-45% in the past to about 18%-20% now.

It can be considered fraud!

Mr. Nguyen Tat Thinh pointed out that the rampant real estate ads with abnormally low prices on social media and real estate websites are one of the reasons why this “chicken herding” situation is difficult to control thoroughly. According to him, the posts advertising the sale of real estate at extremely low prices need to be more tightly controlled. Platforms like Facebook and real estate classifieds websites must take responsibility for content moderation. At the same time, management agencies should also apply sanctions for posting misleading information.

According to Mr. Phan Dinh Phuc, CEO of Seenee (a company specializing in reviewing real estate projects and products), real estate listing platforms, including batdongsan.com, have recently applied artificial intelligence (AI) tools to detect posts selling below market prices, which are then placed on a spam list. After that, the posts will be manually reviewed and either approved or deleted to prevent the appearance of fake information. This is expected to help reduce the number of fake real estate ads aimed at “chicken herding.”

Attorney Truong Van Tuan, Head of Trang Saigon Law Office, said that the act of taking customers to view projects with unclear legal status, using tricks to manipulate their psychology and leading them to make deposits and buy land at higher prices than the actual value, may be considered fraud and subject to criminal liability under Article 174 of the 2015 Criminal Code, with a prison sentence of up to life imprisonment. In addition, the offender may also be subject to a fine ranging from 10 million VND to 100 million VND, banned from holding certain positions or practicing certain professions for one to five years, or had their property confiscated in part or in whole.

Attorney Tuan advised real estate buyers to be cautious with projects that do not meet legal requirements or show signs of fraud. Local management agencies need to closely monitor the organization of land sales, especially at large-scale project promotion events.

According to experts, investors need to be well-informed about the market price of real estate before making a purchase decision. If the price seems unusually low, it is important to be cautious and thoroughly check the project’s legal status. Some important steps include checking the developer’s capacity, requesting legal documents such as investment certificates, land allocation decisions, detailed planning maps at a scale of 1/500, and confirmation from competent authorities regarding the infrastructure acceptance. In addition, buyers should check whether the land lot is mortgaged or disputed by contacting the local government to confirm the project’s legality.

In an interview, a representative of the Ho Chi Minh City Department of Construction stated that according to the 2023 Law on Real Estate Business, prohibited acts include real estate business without meeting the required conditions, forgery of documents, fraud, and deception. Violations will be handled according to regulations. “Organizing a conference to introduce a project is a civil relationship, but if there are any violations, people should immediately report it to the Department of Construction for inspection and handling,” the agency emphasized.

When buying or renting future homes, the project must have confirmation of meeting the business conditions from the Department of Construction, and the list of legal projects is publicly available on the department’s website.

Brokerage activities must be controlled

According to a representative of a real estate company, the 2023 Law on Real Estate Business has stipulated that brokers must have a practice certificate and work at a trading floor. However, many individuals who do not meet this condition still operate illegally, posing risks to buyers. Brokers with a lack of professional knowledge can easily sell non-existent products or provide misleading information, turning customers into victims.

To prevent this situation, it is necessary to tighten the management of real estate businesses and brokers and enhance the supervisory role of local governments to detect and handle violations promptly.

LE TINH – QUOC ANH

– 08:34 11/02/2025