REINCheck

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VO [00:00:06] You're listening to REINCheck with Andrea Rice, Contracts and Industry Specialist at REIN, where you get the latest member news and information delivered straight from the source, REIN MLS.

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Andrea Rice [00:00:21] Hello and welcome to REINCheck. I'm your host, Andrea Rice. I want to start by sharing a recent news article out of Jensen Beach, Florida, that tells the story of Susan Spofford, who knew instantly the property in Jensen Beach, Florida, was just right for her and her extended family. They were overjoyed when their offer was accepted and they felt like the process was running smoothly. That is until it came time to close and their real estate attorney asked for $77,000 for closing costs. They were confused because they thought they had already paid that money. That's when Susan felt like she had a pit in the bottom of her stomach. The family pulled up emails from what they thought was their law office giving them instructions to wire the payment to a nearby bank. Their office never received a payment. That's when Susan realized she had wired the money to a scammer. Their $77,000 was gone. And that sets the stage for today's episode, where I'll be talking about some common real estate scams and how to hopefully avoid falling victim to them. According to the FBI's Internet Complaint Center, in 2017 9,645 victims reported real estate or rental fraud. That number increase to 11,300 in 2018, and in 2019 the number of victims reporting real estate or rental fraud increased to over 11,600. And while the 2020 report is not yet available, I would imagine that if the past is any indicator, that number will likely only increase. While these numbers may seem high, they may not actually tell the whole story. According to Melinda Oppermann with Credit.org, many people are too embarrassed to file complaints in regard to real estate or rental fraud, which means there may be many, many more victims of real estate scams than we are even aware of. While thinking about this episode of REINCheck, I originally wanted to talk about rental scams. But upon doing some research, I found that real estate scams are far more reaching than just rentals. So, while I will talk about rental scams later in the episode, I want to mention some other types of real estate scams as well. There's also wire fraud, which I think a lot of people are becoming more and more aware of as well as some other types of fraud I had no idea existed before I started doing some more in-depth research, such as loan flipping and foreclosure relief. Let's start with wire fraud. Let's face it, scammers are getting really creative. They can mimic phone numbers, websites, email addresses that all appear to come from title or escrow companies and instruct you to wire funds, and before you know it you have fallen victim to the scam and sent money to someone. But it wasn't the title or escrow company, similar to Susan in her family at the top of this episode. Deborah Kerns, author of The Four Most Common Mortgage and Real Estate Scams and How to Stop Them, advises that the best way to protect yourself from this type of scam is to call the lender directly using the information on the original documents to verify any wiring instructions and to never click on email or text links or send money online without verifying wiring instructions first with a live person. I was actually aware of the scam before preparing for this episode and had heard some real horror stories of people losing tens of thousands of dollars in wire fraud scams. I was so fearful of falling victim to this scam that when I closed on my last house, prior to sending any money via wiring, I checked, double-checked with my agent, lender, bank. Anyone and everyone I could find potentially verified that the wiring instructions I received were legitimate prior to wiring any money. I mean, for me, it all worked out but knowing that this scam existed in the first place helped me to know what to check for when I found myself in a position where I had to wire funds. Now, let's talk about loan flipping. A scam that prior to preparing for this episode, I had never even heard of. According to Debra Kerns, referenced earlier, loan flipping is when a predatory lender persuades a homeowner to refinance their mortgage repeatedly often borrowing more money each time. The scammer charges high fees and points with each transaction, and the homeowner gets stuck with higher loan payments and is duped into borrowing most of their home's equity. If you're like me, you're probably thinking, how does this even happen? Well, this is apparently a scam targeting primarily elderly homeowners who may have cognitive issues. Melinda Oppermann with Credit.org suggests the best way to prevent this type of predatory lending is to work with a known bank and lender and to be aware that if you have recently completed a mortgage refinance, it's usually not in your best interest to do another transaction right away. I don't necessarily worry that I would personally fall victim to this type of scam, but it is good to be aware of. Another perhaps lesser-known scam is foreclosure relief. For this scam, scammers use public records to find pre-foreclosure homes and offer to help the homeowners save their home from foreclosure and reduce their payments for a large upfront fee. According to Oppermann, the best way to avoid falling prey to this scam is to work directly with your loan servicer. Foreclosure relief scammers will advise you not to speak with your lender, and that should be a huge red flag. So, now that we know a little bit about wire fraud, loan flipping, and foreclosure relief scams, let's move on to the final scam I want to talk about today. And that's real scams. This is the scam I had in mind when I decided to do an episode dedicated to scams. I think we all know it well, but, then again, maybe we don't because there are people out there still getting scammed. Scammers will use Craigslist or other similar sites to lure potential renters. They may even use information and photos from a real listing, but the scammer has no connection to the property. They will often ask for payments or deposits to see or hold the property without you first seeing the property in person. According to USA.gov, you should be suspicious of the property or transaction if the advertised price is much lower than that of similar properties, the ad for the property has grammatical and spelling errors, or the owner or agent requires you to sign the lease before you see the property. They also suggest that you not send money for a rental overseas. I know more about rental scams now and hopefully, you do too. While it is a little frightening to think of all the ways you could potentially get scammed, it is good to know that there are things we can all do to be on the lookout and help us avoid falling victim to these scams. As part of that is just talking about known real estate scams. Those with bad intentions will continue to try and come up with new ways to scam the unsuspecting, but hopefully, now we know where the potential for scams lurk, and we are a little bit better prepared. My takeaway from the research I did on scams has been the old if it seems too good to be true, it probably is. And there's nothing wrong with a healthy dose of skepticism. Thank you for listening and have a great rest of your day.

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VO [00:07:34] You've been listening to REINCheck with Andrea Rice. Stay in the know from those who know. Delivered straight from the source, REIN MLS.

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