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

Industry Observer with No Longer Processing Mortgages. MLO #293441 expired

Jessica has written a very good description of a current fraud problem -- which could come back to haunt someone, if we aren't careful about taking care of dotting all the 'i's and crossing all the 't's, especially in the hurry up season of the holidays we are entering.

Original content by Jessica Poulos 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!

Posted by


Steven CookSteven T Cook
Loan Officer, MLO-293441      

Cascade Pacific Home Loans  NMLS ID 76988
720 S 333rd St  Federal Way  WA  98003
Office 253-874-1111 | Cell 253-677-1064
Toll Free 1-800-874-8760 | fax 253-295-3901 |

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Comments (4)

Yolanda Hoversten
Self Employed - O'Fallon, IL
Referrals for O’Fallon, IL & the Metro East

Wow. Lots of work for you and the listing agent. I'm glad that you didn't become victims of these unscrupulous people.

I've had several e-mails from 'buyers' who want only homes that are expensive and in great neighborhoods, would pay cash and in a hurry to close. They are always from overseas. I learned that if I tell them that they need to deposit the money in a US bank, and that I won't transfer funds for them, they don't e-mail me back.

Thanks for sharing!


Nov 21, 2011 11:02 AM
Randy Ostrander
Lake and Lodge Realty LLC - Big Rapids, MI
Real Estate Broker, Serving Big Rapids and West Central MI

Good evening Steve. I have heard a lot about this scam. I am really shocked the title company would even consider refunding without waiting to see if funds cleared. Yikes.

Nov 21, 2011 11:32 AM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

This is a variation of an old, and very common, scam the FBI calls "The Nigerian Scam."  It takes many forms.  Have an IT guy check your computer to see if "he" has placed anything in there you don't know about.

Nov 21, 2011 10:21 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

This is an ongoing scam....

It's been posted several times..."buyer" has assumed several names. The gimmick is that the buyer "deposits" a check, then cancels the agreement and wants a refund on a bad check. I posted about this scam before. One agent told me he went so far as arrange for home inspection and paid for it out of his pocket with the promise that he will be reimbursed at closing.

Sad, but true.

Nov 23, 2011 05:45 PM