Much to my chagrin, scams have become an everyday part of our lives. The Real Estate Industry alone has seen its fair share of them along with a constant need to stay abreast because as technology evolves, so do the scams. We have all received the emails saying ” I represent a King of (insert whatever nation you care to) and he has named you the controller of his mass fortune”. For most people these are easy to identify and avoid. As the newer ones bring complications and confusion, here are examples of some of the most common scams I have seen and something to watch out for;
- Fake rentals.
- I’ve seen this done so many different ways. One example is the overseas military assignment. An ad is placed on Craigslist or a similar site. It will be from a New Yorker who was just called to serve in an overseas project pertaining to the military. It goes on to say they need to rent their apartment very fast and will offer a half market price. All you have to do is send a one month’s security deposit and they will send you the keys. The ads look real as they steal photos from real sales listings, along with descriptions and floorplans. So when the mark sends the money, nothing comes in return. Then the mark ends up calling the building and finally discovering that the ad was a scam.
- The other common way is perpetrated by an actual real estate agent. This is when an agent advertises a perfectly priced apartment. They take an application from a individual along with one months deposit. Note that the check will always be to an LLC. It will turn out the LLC is owned by the agent and that agent ends up taking dozens of applications and deposits from different people. This is a one time scam for an agent and they must be leaving town or the US quickly after. But if you think that a deposit can be $4,000 and if they price the apartment well enough they can fool 40-50 people within three weeks. This means a 200K+ takeaway within a one month’s time for somebody leaving the country.
- Fake buyer deposit
- An agent gets a call from an overseas buyer. The caller says they want to buy a condo as investment and need their help. They identify a multi-million dollar condo and make an offer with that broker. The offer is always close to asking but there is some back and forth for a few days. Once the price is reached the buyer hires a lawyer thought that agent and signs a contract. They mail a certified check for the down payment and tell their lawyer to send out the signed agreement. Around an hour later, they state they need to cancel the deal before its fully countersigned and they need their deposit back. The reason is almost always a terrible tragedy, lets say for example for a dead son or daughter due to car accident. They insist their lawyer send back the funds right away. The idea is that the lawyer will send a wire from their escrow account. The lawyer is duped because they didn’t wait for the certified check (which was a fake) to fully clear and they just wire back from they escrow account that holds millions of dollars in total escrows. This is hard to pull off but a 1-% deposit on a three million dollar sale for example is worth it by far.
- The fake invoice.
- A fake overseas architect creates a fake contract between an owner and their company. They look online to see what developer is filling major work and who their law firm is. They then hire a local law firm to represent their scamming efforts. They have their new law firm send out a demand letter for fees due. The contracts look real, they even copy their signature for the developer/owner. The signature is found on a deed or other public documents. The idea is that developer has so many outstanding bills and they are receiving so many value notices they may just pay this one with the rest of them. What makes this work is due to the extent that the scammer goes to make the invoice and contract look real. Read this article for more in in the North Carolina State bar blog.
If their are any other scams out there, I would love to hear them. The best way to protect us against these thieves is to be educated and know what they are doing so we are careful in all our Real Estate endeavorers.