Real Estate RENTAL PROSPECT Fraud in Austin – Could It Happen To You?

Recently we responded to a referral request from an agent in Houston whose client was
interested in the very same neighborhood I live in, Circle C Ranch in Austin, TX. She
described her client as “highly qualified” with no upper price limit. He wanted to lease a
home near the Grey Rock golf course in Circle C Ranch, or on Lake Travis.

After two days of touring properties with the client, the agent in Houston called to check
his progress. We noticed that the things the client told us about his real estate search in
Houston weren’t matching up with what the agent was saying. At that point we asked
the agent to forward us a copy of his lease application packet, including the background
check and financials. The other agent informed us at this time that she hadn’t actually
received these documents from the client yet. Our standard practice is to require these
things in advance of showing properties to clients, but in this case we had relaxed our
procedure because it was a referral from another agent.

We decided to do some research and found that this person had been convicted of $7
million worth of real estate fraud less than 3 years ago in another state. We contacted the
police officer listed in the news article and learned that this person operated by building
relationships with the owners of high end properties directly, gaining full access to the
properties through some pretense (such as doing some work on the property in exchange
for a month’s rent), and then posing as the property owner and entering into a fraudulent
purchase or lease contract with an unsuspecting party.

We felt sure this is what the client was attempting to do again. We contacted the agent in
Houston and she said he was already negotiating directly with at least one property owner
that she knew of.

We also learned that he was in violation of his probation simply by leaving the state
he was convicted in, but the three police agencies we contacted were not interested in
arresting him for this, due to the high cost of extradition. It was very disappointing to
know this person is plotting to scam Austin and Houston property owners and no police
agency was willing to do anything to stop him. We contacted the F.B.I. and the Austin
Board of Realtors, and both issued warnings about this type of scam.

How can you prevent being a victim of real estate fraud? One key thing is to make sure
that you as a property owner NEVER deal directly with anyone unless they present proof
of financial strength up front. If you are selling, make certain that the potential buyers
are preapproved for their loan before you let them on your property. If you are leasing,
make sure the potential tenant’s background and criminal check has already been done
before they negotiate with you or your agent.

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