When The Rental Home Is Too Good To Be True

The early morning sun was shining, and I was enjoying a scenic drive to meet the buyer’s appraiser at one of my “short sale” listings. It was the very last hurdle in a long but successful process… or so I thought at the time.
 

Then my phone rang. It was the appraiser, who had arrived at the property a few minutes early. “I thought you said the house was vacant,” she said. It was supposed to be; the owner had relocated out of state a few months earlier. But according to the appraiser, there was a woman with a small child inside the house and she was claiming to be the tenant!

By the time I arrived, the woman was gone. So was my realty sign (later found in the backyard) and my lockbox. A window had been broken into, one appliance was missing and the front door lock replaced. Overall, though, we were lucky because no one had actually moved in. We filed a report with the police and called the locksmith to change the locks again. The owner had to replace the missing appliance and broken window before closing, but we did not lose any time.

Another agent in my office has not been so lucky. The innocent tenants had already moved into her Pinecrest listing after paying someone a little over $5,000 for security deposit and first month’s rent. Her seller had to hire an attorney to evict them. Unfortunately, because it is not your typical Landlord-Tenant eviction, it is a more costly and longer process than normal resulting in a delay of the sales closing.

These are just two examples in a growing problem throughout the United States. And while it is especially prevalent in areas with a high number of homes vacated due to foreclosure, I have read and heard stories from just about every state – and about houses that weren’t even vacant! A third local incident involved a house the owner still lived in. The scam artist posted the house for rent on Trulia and other websites. He even stole the photos and description from the Realtor’s genuine listing. When one of the prospective tenants contacted him, he wrote a lengthy email detailing how he was traveling overseas and that the tenant should wire the deposit to his account and he would over-night the house keys. His email even cautioned her not to contact the listing agent from the sign in the yard because he (claiming to be the owner) had not yet told the listing agent he was renting the property instead. Luckily, this prospective tenant suspected a fraud and did contact the listing agent. In the meantime, the poor owner had dozens of people pounding on her door demanding to see her “rental” property.

These scam artists are targeting victims and properties at every socio-economic level including multi-million dollars homes. The criminal sometimes poses as the property owner, sometimes as the real estate agent. In one case in Tampa, Florida, the scammer was in fact a licensed agent – just not the listing agent for the property. Sometimes the correspondence is as obvious and laughable as the “Nigerian Prince” emails. Other times, the paperwork is extremely sophisticated, including forged Warranty Deeds to substantiate “ownership.” But they all follow a similar pattern of advertising the home for rent on freely available websites, such as Craig’s List or Rentals.com, at a rental price that is generally lower than it should be for the neighborhood. The “owner” or “agent” is also more than willing to take partial payments and to waive background checks to let the tenant move in. Then, as soon as they have collected as much money as they can from the tenant, they disappear to leave the tenant, real owner and real listing agent to suffer the losses.

How can you protect yourself from this fraud?

If you are a prospective tenant:

·         Ask to see proof of ownership and more than one form of ID from an owner, then double-check the information against public records.

·         If the person claims to be the real estate agent, take down their contact information including their office phone number and address. Verify that information before handing over any money or personal information. Call the main real estate office and ask to speak to a manager to verify both the agent and the rental listing.

·         Do not wire money – especially if you have never met anyone in person – and do not pay in cash. If at all possible, insist on issuing a cashier’s check payable to a specific person or company that you have already verified locally.

·         Or easiest of all, use a reputable licensed agent to help you find a genuine rental property.

If you are a prospective seller of a vacant house:

·         Ask the agents you are interviewing to commit to personally inspecting your property at least once a week, including and especially after the house has gone under contract. Avoid “MLS only” type brokers that are often located far from your property and will not send an agent to accompany showings or check on the property.

·         Ask the agents what type of lockbox and showing system they use. If they intend to use a mechanical lockbox, I recommend that you hire someone else. In Miami-Dade County, we have the option of using an electronic lockbox, which can be opened only by an active licensed agent possessing an electronic key. The exact day/time of the showing and all of the showing agent’s information is automatically recorded when s/he uses the electronic key to access the property.  In addition, Realtors who are members of the Miami Realtor board have access to a scheduling service called “Showing Assist” through our MLS. When another agent wants to show a listing, they are able to click on button on the listing’s data page and make the request. As with the electronic key, only actively licensed agents are able to access the MLS, and all of their information including license number is recorded. These safeguards help prevent an agent from giving out access information to third parties. And showing agents who use these systems are more likely to report problems (such as a broken window) to the listing agent.

·         Notify your neighbors and enlist their help in keeping an eye on your property. Tell them that you or your agent will notify them when the sale has closed, and ask them to report anyone moving in before that. As happened in my case, the neighbor saw my sign come down and a moving truck pull up, so he assumed the sale transaction had closed. Now, if the property is vacant, I keep the neighbors informed as to our progress and give them my card to alert me if they see anything suspicious.

And if someone tries to pull this scam on you, please report it to the police. When it is reported early enough in the attempted fraud, police have been able to catch and arrest the perpetrators.