There is a supply and demand problem in North Carolina, especially when looking at the Research Triangle. The strong job market is bringing people to the area, and they’re ready to buy homes. The demand is so great that new construction can’t keep up with it. This has caused housing prices to go up, creating a sellers’ market. In fact, the median home price has gone up by 16.9 percent in Raleigh over the past year.
When this happens, it seems like scammers come out of the woodwork. They know people are desperate to find homes, and they use that desperation as an opportunity to take advantage of them. That’s exactly what happened to a Durham couple recently. Scammers stole their down payment, and they almost didn’t get their dream home.
Get the details on the scam, along with some tips you can follow to avoid falling victim to a similar scam. Also, get the scoop on a scam that’s hitting the North Carolina rental market.
The Disappearing Down Payment
It took Cemal and Derya Biryol seven years, but they finally saved $50,000 to use as a down payment for a home. They spent another several months finding the perfect home, and when they finally did, they put in an offer. It was accepted, and they put the closing date on the calendar.
Their dreams were about to come true.
Then, they received an email that appeared to come from the closing attorney. The email included insurance information, along with the exact amount of the down payment, which was $53,194.48. The email instructed them to wire the down payment money prior to closing.
The couple dutifully followed the wiring instructions and sent the down payment. Then, they followed up with the Realtor to let her know the funds were on the way.
The Realtor let them know they had fallen victim to a scam. The funds were going to the wrong bank. The closing attorney had not sent that email. A scammer sent it, and they had just wired away their down payment.
The couple went into a panic and tried to get the money back. That’s usually not possible. You basically have a 30-minute window after sending a wire transfer, and if you don’t sound an alarm within that time period, you’re out of luck. The recipient can withdraw the money, and you’ll likely never even find him or her. That’s why it’s such a popular scam.
The Biryols were lucky, though. The wire was sent at the end of the day on Friday. That put the money on hold, and the couple was able to get it back and use it as the down payment for their home. This story has a happy ending. They moved into their dream home, so all of that saving paid off.
Of course, it could have just as easily ended up with an unhappy ending. They could have lost that money and been forced to rent for the next seven years while they saved the funds once again.
- How Do Scammers Send These Emails?
This scam is becoming increasingly common, thanks to hackers. Hackers break into system for attorneys, agents, sellers, and buyers. They get into email accounts and get as much sensitive information as they can. Then, they clone the email address and patiently wait until the closing nears. When the time comes, they send the email, using new wiring instructions so the money goes into their account.
Because they have so much information, people don’t think twice about it. Also, the hackers make it look as if the email came from the agent or attorney’s email address. This makes it difficult to detect these scams. People who would normally double-check their facts send the money without a second thought. It looks so legitimate that they don’t worry at all.
That doesn’t mean you have to be a victim. There are some things you can do to protect yourself and your hard-earned money from these scammers.
- How to Avoid Homebuying Scams
No matter how hard law enforcement works, there will always be scammers out there, trying to take your money. You can protect yourself by following some tips.
First, never blindly follow instructions in an email. Remember, accounts can be hacked and email addresses can be cloned. If you receive an email with wiring instructions, call your Realtor and confirm everything over the phone. Don’t just use a phone number listed in the email, either. Verify the number to make sure it is correct. Otherwise, you could call the scammer and get the go-ahead from him or her.
Also, it’s a good idea to use a Realtor instead of trying to work with sellers on your own. This will help you avoid dangerous title scams and other issues that come up from time to time. As long as everything goes through the Realtor, you should be safe.
- Are Renters Safe?
Renters don’t have to make down payments and they aren’t buying property. That doesn’t mean they are safe from rental scams. In fact, a new rental scam has hit the Research Triangle with a bang.
According to news reports, scammers are lifting pictures and information on rental homes from Zillow and American Homes 4 Rent. Then, the scammers list the properties on other sites. They typically list the properties for less than the going rate to generate lots of interest and, in turn, lots of money.
The scammers steal lock box code information and then pass it on to people who answer the ads. That makes it look valid. Those who want to rent the property can see it in person by using the lock box codes. If they decide to rent it, they are typically instructed to send the funds via a wire transfer. Once the funds hit the scammers’ bank accounts, they never hear from them again.
- How to Avoid Rental Scams
Technology has made it easier for scammers to reach the masses. You need to be careful anytime you’re renting property. In fact, you’re more likely to fall victim to a rental scam than a buying scam.
Follow these tips to avoid getting scammed.
