The property circuit is a cut throat business with everyone looking out for themselves and unfortunately, not all will play by the rules.
Since the beginning of trading there have been those who have tried to solicit money or assets from people making an honest living. And the twist in this tale is that the bad guy sometimes wins.
There are possible perils in both the buying & letting markets. In the UK alone, there have been several victims of property fraudulence which has caused them to losses of house deposits, rental profits and entire properties. Just last year, a family had the entire sale of their property stolen by email hacking fraudster.
While we can’t keep you safe from these criminals in your transactions and property endeavors, we can keep you informed. Although there is no blueprint to their methods here are a few trends that these offenders follow. Here are some property and real estate scams that you need to look out for.
This method to the madness begins with the miscreants finding a vacant home preferably without a mortgage and owned by people who were living elsewhere. Lawyer John R. O’Brien explains that they then “forge a deed from the real owner to one of their group”.
The cons would then list the property ‘for sale’ and find a property developer or flipper looking for a quick buy. Using their ‘official’ deed, they would sell the property to the buyer unaware they were never the actual owners.
Brian Davis of SparkRental tells the tale of this scam, which includes the culprit posing as the landlord of a property online before asking all prospective renters that a deposit must be left before the property can be seen.
This scam is a numbers game, by requesting every interested renter leave some sort of payment they will eventually find someone who will and they will mysteriously disappear.
In the following scenario, the scammers will rent an airbnb for the weekend or gain access to a vacant property by other means. Emile L’Eplattenier real estate marketing and sales analyst at Fit Small Business informs that they then host an open house within these properties, asking a very reasonable price for rent.
As the bargain seeking renters arrive, the fraudsters will collect applications and deposits from all those who are interested.
They renters don’t they even know they’ve been scammed until they attempt to pick up the keys.
Last Minute Price Reductions
This scam sits on the edge of legality, but is still wholly unjust.
These firms will attempt to buy a property at a reasonable price making it seem that the deal is finalised, and that they will pay the agreed amount.
However, at the last second they will greatly lower their offer in the hopes that the seller would be too invested to look for another buyer and accept their new amount. Prior to the offer, these con artists will research the sellers, searching for low income households.
Property Investment Courses
Any budding property investor will look to gain as much information on the topic as they possibly can.
This could include reading books and blogs, watching videos, or even attending property investment courses. Unfortunately not all courses are as they seem.
You would pay a fee to attend the seminar, where the host will then persuade the attendees that they are involved in a sure fire investment that is looking for further investors.
Those who do hand over cash for the ‘investment’ will soon find out that there was no investment.
As previously mentioned cyber scams have become prevalent in the property world.
The hackers by someway or another gain access to the email accounts of a property seller, landlord or the solicitor that they have involved.
From here they search for messages which discuss the sending of funds and bank account details, they’ll then alter the details so that money is sent to their account.
On some properties you will find that there is an agent that is working with both the buyer and the seller and will likely not reveal this information to either party.
Agents work on a commission basis, meaning that they would want the property to sell for as much as possible so that they are able to make a larger commission. However, the buyer they are also working for will want to purchase the property for as little as possible. The real estate agent manipulates the buyer into acquiring the home for more than it’s worth, all so they can have a bigger slice of the pie.
It’s always refreshing as a landlord to come in contact with potential tenants that cannot wait to move into the property, however sometimes too eager can mean bad intentions.
These false renters will be overly excited about the property and willing if not insistent to send you a deposit or first month’s payment without even seeing the property. They will then overpay for the fee in the form of a cheque and ask that you refund the difference, all before the bank could tell you the cheque was no good in the first place.
Usually an appraisal is performed by a property inspector or estate who will then give the owner of the home documentation stating their appraisal. Con artists have gotten the bright idea of forging these documents so that they can inflate the price of the property and sell for a much higher fee.
This has been seen with those who look to make a quick flip on the property they have purchased.
It’s always nice to do a few home improvements to spruce up your home, but sometimes you’ll need the help of a contractor.
Some builders have a bad rep for doing shoddy work or leaving jobs unfinished, however some of the more sinister of the bunch have taken to scamming their unsuspecting clients.
While there are several ways these crafty constructors can pull the wool over our eyes, there is one method in particular that is especially dastardly.
The constructors will cold knock on doors, explaining to the home-owners that something needs to be fixed and could be dangerous if something is not done about it.
They’ll also explain that they can start work tomorrow, but a deposit will need to be made up front. For the unlucky few that do pay the deposit, those contractors will not be back tomorrow.
How to protect yourself?
There is no golden set of rules to ensure you are 100% safe in dealing with your rental property or when buying and selling property. The general rule of thumb is if a deal is too good to be true, it probably is.
Are you able to immediately secure a property for a much sought after area at a cut price?
Is your landlord promising ridiculously low rent or perhaps the proper tenant paperwork ‘will get sorted soon’?
Maybe your letting agent is only doing communication via email and not willing to provide an office address?
As a layer or protection, getting an agent with an outstanding reputation will help.
When it comes to the rental market, finding you the best letting agent is what we do at Rent Round.
Using their fees and feedback ratings from other landlords & tenants, you can easily find the perfect property manager or letting agent.
The service is free & quick to use. Type in your postcode then within 30 seconds, you can analyse the list of the best letting agents & property managers in your local area.