Real estate scams have been steadily on the rise of late, unfortunately with the assistance of technology. It’s possibly never been easier for a con artist to post an advertisement online ostensibly seeking to purchase or sell a home, but in fact hunting for illegally obtained funds.
You’d like to think the average web user is sufficiently well informed to recognize a scam when he or she encounters one, but it’s not true. Scammers wouldn’t continue to post these advertisements if they didn’t work to some extent, so fraudulent listings surface everywhere.
You shouldn’t feel bad if you get taken in by a scam. Even people who have done their homework and have extensive experience in the real-estate industry can be duped by a sophisticated advertisement.
“Consumers are now more aware of scams, but because scams have gotten more sophisticated, consumers are not sure they know how to avoid them,” says Barbara Floyd Jones, program manager for NeighborWorks America, the nonprofit organization behind the 2009 Loan Modification Scam Alert campaign.
The typical scam works something like this: Con people find online property listings on sites like Craigslist or Zillow, and then use the same photos and information to create their own real estate advertisement for a property they don’t own. They’ll price it attractively, remove the address and contact information, and wait for someone to message them through the site’s messaging portal.
These scammers usually make their money by requesting a payment for something seemingly minor like a credit check or security deposit. Too many people give in without recognizing their potential mistake. In most cases, there’s nothing you can do to get your money back because the scammer can’t be tracked and/or the money gets wired to an overseas account without any chance of a refund.
People looking to invest often in real estate are typically the primary target for this kind of scam. Sometimes you’ll come across a bogus ad that looks too good to pass up; other times it will be your property that is duplicated and turned into a false ad.
Either way, you need to be able to recognize a scam when you see one. Here are some of the tell-tale signs.
In the current national rental economy, rent prices have been climbing. The housing market is booming too, which mean that prices are considerably higher than they were a few years ago.
Competition is keeping the market alive, and real estate investors won’t make much of a profit if they don’t keep their prices competitive. If you’re used to renting at $1,200 for a two-bedroom apartment and come across a great looking property for just $700, it’s almost certainly a fake. If the price looks too good to be true, it probably is.
Some listings hide the email address when you send a message, so you might not be able to see the address if you respond to the listing. But if you’re given the opportunity to see the email, evaluate it for authenticity.
First of all, scammers usually use free email servers such as Hotmail or Yahoo. In addition, they’ll often go by a series of random letters to make them less easily traceable. So if you see that the poster has an email like axoiehips@hotmail.com, that’s one clue to be wary.
Naturally, scammers won’t let you see a property they don’t own. If you ask to see the property the next time you’re in town and they claim it’s impossible, it’s probably a fake listing.
The ostensible seller or broker might even use a venerable excuse, such as being out of town or visiting a sick relative. But most home sellers will make time for people who are interested in the property. If it’s possible, never buy a home you haven’t walked through first.
Sometimes the absence of an address may be an oversight on the part of the seller. But more often it’s an indication of foul play. You might ask for an address, and the seller will respond be saying he doesn’t want to send it to you for security purposes.
At other times, if you insist on an address, the person may send you a fake one to appease your demands. If you plug it into Google Maps, however, you’ll find the random address doesn’t belong to the house you were considering.
The faster a scammer gets you to agree to a business deal, the faster he or she can steal your money and avoid getting caught. For that reason, the seller often uses high-pressure tactics that attempt to push you into acting quickly in order to purchase the home.
Don’t be prodded by any seller to send money. If a seller is using high-pressure tactics, it’s probably not worth your time or money.
Most online listings will only offer contact information for a real estate agency. If the person offers personal contact information, that might be cause for alarm, but don’t be worried unless it seems really odd.
For example, if there’s no phone number included or the number is a long-distance connection, it may not be a legitimate listing.
When you post real-estate advertisements, it’s also vital to make sure your buyer doesn’t try to scam you as well. He might suggest a method of payment before you mention it, and offer an all-cash bid. Though it’s not totally unheard-of for buyers to purchase a property with cash, it’s fairly rare.
Most people avoid offering detailed financial information, even when they’re pressed. They especially won’t offer that information to a perfect stranger over email.
But cash-buyer scammers will often do this, and even attach a bank statement or other testament of their financial state to an email. This overly eager buyer is trying to show that she’s the real McCoy, but more likely she’s just looking for a way to lull you into a false sense of trust.
When you see the term “wire money” or similar variation of that phrase come up in a business conversation with someone you’ve never met, red flags should go up. Many scams entail wiring of funds because it’s more difficult to trace and enables the scammer to collect the money sooner.
Scammers will come up with a variety of plausible reasons why the money should be wired rather than sent through a bank or lawyer, but in reality there are no good reasons to do so.
Most people want to at least see a property and become familiar with the area before making a large investment. This doesn’t mean you should be wary of all foreign inquiries, but many scams often occur overseas because it’s harder to trace the person behind the fraud and legal sanctions are more difficult to carry out.
Foreign buyers who don’t ask questions, act in haste, and don’t care to see the property indicate a high likelihood of fraud.
The home buying process can be challenging, even for highly experienced buyers. Scams are getting more sophisticated and difficult to identify, but Green Residential can help you with that.
If you’re looking to buy a home in the Katy or Houston areas, our real-estate team is sufficiently knowledgeable and experienced to coach you through it. We know the market, and we know a scam when we see one. For more information about how we can help make the home-buying process smoother for you, contact us today!
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