How to Avoid Housing Scams
The tight housing market is an open door for scammers to take advantage of those looking for a place to live. In fact, 9,521 complaints of rental scams were filed with the FBI in 2023, amounting to $145 million in losses. Vision Bank offers these rental and homebuyer scam prevention tips to help you remain safe and avoid getting taken.
What Is a Rental Scam?
There are several types of rental scams. Someone may copy pictures and information pulled from legitimate listings and create phony ads elsewhere. Sometimes a scammer will use the name of an actual realtor in a listing but will include false contact information that leads directly to the scammer instead.
The phony realtor might ask prospective tenants to give them money for an application fee, a security deposit, the first month’s rent, etc. The scammer then disappears with the money. In some cases, a scammer claims they can’t show a property because they’re out of town. The scammer asks the victim to send money to secure the rental, then disappears.
Some scammers create phony websites for their property listings or use legitimate platforms, such as Facebook and Craigslist. Another scheme involves a scammer sending a phony check to a victim and then offering an excuse for the victim to return all or part of the funds through another means. The phony check bounces and the scammer makes off with the victim’s money.
Scammers often ask a victim to send the money by wire transfer using a money transfer service, rather than a bank. A scammer might also ask for payment using gift cards, cryptocurrency, or a payment app before the victim has seen the property.
Some scammers will present a vacant home as their property and show it to unsuspecting victims, who sign a phony “lease” and move in. The victims eventually discover that the person they paid rent to was a scammer and they have to move out.
How to Spot Real Estate and Housing Scams
There are many telltale signs to look for when spotting a scam, although they might not be obvious at first glance. A common tactic among scammers is to create a sense of urgency, so someone acts without much thought because they don’t want to miss out on an opportunity. If someone is rushing you to decide, that could mean it’s a scam.
Here are some other real estate fraud prevention tips and things to watch out for:
The Property Seems Too Good to Be True
If you see a property listing that seems unbelievable for its amenities or its price, that’s a reason to proceed carefully.
There could be a legitimate reason for getting a good deal, such as a property being in less-than-ideal conditions compared to the rest of the market. That’s why it’s important to investigate and compare the listing to similar properties in the area.
They Ask for Too Much Information
A listing agent or landlord will naturally ask for your name and contact information before you see a property but if they ask for personally identifiable information (PII) that could be a red flag.
Landlords will require your legal name, Social Security number, and employer as part of a lease application—but there’s no need to give them that much information before you’ve seen a property. Someone who asks for this kind of information upfront could be doing so with the goal of identity theft.
They Demand Money Upfront
If a building manager or leasing agent asks you to send them money before you’ve seen the property or filled out a rental application, that’s a huge red flag. There’s no reason to send someone money until you’ve seen the property and agreed to sign a lease.
No Screening Process
Most landlords want to verify someone’s credit rating and employment before offering a lease. They might ask for references and check with previous landlords, to make sure you’re a quality tenant who will pay your rent on time.
If a landlord does not require a rental application or credit and background check, this could mean they’re a trusting individual who does things on a handshake basis. Of course, it could also mean it’s a scam. Either way, it’s a reason to proceed cautiously.
No Lease, Or an Incomplete One
It’s important to read any legal document before signing it, and that includes a lease. If there’s no lease to sign, or they offer one that’s incomplete, it could mean the landlord would try to change the terms after you’ve signed. It could also mean the “owner” is a scammer who just wants to take your deposit and first month’s rent.
Unusual Payment Methods
Most security deposits, application fees, and rents are handled by check, so both sides have a record of the transaction.
If someone asks you to pay by cash, a wire transfer service, phone app, gift card, or cryptocurrency that’s a reason to be concerned—especially if you haven’t even seen the property yet. These payment methods can be hard to trace once they’re completed.
You Can’t See the Property
A scammer might offer any number of excuses why you can’t see a property, and every one of them means it’s probably a scam. They might claim the owners are out of the country, or someone misplaced the keys, or the place is being painted, etc. If a “leasing agent” can’t let you inside to inspect the property, that’s a reason to walk away.
They Won’t Meet in Person
A realtor, landlord, or property manager who won’t meet you in person might offer an excuse such as medical reasons, an emergency, or being out of the country. They may offer to mail you the keys once they’ve received your money, but that’s a common tactic among real estate scammers.
Real Estate Scam Prevention Tips
Scammers will often press you to make a rushed decision. Many rental and homebuyer scams could be avoided by taking a little time to consider what you’re doing, and to investigate the property itself and whom you’re dealing with.
Use these scam prevention tips to avoid getting taken:
Meet in Person and Tour the Property
If you’re looking for a place to live, you’ll want to see the property yourself and meet with your prospective landlord or building manager, to make sure they’re legit and the type of person you can deal with.
Do Your own Background Check
If a property is being shown by a realtor or a leasing agent, you can Google them to search for online reviews. You can also check the Better Business Bureau branch that covers your area, to see if there are any complaints against them. You can also search for the leasing agent’s business address, to make sure it’s legit.
Verify the Property
Take a close look at the property listing. Some scammers will copy and paste someone else’s listing and present it as their own. They might use the original listing but change the contact information.
Try doing an Internet search for the property’s address, to see if it’s listed under the names of a different owner or management company.
If you’re using Google Chrome as your web browser, you could do an alt right-click on the property’s image and choose “Search with Google Lens.”
This lets you search for other images of that property online. It might show you properties that are similar to the one you’re investigating—but it could also reveal if that picture has been used in other property listings.
You could also check out the local county records office, such as the recorder of deeds or the assessor, to see who owns the property.
Use Secure Payment Methods
It might seem old-fashioned, but if a landlord or listing agent won’t accept a paper check, that’s a reason for concern.
Paper checks provide security for both sides of a transaction, as well as a paper trail that verifies whether a payment was made and who received it. Checks are also easier to track than payment apps and other methods.
Automated Clearing House (ACH) wire transfers between banks, or using a credit card, also offer security and the kind of record keeping that you can use to verify payment. If someone wants you to make a wire transfer outside of your bank, such as at a check cashing service, that’s a cause for alarm.
How to Respond to a Housing Scam
If you suspect that you’re the victim of a rental scam or housing scam, contact your bank immediately to see if you can put a hold on any payments you’ve made.
Notify your local police or sheriff’s office, the Oklahoma Attorney General’s office, and the Federal Trade Commission (FTC).
You could also file a complaint with the Better Business Bureau, to see if they could mediate a solution and warn others about a potential scam.
If a crime involves online activities (such as a bogus property listing) you could also file a complaint with the FBI’s Internet Crime Complaint Center.
You should also contact whichever website or social media provider hosted the fraudulent listing, so they can take steps to prevent this kind of activity.
Vision Bank Helps You Stay Financially Secure
Staying alert and informed against potential scams is essential to preserving your financial health. If you have any questions about financial security or our banking services, please contact us or visit one of our locations in South Central Oklahoma. You can also check out our blog for financial news and security tips. We make it easy for our customers to report lost and stolen credit cards, and we use encryption technology and multifactor authentication to protect your accounts.