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Investor Report: REO Scam Warning
The nationwide boom in foreclosures and bank-owned real estate (REO) property sales to investors is producing an unpleasant and sometimes dangerous side effect: Growing numbers of confrontations occur when investors visiting supposedly empty properties find them occupied -- and the inhabitants don't want to leave or let anybody in.
That was the message at the recent REOMAC bank-owned real estate convention in Hollywood, Florida from Rafael Dagnesses, REO director for Quantum Realtors in Los Angeles.
"Investors are especially vulnerable," said Dagnesses, an eight year veteran of the L.A. Police Department and a marine for 16 years before that before becoming a real estate broker.
Foreclosure investors often have numerous properties to check out during a typical day, he said, but they don't necessarily pay attention to problems that may be lurking inside supposedly empty houses.
For example, he said in an interview with Realty Times, even in higher-cost neighborhoods, scam artists are now tracking houses entering the foreclosure pipeline every day, and then renting those houses out as they become vacant -- totally illegally.
They get hold of notices of default - or other publicly available reports of pending foreclosure actions -- and then rent out the empty houses to tenants at bargain all-cash rents.
When investors or REO management agents later visit the property and find it occupied, the scammed "tenants" may feel threatened and respond with hostility to efforts to enter the house, according to Dagnesses.
In many cases, such visits in the L.A. area have resulted in physical confrontations -- even gunshots and beatings.
Given the growing problem, Dangesses has put together a short list of security procedures for investors and realty agents dealing with REO properties.
Before heading out to see a foreclosed house, evaluate the potential risk of the neighborhood. Let an associate know your schedule and route.
Never enter an REO property without first checking the exterior perimeter to determine whether anyone has broken a window or back door to gain entry. At the front door, never enter a foreclosed house without first giving a loud "knock and notice."
Number three: Even if you're visiting a property in broad daylight, always bring a heavy clad flashight. Not only is it practical if the electricity has been turned off, but "it's a good defensive tool" if you need it.
Bottom line, in Dagnesses's view: Take common sense precautions. "You can't make a lot of money investing in REO," he says, "if you don't take care of yourself."
Written by Kenneth R. Harney
November 14, 2008
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Wow that is incredible. Thank you for those safety tips I never really thought about all that simply because the house is generally vacate. Thanks for this very informative blog.