Renters: Beware of new twists on an old scam
Combine a bad economy, a glut of abandoned homes and people in need of cheap housing and you've got rich ground for con artists posing as landlords and targeting renters.
The scam is as old as desire itself: sell a "super" product at a "low price," then make off with the cash as the victim discovers he's been left with a fake bill of goods.
Now, with a slow economy and more Americans in need of affordable housing, the age-old ploy is rife in the rental market. The rental scam comes in several variations, but it typically follows the same basic recipe: A con artist finds a property, pretends to be the owner, lists it online, then communicates with the would-be renter and takes a cash deposit.
The renter is left with nothing or ends up squatting on someone else's vacant property while paying "rent" to a fraudster, all unbeknownst to the property's real owner.
Familiarizing yourself with the scam can help you avoid being one of its unwitting victims. With that in mind, here's a quick rundown of its various forms, followed by a list of tips on how to avoid falling prey to even the cleverest trickster.
A pretend owner ‘rents’ out a vacant home
Even criminals are subject to market conditions. If thousands of abandoned homes sit empty and thousands of people are in need of cheap housing, someone is eventually going to put the two together, legal or not.
In this case, the scam artist steps in to take advantage of the situation.
He finds an abandoned property, or two or three (these days, it's not hard), and creates an online advertisement pretending to be either the owner or someone authorized to rent on the owner's behalf.
He then breaks in, sometimes changing the locks, and typically asks to be paid in cash. In Las Vegas, a woman arrested for just such a scam had provided a contract and written rental receipts to a mother of two, and instructed the woman to meet her each month in a public location to pay her cash "rent," according to a story in the Las Vegas Sun.
The real owner, who lived in California, arrived one day to find a family living in the home.
"When a house sits vacant for a year it becomes easier to take advantage of it. Six months of collecting rent at $1,500 can be hard to pass up," said Sean O'Toole, founder and CEO of ForeclosureRadar.com, which tracks foreclosures in California.
As proof, take a case this year in Fremont, Calif., in which a former licensed Realtor rented out foreclosed homes at least 13 times before he was caught by a visiting owner. Police said he had 19 more foreclosed homes lined up to rent and had identified 126 others. He copied listings from the Multiple Listing Service and somehow obtained the key codes. He then instructed the would-be renters to change the locks, according to news reports.
Tenants in such cases did not intend to occupy a house illegally and aren't going to be charged with a crime, police say. But the renters are going to have to move on short notice and are unlikely to see their security deposits again.
A fake agent pretends to rent a foreclosed property then splits before the renter moves in
This scam starts in much the same way, except the con artist supplies a throwaway or fake phone number and never supplies the keys to the property. He may also collect a deposit from several victims at a time.
In this case, the victim is out both the money and a place to live.
In Miami recently, a con artist went so far as to create a fake warranty deed and introduce himself to neighbors as the new owner.
"He showed me the house. He had a key. He knew the floor plans of the house, everything about the house. It was convincing," the alleged victim, a teacher who handed over a $3,000 deposit, told the Local 10 television news.
As it turned out, several others had handed over deposits, too, and had shown up with moving trucks only to find they were unable to get in.
"It's very, very devastating," the teacher told reporters.
A fake property manager pretends to rent out a home that's for sale
In this case, the con artist hijacks listings of homes that are for sale or rent by legitimate agencies. He may rewrite the ad a bit before posting it online (often on Craigslist, where posts are free), including undercutting the original price by as much as half.
When interested tenants respond, eager to secure such a good deal, the con artist may claim to need a cash deposit or application information – containing personal data that can be mined for identity theft – before arrangements can be made to view the apartment. The scammer may say he is out of state for work, or for some other reason has to rush to rent the apartment from afar.
The con artist may also use the name of an actual leasing agent and agency; when renters go online, they believe they are verifying the self-proclaimed agent's identity. (See more on how to protect yourself.)
One woman in Florida who got access to a real-estate agent’s lock-box codes, apparently by pretending to be agent, printed rental contracts and business cards, which she displayed inside the home after hiding the real agent's cards in a drawer, police said.
She also pulled the true realty sign from the yard and hid it in the garage during home tours. When one couple spotted the sign, she told them to ignore the telephone number on it, a move that made the couple suspicious and ultimately led to a police sting.
"If you were to listen to her when she was actually doing any transactions you wouldn't think twice about it," said Chuck Lee, an investigator with the Volusia County Sheriff's Office in Florida, who followed one of her presentations. "She was very smooth."
The woman would fill out a rental agreement on the spot and take a cash deposit, making arrangements to deliver the keys later and providing a telephone number, police said. She received money for several homes before she was arrested and charged, police said.
