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Stolen Listings and Zombies: More Real Estate Scams

HI4-5-13If the Nigerian money transfer scheme weren’t enough, a variety of other real estate scams continue to circulate, trapping not just sellers, but also buyers and renters, too. The aftermath of the housing collapse created conditions ripe for scamming, as foreclosures spread, banks mishandled mortgages and desperate homeowners jumped at any opportunity to sell.

A new homeowner in North Carolina was surprised to find people showing up at her house claiming that they’d just bought the property. It turned out that she’d become the victim of a very simple but lucrative scam in which scammers pull property listings off auction and real estate sites and post them to marketplace sites such as Craigslist.

Posing as the seller, they collect deposits and down payments over and over on these stolen property listings, then pull the ads and vanish. But since the listings are real, these would be homeowners appear to claim their property only to find that it’s already occupied by a legitimate buyer. In cases like this it can be virtually impossible to track down the scammer.

Another popular scam trades on the phenomenon of “zombie properties” – those properties left in limbo after a bank issued notice of foreclosure but never actually followed through, and the owners walked away. Here, a scammer claims to be the owner of the property and advertises it for rent. Legitimate renters move in, and the scammer collects rents from them without doing maintenance or upkeep for as long as possible, then vanishes when the real owner reappears or legal action is threatened for failure to keep the property up to code.

Preying on the struggling homeowner who needs to get out from under a defaulting mortgage, numerous self-styled “short sale brokers” offer to find buyers quickly and help the homeowner bypass the bank’s requirements for the short sale – usually for a hefty fee, or a percentage of the final selling price. They may even offer to buy the property themselves. But after they collect their fees, they disappear, leaving the homeowner to cope with a deal gone bad.

Fraud experts acknowledge that in many, if not most of these cases, it may be nearly impossible to track down the scammers, much less prosecute them – especially in cases involving internet transactions and anonymous email addresses. But, they say, it’s still important to report these cases to the appropriate authorities. The FBI investigates Internet crime, and for person-to-person cases, local law enforcement is a good place to start. And it’s important to notify websites such as Craigslist or eBay of fraudulent or questionable postings. A reputable site wants to keep things that way and will delete the post.

If a deal seems too good to be true, it probably is, and if a story seems farfetched, it probably is too. And, experts say, never fall for a proposition that requires you to send money to make money. In the end, the best weapon against scams like these is to stay alert, ask questions and educate yourself — key strategies recommended by Jason Hartman for success in income property investing.  (Top image: Flickr/jeremylevine)

The Heroic Investing Team

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