The Federal Bureau of Investigation and other investigative agencies have released reports of increasing numbers of real estate scams. These scams primarily target renters, but homeowners and landlords could begin feeling the pressure. Keep reading to learn more.
The Housing Market
Scams happen at the worst of times – when a part of the economy is in freefall or a bubble about to burst. The housing market fluctuates constantly, and right now it is starting to dip. In 2020 the housing market, like the rest of the world, came to a halt.
Then, by the end of 2021, the market picked back up as people moved to new states, sold their homes, and developers began building. Suddenly, many states were experiencing a housing shortage and renters were paying higher and higher prices each month.
Now, the housing market is very volatile and as talks of a recession loom over property owners and renters alike, scammers finally have a window of opportunity. When people are desperate for housing, fake deals, and misleading listings.
Scammers are cashing in on renters who are in the market for a change or looking for a short-term lease. These scams involve real listings that from reputable listing sites but with fake down payment amounts. The altered advertisement is then posted to a forum or other site where it will attract potential buyers.
Scammers often use a broker’s name with a fake email to evoke a false sense of legitimacy. Once a buyer makes an inquiry, the scammer will broker a deal for the property and both parties will agree on a price.
When a price is agreed upon, the scammer will forward a check for the rental to the buyer – a check that the scammer says will cover housing expenses. The check is written more than the amount agreed upon and the scammer will ask for the remainder to be refunded but will leave the deal before any further transactions take place.
Most banks do not put a hold on the funds which means the check has cleared. The renter believes they have access to the funds, but since the check is false, the buyer is held responsible for losses.
These scams also target property owners who believe they have a legitimate buyer but instead are left with a deficit in funds. In these cases, tenants may make a transaction seem urgent and offer to pay for the rental without seeing it in person. Scammers will overpay, and ask for a partial refund, wait to receive it, and leave the deal.
If you are a rental property owner, you must take precautions to protect yourself from scammers. The FBI recommends that property owners:
- Use a prequalification process
- Have a comprehensive application process
- Do not accept tenants unwilling to meet in person
- Do not accept an overpayment
- Verify identity, income, and background information
- Verify references
Contact an Attorney Today!
If you believe a potential tenant may be a scammer or a current tenant is in violation of their lease, you may take legal action. Purdy & Bailey, LLP can help you understand your options and pursue litigation so you can protect your business. Our attorneys have helped countless clients resolve legal disputes and we can assist you as well.
Contact our firm today for more information.