Recognise the Red Flags in Property Scamming
Category Market Insight
With so much of our personal and professional lives facilitated by online communications, apps, and smartphones, falling victim to online crime is unfortunately a matter of when not if.
Even when every precaution is taken, fraudsters will always find a way to con buyers and sellers out of significant sums of money.
Here are some common tactics fraudsters use to pull off their crimes:
1. Offers That Are Too Good to Be True
If the price looks too good to be true, it probably is. As with many products and services, scammers bank on extraordinary loan terms, lease payment amounts, or offer prices that will distract you from the reality of the situation.
Taking the time to independently verify and research the validity of the property, offers, and terms of the products and services you're presented with puts you one step ahead.
Property prices are considerably higher than they were a few years ago and finding a 'bargain' online is extremely rare, so always contact the estate agency to verify the details being advertised.
2. Unusual Communication Methods
Scammers will attempt to establish separate lines of communication with you, They will use an email address or phone number that will appear familiar but will have distinct differences. Examples of different communication methods include different email domain names, messages from multiple numbers, often with misspelt words or unusual sentences and phrases.
3. The buyer or seller is from another country and wishes to purchase a home without first seeing it.
Legitimate buyers would want to view the property and become familiar with an area before undertaking the purchase of a large property.
Overseas buyers who don't ask questions, act in haste and don't care to see the property indicate a high likelihood of fraud. This isn't to say you should be wary of all foreign inquiries, however many scams occur overseas because tracking down the perpetrator is more difficult.
3. Lack of Screening
Before the completion of an agreement, tenants need to be screened. Most landlords need access to credit scores and do a background check, ensuring trustworthiness and that financial obligations are able to be upheld.
Side note: A lack of screening should tell you that it could be a potential scam.
4. Last-Minute or Time-Limited Requests from Apparent Professionals
When you're in the midst of a real estate closing, there are many documents, deadlines, and steps that you need to juggle, making it difficult to know when a fraudster is attempting to push their way into your transaction.
Scammers will try to persuade you to send money or provide sensitive information quickly, believing that a time constraint will cause you to overlook otherwise suspicious details. Agents or landlords who seem too eager or persuasive usually have a hidden agenda.
A trusted agent or landlord will always conduct the necessary checks and will not be too disappointed when you don't show much interest in the property.
Remember that legitimate real estate professionals and lenders are required to give you the time you need to review your options, along with copies of the associated documents.
5. Deviations From Known Processes Deviations from the process
Criminals will try to get you to deviate from standard document processes or get you to submit paperwork that is not necessary.
Scammers will encourage you to send money "this one time" via unusual channels and request that you "overlook" the change in procedure.
The term 'wire money' should never come up during a business transaction. Scam artists encourage the wiring of funds because it is difficult to trace and guarantees the scammer the monetary reward. Scammers will invent a variety of plausible reasons why the money should be wired instead of sent through a bank or lawyer.
6. The bait-and-switch scheme
When a prospective buyer offers an 'above-market value price to a seller, the seller is impressed by the high offer, and signs the contract, while the deceitful buyer has no intention to purchase the property.
Once the seller signs the contract, they are only allowed to sell to that buyer for a predetermined period of time; when that period has passed, the scam artist requests an extension of the contract for a few weeks so they may finalise the terms of the closing. The seller accepts the extension, sounding reasonable but being misled by the high offer.
Meanwhile the seller keeps paying taxes, maintenance, utilities and insurance, while the buyer comes back to the seller with an excuse as to why this price no longer works, and requests a reduction to below market value, threatening the cancellation of the deal should their demands not be met. Stressed by time and ongoing costs, the seller agrees to the reduction.
Buying or selling a property can be a minefield of quick scams. Legal and advertising processes need to be strictly followed.
Scammers are incredibly smart con men and women, and are extremely charming at tempting their victims into a false sense of security.
We at FMS Sales and Leasing are well informed and can easily spot anomalies or indicators of a property scam. Our brand and agents are synonymous with checks and balances and most importantly, are trusted by landlords.
Remember - Be vigilant at all times, don't trust too easily, do your research, listen to your gut and always ask lots of questions.
Author: Melanie du Toit
