Renters today are at increased risk of fraudulent activity. This post will assist renters identify the red flags that suggest advertisement, owner or property manager is a scam. Methods to protect yourself and methods of due diligence will be identified.
Three types of scams are common. An individual
attempts to lease you a home they have no ownership interest in or right to
lease. They may pose as the owner, friend/relative of the owner or even
pretend to be a real estate agent or property manager. In one case I am aware
of a priest claiming to be renting a donated property on behalf of a church –
he was actually a convicted felon out on bail. Often these scammers are
looking to make a quick hit and will offer the property at a steep
discount. Say a $1200 per month property for $700 to 800. They will
want to meet to get a money order or cash for a deposit or have you
wire funds to an off shore account. Usually this money is lost.
Some scammers target those relocating from out of state that will not see the property, only view on line pictures. Other scammers will have gained access to the property and put on a new lock. You may get keys to a property that is scheduled to be foreclosed or was just foreclosed. You may not be alone, finding if you were the first to move in, a group of other people showing up with their furnishings.
Red flags: A low price. Wire transfer to a foreign bank. Urgency to meet in person with cash or cashier’s check. The inabilities to see the property or the property is open just go in. Dealing with someone whose identity you cannot confirm. Dealing with someone other than the true owner of the property.
Beyond the lost deposit, identity thieves may use online rental advertisements as bait for unsuspecting identity fraud victims. If you get requests or applications seeking detailed personal information, addresses, dates of birth, social security numbers, bank account numbers, driver’s license, if you are paying for an application with a credit card you are providing the credit card number, the expiration date and verification code. These can be used to access your credit and bank accounts, and open new accounts in your name. Loss of the deposit may only be the tip of the iceberg.
Red flags: Information provided to an individual rather than a reputable identifiable company. The inability to submit your personal information securely online. There is no business address, no way to know who you are really providing the information to.
Today with so many owners in financial distress an owner may lease their property take a large deposit to rent or on a lease purchase intending to collect the rent and never make a payment to the mortgage company. This is fraud is called equity skimming. Your cost to move, deposits, and any improvements will be lost.
Red flags: A low price, large deposit, anxious owner, property in some state of disrepair, the owner is unwilling to the make repairs or improvements you desire prior to move in. A mortgage with a higher balance than the value of the property.
So how do you protect yourself? First, trust your instincts, if it is too good to be true it probably is a scam. Be wary of high pressure tactics where there is urgency for you to part with your money. Deal with a reputable brokerage company or property manager. Make payments to an escrow account where your security deposit is held and the rent is not released to the owner until you take possession.
Only provide sensitive financial and personal information on a secure website belonging to a reputable company. If you have to deal with an owner directly, get their proof of identity. Check the property records to be sure they own the property today, check to see if there is a mortgage and that loan is not in foreclosure. Compare the value of the home to the value of the mortgage and exercise caution if the value exceeds the loan. An owner with less than 20% equity is at higher risk of default than one with more equity. Speak with the former tenant, or other current tenants of the owner. Where they financially responsible, make prompt repairs, promptly return the prior tenants deposit. Talk to the neighbors. There are many steps you can take to not be a victim. Pay a fee to have a professional REALOR to check out the owner and property for you and protect your interests by holding your money in an escrow account. If it’s too late and you’ve been scammed you can file a complaint here http://www.ic3.gov/default.aspx
Atlanta continues to offer solid cash on cash returns to investors. Call or e-mail me if you want notifications of investment grade properties or are planning on relocating.
RE/MAX Greater Atlanta
An Atlanta Real Estate Expert Serving Clients Since 1979
CRS, CRB, ABR, MSRE, CDPE, CIAS, e-PRO, ESQ
2050 Roswell Road
Marietta GA 30062
The Linked In REALTOR