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Red Flags Which Point to Possible Real Estate Fraud

By
Real Estate Broker/Owner with Madeline Island Realty 50317-90

I read an interesting response to the Question & Answer section on the ActiveRain.com real estate website this morning which got my attention.  The real estate agent who posed the question is a well-known real estate industry observer and the reply came from a luxury real estate specialist in Hawaii.

 

The Hawaii agent's response to this request for a short list of real estate fraud indicators was as follows (quoted text below is in bold italics):

 

  • Listings advertised for sale on Craigslist.

Craigslist has acquired a reputation for shady real estate transactions. Some agents see it as a cheap way for them to get Web exposure, but most successful real estate professionals agree that Craigslist has become a questionable place to market property listings (or to shop for them).

  • Cash required on first viewing with promised refund if no offer is made.

If you're asked to pay up front in order to view a property listing, be very  suspicious.

  • Request to wire funds before seeing the property.

Wire transfer fraud involving real estate closings has recently become a real problem in our state of Wisconsin. You may read about those recent developments on the WRA (Wisconsin Realtors Association) website. Hackers are even gaining unauthorized access to brokerage and title company websites, sending phony bank wire instructions and diverting closing funds to their own bank accounts.

 

 

Comments(15)

LUXURYSOCALREALTY COMPASS La Jolla
Compass - La Jolla, CA
San Diego Partner - The Private Client Network

Good Morning Eric Kodner excellent summary of potential red flag fraud warnings.

Mar 24, 2016 01:19 AM
Mickey Hayward
Sunset Properties, Hayward Realty - Onley, VA
Farm - Land - Home Sales & Commercial Real Estate

Good Morning Eric.  Good points.  I didn't realize that CraigsList had such a poor reputation.  I often get calls and emails from clients who have seen properties advertised on CraigsList which I haven't seen since they aren't in the MLS.  I don't spend any time on Craigs List.

 

Mar 24, 2016 01:28 AM
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

Thanks, Joy Bender!  In the past, real estate scams were probably more often encountered in the coastal states, such as California and Florida. Now they appear to be working their way into the Midwest.

Mar 24, 2016 01:28 AM
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

Mickey Hayward, I see a fair number of Craigslist ads which appear to violate accepted industry standards of practice. There's also a lot of puffery and hucksterism in some of those ads and we tend to avoid Craigslist as a result.

Mar 24, 2016 01:31 AM
Sandy Padula & Norm Padula, JD, GRI
HomeSmart Realty West & Florida Realty Investments - , CA
Presence, Persistence & Perseverance

Eric Kodner These criminals know no limit to the creativity involved when scamming the public. Laws and penalties for these sorts of crimes need to be toughened.

Mar 24, 2016 01:53 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

I like what  Sandy Padula and Norm Padula, JD, GRI  unfortunately even the other scams are a billion dollar industry hence I do not see much hope to solve the problem....outside of common sense to stay away from situations like this...Endre

Mar 24, 2016 11:45 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I've been reading about the wire transfer scams in other parts of the country, too. Since hackers ARE out there and CAN get at bank and title company email accounts, it's best to hand those numbers over in person or on the phone. 

Mar 24, 2016 03:09 PM
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

I get on Craigslist just to see how many red flags are out there.  My mother-in-law's property was caught up in a scam for a very short time. My sister-in-law caught it and notified Craigslist and the agent about the property. It was taken down.

Mar 25, 2016 02:42 AM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Preventing fraud by personal delivery in writing is best, although, DocuSign documents are accepted.  I would be very careful and remain in constant contact via phone when documents are delivered and accepted and returned using DocuSign to ensure they are not being diverted. 

Mar 25, 2016 05:28 AM
Craig Cooper
Chase International Real Estate - Tahoe City, CA
Creating-Preserving-Growing Wealth in Real Estate

I hope to shout those are red flags! Goodness sakes, what won't they think of next?

Providing cash or wiring money before seeing a property??? I didn't know any one had that much nerve. I would be more worried about the party I was meeting committing armed robbery!

Mar 25, 2016 04:35 PM
Elyse Berman, PA
LoKation Real Estate - Boca Raton, FL
Boca Raton FL (561) 716-7824

Eric Kodner It's mind boggling to me how much time and energy are spent on these scams.  I saw one the other day - a rental for a ridiculous amount that was a scammed listing.  Called the agent only to find out it was the second time in a month it's happened to her. 

Mar 25, 2016 08:02 PM
Jerry Lucas
ABC Legal Docs LLC - Colorado Springs, CO
Notary Training, Consulting. Colorado Springs, CO

Good reminder to be on the lookout for scams and perform due diligence. Over the years, I have seen various scams including low income apartments for seniors (crooks stole the money and never built the apartments), property managers stealing money (claiming that rented apartments were vacant and pocketing the rent), property managers collecting hush money from drug dealers and protection money from frightened tenants, and even scam investments advertised in the Wall Street Journal.

I recall worthless gold mine penny stocks, where crooks planted gold nuggets to create excitement and drive up stock prices. Then they sold their shares and left victims with worthless dirt.  Definition of a gold mine: hole in the ground with a liar on top.

Mar 29, 2016 02:40 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Holy cow! I had no idea this was going on.  I'm not a CL fan and don't advertise my listings there. 

Apr 06, 2016 09:25 AM
Annette Thor
Connecticut Homes and Commercial Fairfield Cty,CT reinct.com - Westport, CT
Residential & Commercial Real Estate Broker in CT

I regularly posted a listing on craigs....I got many bizarre inquiries....and a fake offer, on a home--site unseen, all cash closing in 30 days.  I feel like sifting thru the sketchyness is too time consuming to make craigs list worth while.

Apr 07, 2016 02:48 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good post.  Any time large amounts of money are involved crooks will be working the fringes.  

Apr 07, 2016 09:38 AM