As fraudsters get more sophisticated, you should too
Technology continues to evolve, and with it so do the ways we can be deceived. I'm not talking about artificial intelligence, but rather oldfashioned fraud perpetrated with new tools. In real estate, at least two types of fraud have happened right here in Mendocino County. Lest you think you're immune, beware. The people who got snookered were often intelligent, trusting souls who didn't think they'd fall for these tricks, either.
Rental property fraud
With the shortage of available rentals, people who are looking for a place to live can start to feel a little desperate. This provides an opening for scammers to strike. When you're scared, you don't do your best thinking, so you ignore signs that something isn't quite right.
Here's how the scam goes down. As a prospective renter, you find a listing for a rental that's big, clean, in a nice area, and priced below market.
You've been pouring over listings every day for weeks, so you ignore the little voice in your head that says, “This is too good to be true. Be suspicious.”
You call to inquire about availability and a showing. The “landlord” (who is actually the scammer) answers and says the house is currently occupied by persnickety tenants who will be moving out soon.
Please don't engage with them; just drive by the property. If you're still interested, send a deposit to hold the place until the occupants move out next week. Then you can see the inside and finalize the lease agreement.
You send the deposit and never hear from the scammer again. The property was never actually for rent.
Another version of this scam happens when a house is on the market for sale. The “owner” (scammer) says she is not happy with her real estate agent and plans to let the listing expire, so she can rent it out. She tells you not to contact the real estate agent because he wants to re-list the property for sale. In fact, she is thinking of suing him because he's done such a lousy job — nothing you want to be a part of.
However, you can go and look at the house, peek in the windows (it's vacant). She can't show you the house right now because she is out of town taking care of her elderly mother who just fell and broke her hip. So, just send a deposit to hold the place and she'll be in touch in a week or so. You send the deposit and soon discover the house was never for rent.
Wire fraud
On the home buying side, people can also be deceived. Lenders, escrow officers, and Realtors will tell you that wire fraud is on the rise across the industry. Wire fraud consists of fake emails being sent to the consumer in a mortgage transaction with wiring instructions to a fraudster's bank account.
It doesn't seem to matter how many times lenders and escrow officers tell their clients to confirm any changes to wire instructions before sending money. Many customers circumvent safety measures. Clearly, no one wants to lose tens or even hundreds of thousands of dollars, so why do they ignore the advice of trusted advisors? It's because they think they are following their advice.
Here's what happens. A hacker gains access to the escrow officer's email account and monitors correspondence until they see that a transaction is approaching the point when a buyer needs to wire money.
When that happens, the hacker sends an email that looks exactly like emails from the authentic escrow officer with one or two tiny ( but critical) changes. If the correct email is jsmith@yourescrowcompany.com, the scammer's email might be j.smith@yourescrowcompany.com or johnsmith@ yourescrowcompany.com. Added punctuation or a slight variation on a theme is easy to miss.
The scammer sends the unsuspecting buyer an email with instructions to wire their down payment to a specific routing and account number. According to financial fraud investigators, if the buyer complies, within a couple of hours after the wire transfer, the money has been divided and sent to several different banks in Europe, Asia, and/or Russia. The odds of retrieving the money are virtually nil within 24 hours.
The bottom line on both scams is this: Trust your gut if something doesn't feel right. In the case of the wire transfer, confirm the new routing and account number via phone with someone you have a personal relationship with — your Realtor, lender, or escrow officer. It used to be easier to spot bogus emails; they were full of grammatical errors and came from ridiculous email addresses. That's no longer the case. Trust your gut and trust your Realtor.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462- 4000. If you have an idea for a future column, share it with me and if I use it, I'll send you a $25 gift certificate to Schat's Bakery.