Fraudsters are unfortunately taking full advantage of the COVID-19 pandemic. As a real estate professional, you need to keep on top of rental scams and take action to protect your listings. Failure to do so can result in serious consequences for your real estate business and your clients.
Common Rental Scams
- When Your Listings Get Lifted From the Internet
In a typical rental scam, the scammer will lift details of legitimate property listings and fraudulently re-list it, presenting the property as a rental on rental websites or online marketplaces, such as Craigslist. These scams traditionally rely on people who will rent a property sight unseen – people who are relocating to the city and live far away or others who want to find a place fast in a tight housing/rental market.
Once advertised on a rental website, the scammers then communicate with unsuspecting, prospective tenants. These people think they’re signing up to a legitimate rental property and pay their security deposit and first month’s rent to the scammer. Of course, the ‘landlord’ they’ve been communicating with is not the owner of the property at all. By the time they realize it, the fake landlord – and their money – is long gone.
These types of scams aren’t new, but the COVID-19 pandemic has created optimal conditions for this type of property fraud. While in normal circumstances, the vast majority of renters will ask to visit a property before paying a deposit. But in a pandemic, many will not question changes to standard practice because this pandemic is unprecedented, and everything has changed so drastically over the past six months.
Sadly, if this is a listing lifted from your portfolio, your face, name and real estate business may be all over the scam, and you could face reputational damage, and even a lawsuit.
- When You Get a Rental Listing Inquiry From a Fraudster Using Lifted Images
Another variety of rental scam is when fraudsters contact a real estate agent to list ‘their’ property or their supposed client’s property for rent. But, they use a property address and images lifted from another agent’s listing. In these situations, it’s common for the fraudster to say they live in a different city, so they can’t meet at the property. They may say the property is currently rented, so you can’t inspect it right now. Some of their lies and stories might even be convincing.
So, how can you avoid getting tied up in a rental scam?
Watch Out For Red Flags
With new rental listings, ensure you do your due diligence and confirm property ownership before listing. You can also do a simple image search via Google to confirm if the property is listed elsewhere on the Internet.
Additionally, watch out for these red flags:
- Be wary of anything that must be done immediately. Often scammers will say a property needs to be rented fast to pressure you to act without sufficient due diligence
- If the ‘client’ asks for a rental price which is significantly different from market prices, this may indicate something isn’t quite right
- Be particularly cautious of people acting ‘on behalf of’ the property owner who cannot produce proof they are authorized to do so
- Situations where inspections are not possible in person may indicate a scam
- If the property ‘owner’ fails to turn up for scheduled inspections and/or meetings with you, this is another red flag
Protect Your Listings
To protect your listings, you should set up Google Alerts on all of your property listings. Once set up, you’ll receive a notification anytime your listing address is mentioned on the Internet.
When scammers lift real estate listings from the Internet, they also often lift the names, images and even license numbers of real estate agents. It’s worthwhile to set up Google Alerts for your name as well, just in case this identity theft occurs.
The NAR (NAR) also recommends setting up alerts via a website called If This, Then That. The website enables you to set up alerts for properties you have listed. If they appear on sites such as Craiglist – which won’t always show up in Google Alerts – you’ll know about it. For detailed information on how to set up these alerts, check out this video from NAR.
Another positive thing real estate agents can do is to educate others, so they don’t fall victim to a rental scam. For example, advise clients that you’ll never ask them to pay money via a link in an email. Clearly communicate any changes to normal property inspection practices arising from COVID-19 to potential renters. In many states, in-person inspections are still allowed during the pandemic, just with extra safety measures in place around social distancing and cleaning protocols.
Ensure You Have Adequate Insurance Coverage
It’s more important now than ever to ensure you have adequate insurance protection. With CRES Real Estate E&O + ClaimPrevent®, you’ll have extensive coverage and insurance protection specific to real estate. So if you find yourself facing a lawsuit, you’ll have protection for you and your business. What’s more, you’ll also have access to legal advice, available 7 days a week, to help you prevent claims before they happen. Contact the CRES team at 800-880-2747 to find out more today.