Real Estate Scams: I was (almost) a victim!

By
Real Estate Broker/Owner with Greene Realty Group 25740

I was recently a part of what could have been a big real estate scam. I want to share this with as many people as possible to hopefully save someone else from this.

 

I was contacted through my website by a buyer. He was from Japan and looking for a retirement home in the Seattle area. Both of these things are not out of the ordinary because I do a lot of internet advertising and I have worked with buyers out of our area and overseas. But I was very skeptical about him. He said he has broken English but he can write well so email is the best way to contact him.

 

He sent me a list of his criteria and informed me that he would be paying cash. I set him up on an auto search and began to send him listings through the MLS. I also started sending information about buying a home in Washington.

 

He found several properties that he liked and asked me to gather more information. He finally settled on one property in particular. He said he wanted to make a full price offer, contingent on a home inspection, and close in two weeks – sight unseen. He also said he wanted to use docusign (which I already use) and that he wanted to close with an attorney (I had to tell him that we close with escrow companies in Washington). I was very skeptical at this point.

 

I called the listing agent and told her about my buyer and that he would like to make an offer on her listing. I also told her that I have never met this person – and wasn’t sure if he was even real. She and I both decided to explore it but we would be very careful and cover all our bases.

 

I wrote up an offer and sent it to the buyer. I also had him send me a copy of his passport bank statement showing proof of funds to close. He signed the offer and sent me the documentation.

 

I submitted the offer to the listing agent. She had her clients sign it and we sent it over to escrow. The listing agent and I called the escrow closing agent and told her our concerns with this buyer and to cover all her grounds. The buyer immediately sent a cashier’s check for half of the purchase price plus $5,000 earnest money (which totaled just under $500k). He said he would send the remaining prior to closing.

 

The listing agent asked the escrow agent to call to confirm the check was good before depositing it.

 

Meanwhile, the buyer kept pushing and pushing for us to “close on time.” He said it was a surprise for his wife and he needed to close on time. He was hoping that both agents and escrow would be in such a hurry that we would mess up. The other agent caught that he said, “wife” and said that she would need to sign also before we have mutual acceptance.

 

The day before closing, the escrow agent called me and said that she called Citi Bank to verify funds and was immediately sent to the fraud department. The check was bad. We told the buyer that we were unable to close the transaction and if he has questions he can call Citi Bank. We never heard from him again.

 

I have been told that several attorneys and even the FBI are investigating this as well as many similar scams. It is a growing real estate scam and this is how it works:

1.       Buyer sends a cashier’s check to the closing agent.

2.       The closing agent deposits it right away (current escrow policy is not to verify funds of a cashier’s check).

3.       Buyer cancels the deal last minute and asks for a refund.

4.       Closing agent issues a refund.

5.       And before the buyers cashier’s check bounces, the buyer is long gone and so is the refund they were issued.

Lessons learned:

1.       If it’s too good to be true, if probably is.

2.       Don’t let a buyer with an agenda make you cut corners.

3.       It is more important than ever for buyers and sellers to work with a reputable, knowledgeable and experienced agent. Can you imagine if this happened to a FSBO? Or someone who was trying to buy a home without an agent. There is a reason that they hire us!

 

It is probably also a good idea to check your policy with clients. Even though this didn’t go through – I wasted a lot of time on it as did the other agent. The other agent said her office said that her office doesn’t don’t do sight unseen anymore (for rentals or purchases). And the buyer must bring in a picture ID before purchasing. I personally will be changing things in my business so I don’t take time away from clients who really do want to buy or sell.

 

Spread the word!

Comments (117)

Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I've worked with overseas buyers before as well...and have done so very successfully. I have closed 3 deals this past year with a client from Malysia whom I have never met and never spoken to on the phone....it's a new world.

That said....money is wired and not a cashier's check. I would find that odd by itself.

Glad you were on top of this from the beginning.

Nov 22, 2011 05:05 AM
Sheri S
Wells Fargo Home Mortgage - Folsom, CA

wow... what a society we have become, scams everywhere!

Nov 22, 2011 05:23 AM
Jon Eliason
EXIT Realty Advantage Pagosa, Pagosa Springs, Colorado - Pagosa Springs, CO

Jessica, thanks for the blog! I haven't encountered an issue such as this yet, but with your experience in this predicament, it will definitely help me be more astute in situations that may present themselves.

Nov 22, 2011 05:42 AM
Bill Dean
Haggerty Team St. Louis, Mo. - Fenton, MO
William Dean - Broker, Salesperson

Jessica,

Well deserved featured post!   Scams like this need to be exposed.  Sadly, it must work for them sometimes, since they keep trying to do it.  Glad to see both agents and the escrow folks were on top of it.

