Buying or selling a home can be a stressful process for clients — even in the best of circumstances — but falling victim to a scam or other fraudulent activities can be devastating. As a real estate agent, it’s your job to take care of your clients in all things related to the real estate transaction, and that includes keeping them safe.
Some scams seem to come from an old playbook, while others come in and out of vogue. When new cons pop up, they can fool a lot of people before word spreads about the ploy. But generally speaking, criminals are after one of two things: cash or data. They want data to either use themselves or sell for profit, and in most cases, once they get their hands on a sum of cash from an unsuspecting victim, they vanish.
To ensure your clients are protected from fraud before, during, or after a transaction, you must stay informed about common dangers and educate your clients about them as well. Here are three scams to watch out for:
1. The Poser
One common strategy scammers use involves hacking into an agent’s email account and finding client contact information. Then, they’ll pose as agents or title companies to extract personal information from unassuming victims. Educate your clients on the clear signs of such a scam. For instance, when something “unusual” happens — such as the client is suddenly informed that wire transfer information has changed — it should send up red flags.
Furthermore, you should carefully explain the importance of open communication between the real estate agent, escrow company, lender, and client. If clients are asked to do anything concerning money or money transfers, they should always confirm the action with these professionals before sending money. This only takes a few minutes and creates a great system of checks and balances that keeps their resources secure.
2. The ‘Too Good to Be True’ Deal
This scam has been around for years. Swindlers will find homes listed for sale, then post those homes on Craigslist, claiming the property as their own and offering a fantastic rental price. Typically, they’ll want to handle all the rental information and deposits over the phone.
Here’s what I like to tell my clients: If the offer seems too good to be true, it probably is. For us agents, a significantly under-market price is a dead giveaway, but those outside the real estate world might not have the background knowledge to make that call — so it’s up to us to coach our clients. The easiest thing for a potential renter to do is call the real estate agent or company associated with the listing and see whether it’s actually available for rent.
3. The Home Improvement Trickster
We’ve all heard horror stories of contractors or roofing specialists who take your deposit and never follow through on renovations or repairs. Unfortunately, these scams can be a bit tougher to feel out, but you can help your clients minimize the risk of being duped by equipping them with reliable strategies in home improvement.
Similar to real estate agents, the best way to find reliable contractors is through referrals, so tell clients to ask friends and family who they’ve used; if you know of any reputable professionals in the area, offer your suggestions, too. It’s also a good idea to ask the contractor for references from past clients or employers. I also suggest visiting the contractor’s brick-and-mortar location to determine whether the business is truly legitimate.
Finally, tell clients to never give an “advance” on a project. If contractors say they need money for materials, clients should purchase them independently and have them delivered to their home. Even if the contractor skips town, the materials are already the client’s possession; at worst, the client will simply need to find another company or contractor.
As an agent, you may recognize the signs of a scam because your expertise and familiarity with the housing world sends off alarm bells when things feel “off.” But for people less familiar with how things work, these criminal acts can result in devastating losses. Protect your clients by giving them tools to spot traps before they fall in.
Jeff Thompson is managing partner at Windermere Group One. WGO is a member of Windermere Real Estate, a real estate network comprised of 300 offices and more than 6,000 agents throughout the western United States. Jeff is truly passionate about helping build companies by building their people. He leverages his 25-plus years of experience in real estate to coach other managers and brokers. Jeff credits much of his success to hard work and a willingness to partner with good people.