The latest issue of People magazine has an article about mortgage fraud that’s happening in some areas. The way it works is that someone comes in and buys a piece of property and then immediately (sometimes in the same day) will relist it and sell it to an accomplice for WAY more than it’s worth. They pay off an appraiser to justify the high price, get the loan, split the money, and bug out. The problem (apart from the mortgage company having a piece of property worth a fraction of what they loaned on it) is that the property taxes go up for the neighbors.
One way to avoid this is to check what sales have gone on around a home you plan to purchase. Use my home sold lookup report (available here) which will show all properties recorded at the County. If a real estate agent provides you a sold report, they will probably only give you ones that were reported to the MLS. These don’t include For Sale By Owners, Private Sales, Foreclosures, etc. If you see an excessive amount of sales that should raise a red flag and prompt you to ask some questions.