Nov 22, 2011 05:50 AM
Emilie Greenwell
ALLEN REALTORS - Lakewood, WA

Thanks for sharing this.  I recently heard about a similar scam, on a smaller scale, in -of all things- the music lessons industry.  My husband is a piano tuner and gets the magazine for the Music Teachers National Assn, as he is a supporting member.  They had an article about a scam where a foreign person contacts music teachers through Craigslist.  They say that their teenage child is coming to the USA as an exchange student and will need music lessons.  They want the student to take 2-3 lessons a week (very unusual) and prepay a  full school year.  That would be somewhere in the range of $1000-2000.  They then send a (bad) check, and within a couple of days the plans for the "exchange student" fall through and they request a refund.  The teacher sends a personal check for the refund, but it turns out the original check was bad.  They say the phony checks are very good and it can take a couple of weeks to get found out, but by that time the teacher has already refunded with their own money.  We advertise music lessons on my husband's website, and we have gotten a few questionable emails from foreign folks about lessons, very similar to this scam that was in the magazine.  We don't reply to those emails.

Nov 22, 2011 05:56 AM
Heather Anderson
214-317-1964- www.REConcierges.com - Allen, TX
Real Estate Concierges

I am so sorry to hear that.  And so glad  you did not get pulled directly.

 

Nov 22, 2011 06:55 AM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Great example of both agents and the escrow company working together to verify the validity of this deal. Glad to hear that no one was harmed.

Nov 22, 2011 07:18 AM
Dee Neal
Palmer House Properties - Alpharetta, GA
Atlanta Area Real Estate

ouch! i see the evil doers are getting creative these days. i think you did good to act on your gut that something in the milk wasn't clean. 500k is alot of money for someone to get burned for. wow...

Nov 22, 2011 07:28 AM
Tricia DeSouza
HomeSmart - Scottsdale, AZ
Selling Scottsdale Luxury

Wow!! Kudos to you for recognizing the red flags and being very thorough throughout the process. It is amazing to me how people come up with scams like this. Thanks for warning us all!

Nov 22, 2011 07:40 AM
Peggy Yee
NoVa House and Home - Vienna, VA
Search Vienna Homes For Sale - Northern Virginia

Wow!  Thanks for sharing this.  I'll definitely be on the look out!

Nov 22, 2011 08:05 AM
Sheila Moran
RE/MAX Access (Garden Ridge, San Antonio, New Braunfels) - New Braunfels, TX
SanAntonioSheila.com, RE/MAX Access, 210-32

I am so glad you posted this.

I have been getting all kinds of strange requests via my website these days.

Glad you had a good sense to check things out!

Nov 22, 2011 09:05 AM
Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
Trusted For Experience - Respected For Results

Jessica - There are scams and then there is the real deal ..... one has to be very cautious but I've had 2 successful deals dealing with "out of town out of country buyers" who never saw the homes before making their offers one came and inspected prior to firming up the second never saw the home till moving day

Nov 22, 2011 09:11 AM
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

Hi Jessica. I think it's all been said above - lots of good comments. Thank you for posting this and I'm glad you caught it in time!
Bruce

 

Nov 22, 2011 09:15 AM
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Jessica, as terrible as it is that people try to get away with scams like these, it's a good thing that we as real estate agents do what we do to protect our clients as much as possible.

Nov 22, 2011 10:34 AM
Jessica Poulos
Greene Realty Group - Olympia, WA
Northwest Home Team Realty, LLC

Thank you everyone for all the great tips and awesome feedback. Couple things: the emails that I got looked and sounded "normal" and I did get a copy of the passport (which was fake but I couldn't tell). Also, many title companies are requiring wired funds for a cash closing now...interesting. You'll also see that I posted a blog that our legal hotline in Washington did on my experience. Check it out!

Nov 22, 2011 11:03 AM
Marti Steele Kilby, CRS
Steele Group Realty - La Mesa, CA
Broker/Owner, San Diego, CA

Wow - I had the exact experience just two months ago in terms of contact and setting my Japanese retirement cash "client" up with a search.  He selected a property in Carlsbad and wanted to write an offer.  I warned the listing agent that I thought it was bogus, and told the "client" that I needed proof of funds prior to writing an offer.  He sent me a bank statement from a bank in Tokyo....I called the number on the statement, and it was a Tokyo bank, but a different bank than named on the statement and they had no record of the "client" having an account.  I told the "client" that I could not proceed, and he backed-off, never to be heard of again......

Nov 22, 2011 01:21 PM
Kevin Vitali
EXIT Realty Beatrice Associates - Middleton, MA
Helping Massachusetts Home Buyers and Home Sellers

I have seen this scam with summer rentals.... Fortunately I have never had a problem, but I know others in the resort have. 

Nov 23, 2011 04:54 AM
Sherry Chastain
Hendersonville, Nashville, Old Hickory, Lebanon Tennessee - Hendersonville, TN
Realtor, Selling Homes, Lake Properties,Luxury Homes,Short Sales

Amazing how many of us have experienced this. I had a same type senario tried on me a couple months ago. It is a time waisting event. 

Nov 23, 2011 03:12 PM
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

Hi Jessica, scams develop quickly, so many thanks for posting your story.

Nov 23, 2011 04:09 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

I'm so sorry to hear about your experience......

To tell you the truth, the international buyer or even the buyer/seller out of state is my favorite kind of client. I regularly work with such and even planning to get the international certification. We always ask to wire money and all is good and fast. 

But again, thanks for worning about cashier checks!

Mar 20, 2013 04:46 PM