With its sunny shores and towering palm trees, Florida has a long history of attracting people from all over the world. Even with all its beauty and famous destinations, Florida also has a shady history rooted in fraud and scams. Does the term “Ponzi scheme” sound familiar? Turns out Charles Ponzi was an original Florida Man.
In 1925, Charles Ponzi set up a real estate business to sell swampland, though he advertised it as “prime Florida property.” Since the days of Charles Ponzi, crimes have gone viral, and criminals have become increasingly savvy. Being an aware consumer is a good defense against scammers; however, having a seasoned Real Estate Attorney on speed dial greatly reduces your chances of being the next owner of “prime property” in the local swamp.
5 Common Real Estate Frauds and Scams
- Escrow Wire Fraud
- Rental Scams
- Moving Scams
- Fake real estate listings
- Loan refinancing scams
1. Escrow wire fraud is more common than you think.
Savvy scammers will go to great lengths to commit escrow wire fraud. They will go so far as to set up fake websites to build “credibility,” duplicating almost exactly the look of your title or lending company. Their communications and requests will look quite real when it comes time to complete the transfer of escrow funds.
In the moments leading up to closing on your dream home, these scammers will connect with you, claiming to work with your title, escrow, or mortgage company and providing instructions on where to wire funds to cover closing costs. While the account numbers they provide will look quite legitimate, upon closer inspection, you’ll find they are just a digit or two off. Unfortunately, this closer examination only comes after the real escrow company representative makes you aware that you are not clear to close because your escrow funds have not been received.
Don’t think these fraudsters are only targeting consumers either. Shockingly, during 2020 and 2021, the real estate professional sector accounted for 26% of all submitted recovery request claims, totaling $893 million in losses as a result of wire fraud. The remaining 74% of fraud recovery requests came from consumers, with an average reported loss of $106,557.00.
The first step to avoiding closing day panic is to consult with a Real Estate Attorney near you. Let them represent your interests, read the fine print, and work with all involved to get you into your home with little to no drama.
2. Rental scams take advantage of those looking for a good deal.
If something is too good to be true, it probably is – and that is especially true with rental scams. For renters, finding the right apartment can be exhausting work. Whether it is an ad that has been hijacked by a scammer or a phantom listing that isn’t for rent (or doesn’t exist!), people are losing money.
Signs of a Renter Scam
- Ad poster asks you to wire money;
- Ad poster asks for a security deposit or rent before you’ve signed a lease;
- Ad poster tells you they aren’t available but will “send keys”.
Be wary of requests to wire money – it is the same as sending cash with no recourse. If you are renting an apartment or home, meet with the owner in person and avoid sending money to someone you’ve never met for a rental you’ve never seen. In addition to meeting in person, do your due diligence in ensuring the person who is renting the home has the authority to do so and is the actual owner.
3. Unscrupulous movers hold your property hostage – know the signs.
Once your house is sold, packing up all your belongings and relocating to another home is a huge job. With 15.3 million households in America moving annually, that is a lot of people experiencing a great deal of stress and making decisions under pressure. Mover scams make one of the most stressful experiences in life even worse.
Imagine signing a contract at one price to have all your possessions loaded into a moving truck. Upon arrival at your new home, the price has gone up – substantially – to remove the items from the truck. And as you review the copy of the contract you were provided with, none of the numbers match the ones discussed before the job starting.
Signs of a Mover Scam
- ‘Mover’ gives an estimate sight unseen;
- Demands large cash deposit upfront;
- Mover uses rental trucks rather than fleet or company-owned trucks;
- Ask you to sign blank documents before loading trucks.
Mover scams are so common, the State of Florida provides guidance on how to protect yourself. Consult with your trusted Real Estate Attorney for referrals to reputable, local movers.
4. Spotting a fake listing can be difficult – consult with a Real Estate Attorney.
Technology has become a staple in our daily lives and that is certainly true with purchasing a home. 97% of homebuyers use the internet to find a home which casts a wide net for fake listing scams. A fake listing is hard to spot because it has photos and all the pertinent information – you just don’t know that it is not owned by the person who has listed it for sale.
The scam occurs when the buyer contacts the “seller” and puts in an offer for the house or vacant land they found online. The scammers impersonate the realtor, seller, mortgage, and title agents, and even the notaries! The scammers take the buyer through every step of what appears to be a legitimate real estate transaction, only to leave the buyer completely empty-handed on closing day.
Buyer beware! These types of scams are so prevalent in Florida that some Counties have implemented additional closing requirements and government protocols to verify that a pending property transfer is legitimate. Protect yourself with a Real Estate Attorney who can search the title for proper ownership and work with a Florida licensed real estate agent who can be found through the Florida Department of Business & Professional Regulation.
5. Loan refinancing scams often target those who are already struggling.
Hardly a day goes by when we don’t get an email, phone call, or mailbox solicitation offering “relief” on our mortgage rates. Scammers use a variety of tactics to acquire our personal information but there is always a catch. In order to access their “program,” you will need to fill out a form or wire money to get started.
Signs of a Loan Refinancing Scam
- Excessive fees
- Demand for fees before service
- High-pressure tactics
- Unusually high fees
When in doubt, delete, hang up, and trash the unexpected offers and notices. If you want to refinance or modify your mortgage, contact your mortgage lender directly, and thoroughly do your homework before giving out your personal information or sending money to anyone for any services. These scams are so prevalent that you can even run suspected scams through the Better Business Bureau Scam Tracker.
Staying safe from scams is partly common sense and partly having experts for consultation at your fingertips. Keep our firm on speed dial and avoid these scams that can be financially devastating. It’s nice to have someone looking out for you in a world where scammers continue to get more savvy.