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An Old Real Estate Scam Snares New Victims

HI3-10-14In an age of heightened worry about sophisticated scams and information hacking, a few low-tech, old school scams are still flourishing –w with a little help from the internet. Case in point: a very simple real estate “bait and switch” that recently netted a New York con artist a cool $22,000.

We’ve brought you news in these pages about a variety of scams and frauds masking the rounds of real estate transactions both online and off. And while vigilance is usually the key to avoiding getting burned, sometimes the scam looks so straightforward it’s hard to spot the catch. That’s what scammers are counting on when they place ads (usually on Craigslist but also on other kinds of real estate listing sites) for homes and apartments for sale or rent.

There’s just one catch. They don’t actually own the places they’re posting about. So when interested parties respond, the scammer may show the place, collect deposits or – in some especially brazen cases, a sale price – and then disappear. That’s what happened in New York’s East Village, where a man claiming to be the owner showed 10 people a vacant apartment, collected $2,200 in deposit money from each of them and then vanished.

When the would-be renters tried to finalize the transaction, they found that the apartment was owned by someone else and that it wasn’t actually up for rent. There was no hops of recovering their lost money – or of tracking down the bogus seller.

The same scenario is played out on home and apartment listing boards across the country. Some transactions are conducted entirely online, with hungry buyers sending a “seller” large deposits or, in some cases, the whole purchase price of a dwelling on the basis of a few photos or a talk with the scammer, who often pressures them into moving forward fast with a story of unhappy circumstances.

The properties used as bait typically come from real listings pirated from other sources – or local properties the scammer has personal knowledge of, as in the New York City case. The scam joins a long line of similar traps laid for unwary renters and buyers. But because it appears so transparent and above board, it’s easy to become snared.

The solution, real estate fraud experts say, is to be as diligent as possible. Don’t send anyone money for a property sight unseen. Resist hard sells, sob stories and other kinds of pressure tactics to close a deal before you can think. That might include a look at property records or a call to a building’s manager to confirm the details.

Of course, fraud experts recommend reporting this kind of incident to local authorities and anti-fraud task forces, who add it to their database even if it seems unlikely that the scammer will ever be tracked down. And, as Jason Hartman advises, do your homework research any properties you might be interested in – and consult qualified real estate experts before committing any money.  (Top image:Flickr/denharsh)

Read more from Heroic Investing:

Early Birds Catch Investing Success

Bitcoin Scams Trap Unwary Users

The Heroic Investing Team

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