Bali is a tropical paradise, famous for its stunning landscapes, serene beaches, and vibrant culture. This is exactly why the island has long been a sought-after destination for tourists and expats for decades. The demand within the local market continues to attract investors, as well as long-term residents and tourists. However, amidst the attractiveness of Bali’s real estate market lies a worrying problem: the rise of real estate scams.
These scams take various forms, with scammers targeting both locals and foreign investors. They not only undermine the credibility of Bali’s real estate market but also raise concerns about the security of investments in this otherwise enchanting locale. Here, we will highlight the growing problem of property scams in Bali and give you advice on how to protect yourself from such schemes.
Types of Real Estate Scams in Bali
There are many types of property scams that have popped up in Bali. Unfortunately, scammers seem to some of the more creative people on the island. As a result, they’ve caught out thousands of unsuspecting tourists and locals over the years.
The Phantom Property
One common real estate scam in Bali involves the sale of non-existent properties. Scammers create alluring online listings with stunning images of properties, enticing potential buyers with promises of luxurious villas or beachfront homes. They may use images of other legitimate properties. Unbeknownst to the buyers, these properties do not exist, and the scammer disappears with the deposit money once it is paid.
The Fake Real Estate Agents
Another method used by scammers is to pose as real estate agents. These individuals may use fake identities and offer properties at prices that seem too good to be true. Unsuspecting buyers, eager for a bargain, may hand over their money only to discover that the agent was never licensed, and the property does not belong to them.
Protect yourself by checking the agent’s credentials, seeking recommendations from trusted sources, and verifying the agent’s affiliation with a legitimate real estate agency. Always verify the credentials of your real estate agent. Reputable agents in Bali are registered with the Indonesian Real Estate Association (AREBI), and it is advisable to check their credentials and ask for references from previous clients.
Forged Titles and Ownership Documents
Scammers often present fake land titles, licenses, and other legal documents to unsuspecting buyers. These counterfeit documents may appear authentic, luring buyers into believing they are making a legitimate purchase. However, once the deal is sealed, the scam comes to light, and the buyers are left with nothing but forged papers.
To protect yourself from this scam, always seek legal counsel and involve a reputable notary or lawyer in your real estate transactions. They can help you verify the authenticity of the documents and ensure that the property you are buying has a legitimate title.
Rental Guarantee Scams
Some scammers promise lucrative rental returns on properties, enticing investors with guaranteed income. Buyers are asked to make substantial upfront payments in exchange for these promised returns. Unfortunately, these guarantees often turn out to be empty, and the scammer vanishes with the money.
Buyers should exercise caution when presented with rental guarantees that appear too good to be true. Legitimate rental returns may vary and are dependent on market conditions.
Protecting Yourself from Real Estate Scams
It’s important to take steps to protect yourself from falling victim to real estate scams in Bali. Some of it is common sense, while other scams are harder to spot… so it’s critical to be thorough when considering buying or renting a property in Bali.
Due Diligence Before Purchase
Before making any investment, conduct a thorough research. Verify the ownership of the property, review all relevant documents, and consult with a trusted local attorney or notary who is experienced in Bali’s real estate laws. Make sure the property has a valid land certificate, known as a “Hak Milik,” and is free from any encumbrances or legal disputes.
Visit the Property in Person
Whenever possible, visit the property in person. This will allow you to inspect the property, meet the seller, ensure that it matches the descriptions and photographs provided by the seller, and assess the surrounding area for yourself. If the seller is hesitant or evasive about arranging a viewing, it should raise red flags. Additionally, verify the property’s ownership and title deeds to ensure its legitimacy.
Use Escrow Services
To protect your funds, consider using an escrow service for transactions. This ensures that the money is only released to the seller when all conditions of the sale are met and adds an additional layer of security to your investment.
Keep meticulous records of all transactions, correspondence, and agreements related to the property purchase. This can be invaluable if a dispute arises.
Hire a Reputable Agent
Engaging a licensed real estate agent is a prudent move. These professionals are well-versed in the local market, and legal requirements, and can assist in the due diligence process. Ensure that your agent has a good track record and is well-recommended by previous clients.
Avoid Rushed Decisions
Do not feel pressured to make a quick decision. Scammers often employ high-pressure tactics to induce impulsive investments. Take your time, consider all aspects, and seek independent advice.
Consultation with Legal Experts and expats
Consulting with a legal expert specializing in Indonesian property law is essential. They can review all contracts and agreements to ensure they are legally sound and can provide guidance on local regulations. Another option is that you can seek advice from expatriates who have successfully invested in Bali’s real estate market. They can provide valuable insights and recommendations.
Check Legal Requirements
Make sure you understand and comply with all local legal requirements, such as zoning regulations and foreign ownership restrictions, and check the property licenses by ensuring the seller provides the Certificate of the Property and the Building Approval (PBG).
Reporting Scams to Authorities
If you encounter a potential scam or have been a victim of a real estate scam in Bali, report the incident to the local authorities and your embassy. Fast action may help prevent others from falling victim to the same scam.
Bali Real Estate Scam Cases
It only takes a quick Google search to see how many property scam cases take place in Bali every single year. These are some of the more eye opening ones.
Hotel Scam in Amed
In Amed, a hotel scam was reported. A guest had booked a room on hotel.com but upon arrival, the hotel denied their reservation and asked them to wait. The owner claimed his hotel wasn’t on any platform and that it was full, though there were empty rooms. After a two-hour wait, they were told to leave without a refund. They later discovered the owner scammed others through various platforms. However, because he was a former community leader, people were afraid to speak up. The person is now seeking advice on how to report the scam to help future travellers.
“The neighbors arrived and told us that the owner was scamming everyone the same way on all platforms (booking, Airbnb, agoda…).”
Villa Scam in Canggu
A warning about a property rental scam involving a yearly villa rental in Berawa has surfaced. The scam artist, posing as a villa stakeholder named Andrean Akbar, convinced renters with detailed property knowledge. After paying a 120 million IDR down payment and moving in, the renters discovered that the owner hadn’t received any payment, and they were sharing the villa with other daily renters. They left the property, losing their down payment and any chance of a refund. The scam involved creating the appearance of legitimacy while covering up daily rental payments from other clients.
“Everything seems ok until people keep coming to villa to visit, which is weird cause we thought we took this villa for 600mil/year. Luckily, not until we paid full amount we realize that the owner never recieved the money. We left the villa because we were told that if full payment not made in a day we will be kicked out, but 120mil already paid and not even a refund.”
Legal Actions Taken
In response to these scams, the Indonesian government has taken steps to regulate the real estate industry more effectively. Laws have been implemented to prevent land disputes and safeguard the rights of legitimate buyers. Additionally, efforts are being made to improve transparency in property transactions, making it easier for buyers to verify the legitimacy of their investments.
The last word… protect yourself at all times!
For those considering real estate investments in Bali, it is important to remain vigilant. Work with registered, reputable agents, employ trusted legal counsel, and conduct thorough research before parting with your hard-earned money. While Bali is indeed a paradise, the presence of real estate scams should not deter potential investors. Instead, it should encourage them to approach property transactions with caution.