How to Keep From Getting Scammed in a Real Estate Deal
You'd be foolish to think you couldn't be fooled in a real estate transaction. While the majority of sellers, buyers and renters are presumably honest, there can be additional players with skin in the game, including landlords, real estate agents, bankers or workers at title agencies.
As Sacramento real estate broker Alexis Moore observes: "The crooks don't always have on orange jump suits. Many are former real estate professionals who are using the system."
So how do you know if you're about to be scammed? You can't, but there are warning signs and steps you can take to protect yourself. Even if you are working with honest people, there are smart ways to approach buying, renting or selling any home.
Sometimes, you really do stumble into a great deal and, yes, you want to act quickly before someone else stumbles on -- and snags -- this great deal. But rushing means you have little time to question what you're doing.
Joe Rand, managing partner for Better Homes and Gardens Rand Realty in New York and New Jersey, says that about once a week, he hears of a renter who saw a house but didn't actually go inside.
"The person will tell the renter that they've relocated, they need to rent [the property] quickly, here's a photo. Just go look at the place, but I can't show you the inside," Rand says.
The renter will send the "landlord" deposit money and show up at one of his business's many offices, asking for the keys. Of course, that's when the renter learns he was working with a con artist who had simply taken a photo of an apartment and let the victim's imagination fill in the blanks.
It may seem crazy to rent property without touring the interior, but as Rand explains: "What does every scam depend on? Somebody thinking this is an amazing deal and they have to jump on it."
Vet People and Businesses
Just because someone has a LinkedIn page doesn't make him or her a swell human being. For instance, earlier this month, at least 14 unsuspecting home buyers in towns around Monroe County, New York, paid down payments to a real estate agent whose license had reportedly expired. The homeowners wrote him checks but instead of putting their funds in escrow, the agent allegedly pocketed the money. At the time of this writing, the accused agent, John Valerio, was cooling his heels in the county clink.
But one can hardly blame the victims. Valerio apparently was, until very recently, a licensed real estate agent. He doesn't have much of an online presence, but his LinkedIn profile states that his company, Lamplighter Realty Inc., has been in business since 1971. What's more, his business is listed in the Yellow Pages.
This scenario may happen more than we'd like to believe. Moore says she recently reported an unlicensed colleague who was still selling homes. Your safest bet is likely to walk into a bustling, reputable real estate office to meet with a new agent. But if you meet an agent randomly who has little more than a business card and a charming demeanor, ask to see an agent's license to ensure it's current, Moore suggests.
"We all carry a plastic card like a credit card in California, and it says the person's name and their title, like broker or sales agent," she adds.
If you're really concerned, check online to see if anything concerning pops up. To find someone you trust, ask for a referral from a close friend or family member.