Ways to Avoid Home Buying and Rental Scams

By LaTINA EMERSON, The Weekly Deal Finder

As housing costs continue to rise, home buying and rental scams have also been increasing. Consumers need to beware of scams so they won’t lose money or have their personal information end up in the wrong hands.

The Federal Bureau of Investigation (FBI) reports there has been a steady increase in losses reported by victims of real estate and rental scams in the last three years. In 2021, nearly 11,600 people nationwide reported losing more than $350 million due to these types of scams, a 64 percent increase from the previous year, according to a report from the FBI. 

Jess Barron, vice president and associate broker at Lindsey’s Inc. Realtors, offers some tips to help readers avoid falling victim to housing scams.

Rental Scams

“The most common forms of scams I see in my real estate business are rental scams involving deposits and earnest money and wire fraud,” Barron said. 

Rental scams occur when either a property owner or potential tenant misrepresents themselves, as well as when the terms and availability of a rental property are misrepresented, according to USA.gov.

Barron said the local sheriff’s department has previously contacted him when they were trying to track down a rental scam prospect. 

The scams have even hit close to home. An agent at Lindsey’s Inc. Realtors recently had his father-in-law’s residential property listed for sale. While looking online, the agent saw that someone had taken pictures of the house and posted that the home was available for lease, which was completely untrue. 

“The scam artist was cold calling prospects to rent the property,” Barron said. “He just happened to contact our agent’s friend, so she called our agent and made him aware of the scam.”

The scammer was using the money payment application Zelle and asked prospective renters to put both a security deposit and first month’s rent down. He created urgency by telling people they had to put the money down as soon as possible or someone else would lease the property. The scam artist took $3,000 from one potential renter. Barron said the scam artist used Zelle because it is harder to trace.

“People need to do their due diligence when looking at properties to lease or buy,” Barron said. “I would recommend using a trusted realtor to help avoid these types of scams.”

Home Buying Scams

Wire fraud is another common type of fraud that Barron has witnessed. 

“Buyers typically wire in their earnest money as part of a contract,” Barron said. “Buyers need to make sure that they have the correct wiring instructions from the earnest money holder. Do not open suspicious emails from people you do not know.”

Real estate closing attorneys, who typically hold earnest money as part of contracts, can call the home buyer or email them the correct wiring instructions, he said. However, home buyers still need to pay attention to details.

“We see scam artists create email addresses and pose as the closing attorney asking for the earnest money or funds to purchase a home,” Barron said. 

The scam artist will change a letter in the closing attorney’s email address in hopes their target doesn’t notice and will wire the money to their account instead of the real estate closing attorney. With home purchases, the buyer could lose a significant amount of money.

Barron recommends for home buyers to close with a trusted real estate attorney and have their realtor double check everything, including wiring instructions, before they send the money. The home buyer could also call the closing attorney before they send the wire to make sure the wiring instructions are correct. Wire fraud is very common, Barron said.

Here are some additional tips for renters to protect themselves from scams:

USA.gov recommends that renters should be suspicious if: 

• The advertised price is much lower than the cost of similar properties.

• Ads for the property have grammatical and spelling errors or overuse capital letters.

• The renter can only work with an agent, and the agent says the owner is too busy or unavailable to handle the rental. 

• The owner or agent requires the renter to sign the lease before they see the rental property. They might also charge the renter a fee to view the property or say they aren’t able to let the renter enter the home or apartment.

Renters should:

• Get rental terms in writing, including fees, rent and maintenance.

• Get a copy of the lease signed by the renter and the property owner or manager.

• Conduct a search on the owner, real estate management company and listing. If renters find the same ad listed under a different name, this is a clue it may be a scam.

• Visit real estate websites to see if the desired rental property is listed in another city. A scammer could have copied the photo or description to use in their ad. 

Renters should not:

• Wire money as a deposit or payment for first and last month’s rent. This is the same as giving cash, so the renter can’t get a refund even if the offer was fraudulent. 

• Pay a security deposit, fee or first month’s rent before they’ve signed a lease.

• Rent a property they’re unable to see prior to signing the lease.

• Send money overseas for a rental.

• Give their personal information or Social Security number to a property owner without verifying their identity.