Don’t Get Tricked: Learn How to Spot, Avoid, and Deal with Real Estate Scams
Quality, affordable homes in inclusive communities are valuable assets that come with big commitments—or big setbacks if you’re victimized by a real estate scam. According to data from the Federal Bureau of Investigation’s Internet Crime Complaint Center, in 2021 alone, nearly 12,000 victims reported real estate fraud.
So, if you’re embarking on your search for a new rental home, congratulations! Your journey has just begun. And, as a property management team, we consider it our responsibility to help ensure you celebrate every step of the way.
Real estate fraudsters take advantage of clueless individuals trying to rent homes, and we’re intent on not letting you become a victim. In this article, we cover what you must know to avoid real estate scams.
Types of Scams in Real Estate
The more you’re informed of real estate industry frauds, the more you can protect yourself from falling into their traps. Here’s how several of the most common scams work and how to avoid falling for them:
Fake Rental Ads
There are many crooks out there with online rental listings that they copied from a legitimate source.
Their rental ad is always at an amount far below market rent. They often tell you to ignore any other online ads or signs at the home because the owner just fired that “other company” and hired them. They don’t ask for the usual approval documentation as their only goal is to get you to give or send them money for a “deposit”. Then they disappear and you find out they had no legal right to rent the home.
Fake Property Managers
An even more brazen scam involves the crook doing everything above PLUS breaking and entering the rental home to change the locks. They have you sign a lease and even give you a key and “let you move in”, but disappear with your first month’s rent and security deposit.
You don’t find out you’ve been scammed until the legal owner or property manager shows up at the home asking what you’re doing there!
Fake Sublease
With this one, a crook claims they have to move for some reason, but you can take over their lease for a fee. They often use vacant homes for this scam, but we’ve heard stories of crooks using Airbnb homes and telling their victims they are moving out of state or out of the country, so they are leaving all their furnishings behind!
Fake Facilitators
You see an ad online that promises to help you get approved for one of the rental homes they show. They ask you to fill out a simple application and for some income info, then call you back with the good news that you’ve been approved. All you have to do then is pay them a fee to finalize everything.
The reality is that they have nothing to do with the homes in their ads and it’s all a scam.
How Can You Avoid Real Estate Scams?
Scamsters aren’t dumb—fraud is typically a skilled psychological business that uses advanced technology, albeit in a direct attempt to steal from another business. A good scam is typically difficult to catch, but there are several ways you can educate and protect yourself.
Here are the best ways to avoid real estate scams:
- Only work with professionals: Don’t get tempted by “too good to be true” deals. Only work with licensed agents and property managers. If someone contacts you randomly, do your due diligence to confirm their legitimacy. Legitimate companies have websites or Facebook pages.
- Verify company exists: You can often verify if a company is legitimate by checking with the State of Michigan Corporate Division. A search also shows the company agent and mailing address, so you can verify who you’re communicating with.
- Secure personal information: It goes without saying, but don’t give your personal or financial information to someone you barely know and haven’t vetted.
- Be cautious about upfront fees: Don’t pay for something you haven’t received or confirmed yet, especially if the person pressures you. Scam victims are people who are easily pressured.
- Be suspicious of last-minute changes: If you’re in the process of renting a home and are told of a last-minute change, verify that it’s real news. Don’t act hastily, trust strangers, or let your emotions get to you.
- Find out who owns the rental: You can research online to find out the name of the actual owner of the home. So, before paying any money, ask for proof in writing that they are the owner or legal representative (agent or property manager) for the owner. Also, search the home address online and if you find another rental ad, contact that person or company.
- Double-check the lease agreement: You can often usually tell something fishy is going on by the unprofessional lease they provide you with. In their rush to scam you, there are often errors with the Start & End Dates, rent amount, security deposit amount & bank where it is held, mailing address and contact info for the landlord, etc.
- Insist on a conversation with the homeowner: You can also insist on speaking with the actual homeowner to verify they are allowing the sublease, as most lease contracts do not.
Finally, if you do find yourself in a real estate scam, report it to the property authorities by contacting your mortgage service provider, local law enforcement agency, or the Federal Trade Commission. The earlier you report or file a complaint, the higher the chances of reversing any loss.
Avoid Real Estate Scams and Truly Find Your Dream Home
Real estate scams are awfully common, but they don’t have to get you.
Stay informed about the possibility of fraud, only work with licensed real estate agents and property managers you can trust, and verify legitimacy every step of the way by double-checking licenses and reviews. If you believe that you’ve been involved in a real estate scam, contact authorities right away.
Work with our team to protect yourself from real estate scams today. We’re a team of expert property managers with over two decades of experience under our belt—we’ve seen and handled it all.