- Never Wire Money to People You Don’t Know
If you haven’t met someone in person, don’t wire him or her any funds. This is the most common way that scammers collect money. The scammers are often located halfway across the globe, and they know it’s hard for people to get their funds back if the money is wired. If a potential landlord says you have to wire the funds to get the property, start looking for another property.
- Don’t Fall for Too-Good-to-Be-True Offers
Scammers get people to send money by offering huge discounts on rental properties. People are excited to get into a property for a fraction of the cost, so they send the money, even when they know better.
If an offer seems like it is too good to be true, it is. Why would someone offer a hot property in the Research Triangle for half the price? There is no reason a real estate investor would do that. The only reason it’s so cheap is because it is a scam.
- Look Out for Grammatical Errors
Scammers often send emails or have ads that are filled with grammatical errors. Some believe this is because English is their second language, so they accidentally make these mistakes. In reality, they use these errors as a vetting process. When someone ignores grammatical errors and still shows interest in the property, he or she is essentially saying red flags don’t matter. That means the person is more likely to send the money. Protect yourself by deleting emails and ads that are filled with errors. The errors are bait, so don’t bite.
- Don’t Go for Long-Distance Landlords
Long-distance landlords are a big red flag. Yes, some legitimate landlords live far away, but they should use a management company that’s in your area. Landlords aren’t going to rent and manage property from hundreds or thousands of miles away. They will want to keep track of the investment, so they will at least have an agent nearby. If the landlord conducts all business from a distance, there’s a good chance he or she is running a scam.
- Don’t Believe in Guarantees
Some scammers claim that Zillow can guarantee a money exchange. That gives renters peace of mind, but it shouldn’t. Zillow and other third-party real estate sites don’t guarantee money exchanges. They also don’t act as go-betweens for tenants and landlords.
- Avoid Oral Leases
When landlords want to scam you out of your money, they typically don’t want to leave a paper trail. Never give a landlord money without having a signed lease in your hands. A rental lease agreement will protect your interests. The lease should identify the property’s owner or agent. Go the extra mile and run a quick check of the owner or agent. Verify the details to make sure you’re dealing with a legitimate person or company.
- Avoid Landlords That Don’t Have a Screening Process
You might not like to go through tenant screening process, but you need to be worried if a landlord doesn’t screen you. High-quality, responsive landlords do things the right way from the beginning. Those who don’t use tenant screening either don’t care if you’re a quality tenant or are running a scam. They don’t want to weed people out with screening since that will prevent them from being able to steal money.
- Watch Out for Online-Only Transactions
Technology has made renting property easy, but that doesn’t mean you should rely on it completely when renting property. You should meet the agent or landlord in person before signing on the dotted line. If the person only wants to conduct business on the internet, you have to ask yourself what he or she is hiding. Most landlords or agents want to meet potential tenants in person as part of the vetting process. Those who don’t might be running a scam. This isn’t always the case, but it’s still a good idea to protect yourself.
- Be Wary of Property That’s Available Today
Most landlords don’t have property that is available right this minute. You might be able to move in next month, but not today. If the listing says it is available now, you need to give it some thought. Is it a scam? It very well could be.
Scammers often list the property as available now to attract desperate renters. They know people who need to move in right now are more likely to send money to get the ball rolling.
Of course, the landlord could just be disorganized or he or she could be dealing with a tenant who moved out unexpectedly. Make sure you do your research on any property that is available now, so you don’t end up as the victim of a scam.
Can Landlords Be Victims, Too?
Landlords can even end up victimized by scammers. If you are renting property, take proper precautions. Use online rental applications to collect the tenant’s personal details, and run tenant background checks to make sure the person meets your criteria. You can even improve your chances of getting paid on time with online rent collection services.
Protect Yourself, No Matter Your Real Estate Needs
It doesn’t matter if you’re buying, renting, or acting as a landlord. You need to protect yourself from scams.
If you’re a landlord, that means you need the appropriate tenant screening tools. If you’re a buyer or a renter, that means you need to do due diligence to protect yourself.
The North Carolina real estate market is popular right now, and as long as people are fighting for available properties, scammers will be out there. They know people are motivated to buy or rent, and they are using that to their advantage. They don’t have to have the control, though. You can get your control back by using these strategies when buying or renting property.
About the author
Matt Angerer is the Founder and President of VerticalRent. He enjoys writing on a variety of topics that help Landlords, Property Managers, and Renters across America. He is particularly interested in helping renters understand their local marketplace, pick the best places to live, and find an awesome roommate. Since 2011, VerticalRent has grown to service over 100,000 landlords and renters across America.