A real owner rents his foreclosed property
At times the scam artist is a desperate homeowner. Authorities say owners approaching, or in, foreclosure have been renting the property and pocketing the cash, removing eviction signs from the property to keep tenants in the dark as long as possible.
Renters may not learn their money has been taken until eviction day, although government agencies have been working to ensure that tenants get at least three months to move after a confirmed notification.
When renting, "you should as a matter of course check whether the property is in foreclosure or not," said ForeclosureRadar.com's O'Toole.
One free site dedicated to helping renters with this task is RentalForeclosure.com, where you can type in the property's address.
A con artist borrows a real apartment or address and collects deposits and Social Security numbers
Instead of borrowing a listing, the scammer creates his own for an occupied apartment that he has borrowed or even temporarily rented using phony identification. He advertises a low price and creates a sense of urgency to encourage people to hand over cash and an application containing Social Security numbers to hold the unit.
For a dramatized example of how such a ruse is carried out— and how easy it is to fall for — check out this video by "The Real Hustle."
In the end, the victim risks losing not just cash but his identity and banking information.
A con artist rents a real, but unavailable, apartment to tourists
Anyone can list a property as a vacation or temporary rental, and it attracts those visiting or moving from out of town. But a scammer will request that a security deposit and rent money be wired in advance, as opposed to accepting a credit card or check.
Visitors show up at the address to find no apartment and no valid contact information. Authorities say it is almost impossible to recover money that has been wired, which is almost as untraceable as cash, or even to find the perpetrators.
This scam happened to my parents home whilst it was empty. We had a buyer and it had a SOLD sign in the front garden. Someone broke in on the Friday and changed the lock, had an ad placed in a local shop and showed the house to numerous potential renters on the Saturday. Sunday morning I received a phone call from one of the neighbours saying they had seen people in the property. I reported this to the Police and raced over there straight away. The police were already there talking to a Polish man who had paid over £1000, (so he claimed) to rent the house. He had replied to the add, met some guy at the house was shown around and handed cash to this guy for 3 months rent. The mobile number was unattainable.....surprise surprise. Anyway the man left after his statement to the police and I changed all locks. 2 further victims arrived over the following next week, all stating they had handed cash over to 'The Owner'.
Following this up, all 3 known victims failed to report it to the police and the original victim disappeared completely.
I had been due to drop in on the Saturday but was unwell. Would have been an interesting situation, walking in on some stranger showing my parents house to other people.
Hopefully I'll catch up with this guy someday and i'll be his worse nightmare.
ALSO, TAKE PICTURES. Who today does not have a camera? Digital or Cell phone or even a cheap throw away film camera. How many scammers really want to have their pictures taken? Don't forget to get some of the scammers vehicle/license plate too! How do banks catch thieves, they take pictures. Mayby try to get fingerprints too.....offer the scammer a soft drink or bottled water you just happened to bring along.
Obviously FOLLOW THE REST OF THE SAFE PRACTICES STATED HERE. It would be really stupid to just "document" your DUMB-CASH transaction while it goes down.
This is a very sad and way to common problem in this market and the past down real estate markets we've had. Due diligence is the key whether you rent or buy on your own or with a Realtor. There are many things you can do to lessen the likelihood of being ripped off by an unlawful seller or agent. #1. Always, always, always check to see if the present owner you are buying from or renting from is currently in foreclosure or in ''pre-foreclosure". This can easily be done by checking public records or with a local title company. If you are really concerned, simply tell the owner of your concerns and ask to see their last mortgage statement and the canceled check or proof that the payment was actually paid. #2. Never give cash to a Realtor or seller. If you are buying, the money should be going directly to a escrow company (at least in California). #3. Find a professional Realtor that you trust to either assist you or give you sound advise. Most people know a good Realtor or know someone who has had a good experience. (even though it may seem like they are far and few between, there are some outstanding professionals out there to help you). Ask around for a good referral. Let's face it, we're talking about YOUR home, where YOUR family lives. Do the research, find good help, and do EVERYTHING in YOUR power to protect YOUR money, assets and sanity.
So Cal Realtor
I work for a foreclosure company. Every week I get called by renters who were scammed by the "poor family in foreclosure". Many foreclosures are a result of fraud by borrowers and/or realtors and/or independent loan brokers. Many realtors bought a handful or a dozen properties and are rent-skimming until they get caught. Many homeowners used money they made elsewhere to build an empire of rentals where the renters pay but the owners do not pay the bank, even across state lines. Other scammers took out loan after loan after loan with no intention of ever paying. We would have to add another 150.000 beds in our Cali prison system to house this scum. The Realtors who are old timers and decent folks are disgusted with these animals who saw a quick buck and stole it. To this day the number of real estate crimes is under-estimated by paid-for politicians on a biblical scale. This is the wild west folks!!!
we also suggesting all people that before purchasing or taking home in rental basis first investigate thoroughly as you are going to put money as deposit etc.
