Too Smart to Fall for a Real Estate Scam? Think Again
If $36,000 for a three-bedroom house in D.C. sounds too good to be true, it probably is. Coldwell Banker agent Scott Frost first discovered the scam after discovering that he was listed on a Zillow ad for a property with a price nearly ten times below the typical home value in the area.
“I first noticed it was a scam due to the incredibly low price,” Frost told Inman. “I then contacted the listing agent whose photos were used and found out that they were posted illegally as a scam.” Once alerted to the scam, Zillow took down the listing.
Stories of online scammers targeting both agents and homeowners are many — last winter, a retired pastor lost $130,000 to wire fraud after transferring money for what he thought was a house. Scammers regularly create fake leads that look like they come from Zillow or Realtor.com. And, most recently, a Forbes contributor got a fraudulent message from someone who, pretending to be her escrow officer, told her she needed to wire money immediately or lose the home she’s been trying to close for weeks.
The latest Internet Crime Report, conducted annually by the Federal Bureau of Investigation (FBI), found a total of 351,936 incidents of Internet-enabled theft, fraud and exploitation in 2018. This number is up nearly 15 percent, from 301,580 incidents in 2017.
Real estate and rental internet crimes affected 11,300 victims in 2018, according to the new report, and cost them nearly $150 million, up dramatically from 2017, when 9,645 victims were impacted by these types of crimes, and lost a collective $56 million to scammers and fraudsters using online means.
“Wire fraud attempts are definitely our biggest risk,” Carol Berberian, a safety trainer and business development consultant at Boston-based brokerage Lamacchia Realty, told Inman. “Scammers are patient and follow the details of a transaction. Typically, the Realtor or clients will unknowingly have their email compromised which can give the scammer access to all of their communication.”
Real estate scams are, according to Berbarian, are getting increasingly difficult to identify — tech-savvy fraudsters will take great pains to know the minute details of one’s real estate history or generate leads that look remarkably close to real ones.
As a result, one of the most important things buyers and agents can do when they spot a scam is get on the phone. Before transferring any money online, one should actually speak to an agent, escrow officer or other real estate professional to see if the request is truly coming from them. If an agent gets an email asking for money to receive a lead, they can also reach out to Zillow and Realtor.com to check whether it is genuine.
“We are all quick to send an email or a text rather than picking up the phone,” Berberian said. “Verifying any request dealing with money over the phone with your Realtor, attorney, lender or title company is always worth the time.”
Real estate safety expert Tracey Hawkins said that she’s seen one other common type of real estate scam — fraudsters will list a house in a popular market for a low price, tell the interested buyer or renter that it’s unavailable for viewing and then ask for a deposit to hold the property.
“A Google search is a great starting place,” Hawkins told Inman, adding that one should also always physically tour a property before making any deposit. “That will help confirm property ownership and any real estate activity (like listings on various websites). Local county websites typically offer free property owner as well as tax record searches.”
Particularly in a competitive market, it can be easy to feel like one has to act fast in order to get their dream house or a profitable lead. But as online real estate scams become more and more technologically complex, taking the extra time to review who is asking for money and why can save you thousands in lost dollars.
“If a deal is too good to be true, it probably is,” said Hawkins. “Proceed with caution or walk away.”