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Answering all those burning questions you didn’t know you had about home ownership.

3 Real Estate Scams to Avoid

Picture of Jessica Dabkowski

Jessica Dabkowski

Helping you with all things homeownership!

Today’s article is inspired by true events. I know, that was a dramatic opening line, but this is some serious stuff.

We all know scammers are out there, working hard for their “easy” money. But did you know they operate in the real estate sphere as well?

Today I’m going to advise you on three common real estate scams and how to protect yourself.

1. “For Rent” Scams

My last transaction of the year closed in December. I was representing the seller. Being excellent at my job, I staged this adorable little ranch and had it professionally photographed. It sold relatively quickly and sellers were happy. Awesome!

About a week after it closed, I received a voicemail from a gentleman inquiring about this property. I called him back and let him know that house had been sold the previous week. He reacted with confusion as he had paid an $850 deposit to rent the property. Uh oh.

This is an increasingly common scam which proceeds along these lines. A seller lists their home for sale. The scammers swipe the pictures off Zillow or a similar site. The scammers then post the home’s address and pictures on Craigslist or Facebook Marketplace as available to rent.

When a potential renter inquires about the property, the scammers sing a song of bullshit that goes something like this:

Oh, I can’t show you this home

Because the current tenants have big dogs/small kids/I’m outa the country

But if you love this home

I can hold it for youuuuuuuuuuu

Take a look at these beauuuuuteous photos

Don’t you want to live there? (live there, live there)

Just send me a venmo of 850 buuuuucks

and it will belongs to youuuuuuu.

Dabs

This song is like the Hogwarts school song — you can sing it to the melody of your choice.

Those lyrics probably should go in the bin . . .

You get my point. The scammers give a seemingly legitimate reason the renter can’t get into the house and extract a large deposit and/or first month’s rent from the renter (usually via electronic transfer such as Zelle, Venmo, etc.) before ghosting into thin air.

How can you protect yourself? If it seems to good to be true, it probably is. A gorgeous ranch available for $900 when normal rent in the area is $1300? Red flag, folks. Landlords want to get the most money possible out of their investment so they research the market rents.

Never send money electronically to someone you have never met and has not been able to allow you into the property. Coming in from out of state? Have a friend, future coworker or a real estate agent go tour the property on your behalf. You can also request a video tour, but I would use this as a last resort because there could be some slight of hand in that situation.

Making them physically take you through the property will demonstrate that they have control over the property. As soon as you demand to meet them personally, scammers will go radio silent on you. There’s easier prey out there who won’t insist on seeing their faces. The police told me many of these scammers are out of state, so they aren’t even physically present in Michigan to meet you.

If the person you are in contact with is a real estate agent, you can verify that they are a licensed Michigan agent on the MiPlus website. I looked myself up just to verify the information is easily accessible.

Now, you know I’m going to mention using an agent to help you. It’s fairly common for rentals to be transacted between the landlord and the renter, without the involvement of real estate agents. However, I will point out that we are flexible resources. You can pay an agent for the hour and a half it takes to tour the property for you. Seems like a good investment if you don’t have anyone else who can go on your behalf.

Something still feels not quite right? Call myself or any real estate agent you know. We pay through the nose to have easy access to public property records. We can at least poke around a bit and do a sniff test for you. It will take 90 seconds of time at our laptop and most of us are happy enough that you thought of us that we’ll do it gratis.

2. Wire Fraud in Real Estate Scams

Wire fraud is real! (All my past clients are giggling right now because I literally start one of my template emails with this phrase.)

Wire fraud has become a huge problem in real estate closings over the last decade. I emphatically warn all my clients that it happens and advise them on steps they can take to protect themselves.

When a home is purchased, the buyer commonly pays their down payment to a title company. The title company holds these funds in escrow until all the documents are executed. Once the i’s are dotted, the title company will issue the proceeds of the sale to the sellers.

How does the title company receive the buyer’s funds? Wait for it . . . a wire. A big, fat wire for lots of money. Money just begging scammers to divert the funds into their own pockets.

So the scammers will hack into a real estate agent’s email and just watch the emails come in and out. When they see a closing scheduled, they will use the agent’s email to send “updated” wiring instructions to the buyer. The buyer, on the “agent’s” instructions, sends their down payment to the new account – the account controlled by the scammers. These funds are almost never recovered. The scammers may also impersonate the title company, spoofing their emails and/or setting up a fake website to lull the buyer into thinking they’re the real deal.

Moira from Schitts Creek It's a Scam

How do we combat this scam? I tell my clients I will never EVER send them wiring instructions. Also, it’s a huge pain in the butt for a title company to change its bank accounts, so last minute changes to the account numbers is not really a thing.

Wiring instructions will come via secure email from the title company. Once the client receives the instructions, they need to call the title company via the main number and request to verify the wiring instructions.

Why can’t the buyer just bring a certified check? Because most title companies will only accept checks for smaller amounts because of, you guessed it, FRAUD.

3. Deed Fraud

Deed fraud is a troubling scam that is on the rise. Basically, criminals illegally transfer and record the ownership of your home without your knowledge or consent. The “deed” is the piece of paper that shows you own the property. “Title” is the abstract concept that you own the property. In effect, deed fraud is title fraud, but we’ll keep it simple and call it deed fraud here.

The scammers often target homes where the owner has passed away and the house has not been transferred to a new owner. However, they can target any home. They will write up a deed “selling” the home to themselves, forging the deceased owner’s signature on the deed.

The scammers then take the deed down to the county and file it using fake ID or a counterfeit notary signature. Once the deed is filed, they are now the “owner of record” as far as the government is aware. They can then turn around and sell the property to a legitimate buyer, who is unaware that anything untoward has occurred.

The scammers can alternatively rent out the property, pocketing the rent. They could also open a home equity line of credit, cash out and then not repay the loan. Similarly, they can do a cash out mortgage to access the equity of the home without trying to actually sell it to a third party.

The best way to protect yourself is to safeguard your identity. The scammers need your personal identifying information to execute the fraud. Watch your incoming bills – mortgage bills, tax bills, water bills, etc. If a bill suddenly stops coming, you should investigate why.

You can check the status of your property deed with your local county. Ensure no new deeds have been filed since you purchased the property.

In Wayne County, you can sign up for deed fraud alerts. You receive an email anytime a deed is filed with your name on it. The scammers would need to use your name in the deed as the seller, so you would get an alert. Check and see if your county offers a similar service.

If you are purchasing a property, PLEASE get yourself an owner’s title policy. Usually, this language is standard in the purchase agreement an agent provides. If you are contracting with a “for sale by owner” or not using your own agent in a transaction, you want this policy because the title company issuing the policy will research the public records to review the chain of ownership before agreeing to insure your ownership of the property. It won’t protect you against future deed fraud, but it may protect you if you are purchasing a property where deed fraud previously occurred.

I hope this article opens your eyes to some of the real estate scams that are happening out there is the great wide world. As always, reach out with any questions, comments or concerns. I’m here to help! Thanks for joining me, and I’ll see you next week.

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