We have been there too! We bought a house through a legitimate Real Estate Broker (or so he claimed). When we couldn't get financing he said he'd find a investor to purchase the house and sell it to us on a Contract for Deed. We paid $12000 down, paid closing costs and moved in. We started getting notices in the mail from the mortgage company. Seems the 'investor' was the realtor's son and didn't have a job or checking account. That meant we paid him our payment, he had to wait for it to clear his bank to get a cashier's check to send to the mortgage company. At least that was the explanation we got. Eventually, the son quit getting the cashier's check to send to his mortgage company and just kept our $2400/month payments. The mortgage company wouldn't talk to me citing privacy requirements, so I couldn't find out if the payments were being made or not. After five months of back and forth with the Realtor and his son, the house went to foreclosure. We hired an attorney who filed a lawsuit against all parties (realtor, his son, mortgage company, title company). Problem with that was he never officially served the rats with the lawsuit, so the judge threw it out. We hired attorney number two who did everything correctly and got a temporary restraining order against the realtor and his son (they were suing us for non-payment!!!). In the end, the property went to foreclosure and we had to move. We lost our $12000 down payment, over $12000 in payments that never went to the mortgage company, $3500 to the first attorney and $5000 to the second attorney and of course, our home.
If you do nothing else, check out your realtor with the state licensing agency, find out the county he lives in and check the public records to see if there are any foreclosures. Turns out the realtor had 6 properties, including his own home, in foreclosure during the time we were dealing with him. Since then he has had 3 more foreclosures that we know of. We can sue him in our state but the process is long and cumbersome and there is no guarantee we will win. If we do, we can only recover our actual losses, not attorney fees.
Contact your legislators and let them know that you want these scam artists prosecuted criminally, which paves the way for you to sue them in civil court. Check to see if your state has a recovery fund for realtors which allows you to actually collect something if you win your court case. Most of these guys are good at hiding their money, so you wouldn't find much if you expected a judgment against them personally.
We rent now and probably will until the day we die. We checked out the owners and know exactly where they are at with their mortgage so we can sleep at night.
How would you check on something like this? Get the address and go to city hall and ask them to look it up or what? Lshadylady
Amazingly enough, this very situation just happened to my husband and me about 2 weeks ago. Fortunately for us, we checked out the real owner of the property through the local property appraiser's website. When things didn't add up, we contacted our local authorities. It turns out that somebody had pulled an actual real estate listing, copied it word for word onto Craigslist (here we go again...) and presented it as a rental property.
I'm not sure that it all is due to the present economy. Sometimes people are just lazy. The property owner tries to cut corners (or just doesn't know what they are doing) and ends up presenting an invalid agreement. The buyer/tenant doesn't do their homework. It's so easy these days with the internet to check things out and doesn't really take much time, either.
We've been in Florida six years and have had three different transactions go poorly because we thought we were dealing with honest people. In one scenario, the property owner "forgot" to include his daughter on the agreement. She was also on the title to the property. When it came time for us to go from being tenants to actually purchase the property, she wouldn't agree to the purchase price stated in the agreement. There wasn't a thing we could legally do. Another time the seller "forgot" to mention that the home was in foreclosure. The sad thing about that property was that the owner actually owned a property management company. Now we are having to move out of our apartment which is considered to be "in-law quarters" because the landlord built the unit without getting any permits from the city and the apartment violates zoning codes! YEAH US!!! We win the "stupid tenants" award of the century!
From now on, we will only deal with a bonafide company and/or a licensed real estate agent. As my husband put it, we are going to interview the landlord(s) as critically and completely as they interview us. This market is a two way street and both sides have to be comfortable and confident with one another.
It is a shame that honesty has gone by the wayside in many business dealings. Maybe I'm being a Pollyanna but it sure would be nice to think that one day we'd return to doing business according to the Golden Rule.
I have had 866 people contact me about renting a house near UMD. THe scammers pose as tenants and are Brokers,Real Estate agents, Felons, people claiming to work for FEMA, and a crystal meth cooker. Bankrupt, unemployed ect. Everyone wants to rent to own, and spend most of their time trying to buy the house. And a few NLP as in thought reform.
I pay 7k in taxes, 3k in licensing and insurance, repairs and upgrades 5K, not to mention Plumbers, electricians, masons for another 5 k. And 3k in upgrades. I did an energy audit and installed 22 energy saving devices,I am operating at less then 3% profit for 15 years. The last two 0 profit. So when the taxes don't get paid I will donate the home to one of the following A Church, or a temple, or the Girl Scouts.Because no conartist is buying the house period.