Protect yourself by learning these important real estate scam warning signs
As a broker or escrow agent, your number one concern should be keeping your clients and their money safe.
Unfortunately, the United States has seen a troubling increase in the number of real estate scams intended to take advantage of unsuspecting parties. In 2018 alone, the FBI reports that there were 11,300 victims of real estate/rental scams — totalling $149,458,114 in losses.
Keep reading to learn more about how real estate scams work, and the warning signs to look out for.
How real estate scams work
Most real estate scams are centered around the electronic transfer of large sums of money. The scammer will often pose as a buyer with an impressive investment bio who makes a great offer on a property. They may even impersonate an individual—such as a lender, broker or attorney—from a trusted organization.
Commonly, the scammer will send a deposit via check. They will then cancel the contract before the check clears, and request that the amount be wired back to them. A few days later, the check will bounce—but the return deposit wire is already long gone.
What makes these scams harder to spot is that it’s common to have no prior dealings with a real estate buyer, and transactions often have deadlines that can prevent the opportunity for thorough vetting.
Our experience with real estate scams
A similar situation was recently encountered by 100Units.com Multifamily Advisor, Joe LaFleur:
“We just had an ‘international buyer’ make a full price, quick close offer with a large deposit. They never visited the property and only communicated via email. However, they sent a large bank statement and personal investment bio that was very impressive.
This ‘buyer’ asked for the mailing address to send a certified check for the deposit — they would not wire the deposit. Fortunately for everyone involved, this deal didn’t go any further as the escrow company was aware of this scam.”
Are you being scammed? The top warning signs to look out for
- A very generous offer, on the proviso that the transaction moves quickly
- Refusal to wire money using traditional methods
While the following can also occur during a genuine transaction, especially if the buyer lives overseas, you should also be on the lookout for:
- A buyer who never visits the property
- Communication solely via email.
Have you encountered a real estate scam? Let us know at Joe@100Units.com.
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FBI Internet Crime Report (2018)