A scam, according to Dictionary.com, is “a confidence game or other fraudulent scheme, especially for making a quick profit.” The only way to avoid being a victim of a scam is to know as much as you can about scams.
The key to avoiding scams in the property market, especially during economic difficulties, will always lie with having street-smarts. Start by knowing why scam-artists scam, how to identify obvious scam signs, and how to deal with a scam.
The reason for why people scam is quite simple; money. Everyone loves money, you can never have enough money and money changes people – sometimes for the worse. Yes, the cliché answer is the correct one. Difficult economic circumstances, like high inflation and unemployment, are strong motivators for people to start scamming their way to an easy few thousand (or sometimes, just to have a roof over their heads).
Here are some examples of property scams discussed in MSN Real Estate writer, Karen Aho’s article, Renters: Beware of new twists on an old scam and the Fin24 article, Don’t fall victim to tenant scams:
1. A pretend owner ‘rents’ out a vacant home – “He finds an abandoned property, or two or three, and creates an online advertisement pretending to be either the owner or someone authorized to rent on the owner’s behalf.”
2. A fake agent pretends to rent a foreclosed property then splits before the renter moves in – “The con artist supplies a throwaway or fake phone number and never supplies the keys to the property. He may also collect a deposit from several victims at a time.”
3. A fake property manager pretends to rent out a home that’s for sale – “The con artist hijacks listings of homes that are for sale or rent by legitimate agencies. He may rewrite the ad a bit before posting it online, including undercutting the original price by as much as half…[and] may also use the name of an actual leasing agent and agency; when renters go online, they believe they are verifying the self-proclaimed agent’s identity.”
4. A real owner rents his foreclosed property – “[some] owners approaching, or in, foreclosure have been renting the property and pocketing the cash, removing eviction signs from the property to keep tenants in the dark as long as possible.”
5. A con artist rents a real, but unavailable, apartment to tourists – “Anyone can list a property as a vacation or temporary rental, and it attracts those visiting or moving from out of town…scammer will request that a security deposit and rent money be electronically transferred in advance, as opposed to accepting a credit card or check.”
6. Tenants renting with false ID’s and Proof of Payments – “A tenant who signed a lease with the landlord and proceeded to hand over a false proof of payment. Not knowing that the payment was false, the landlord handed over the keys…By the time the landlords managed to evict the tenant, they had sustained the loss of eight months’ rent as well as an outstanding electricity bill. Not to mention…the tenant…vandalising property on departure.”
7. Tenants conning other individuals without negative credit histories – “into co-signing a lease agreement with them so that their own credit history will be overlooked.”
The Ombudsmen at www.ombudsmen.co.za gives a great starting point to protecting yourself from scam-artists by listing 12 obvious scam tell-tales to beware:
1. Communication is exclusively by email or cell phone.
2. The “owner” or “renter” claims to be out of the country.
3. Communication is urgent — the person seems in a hurry to close the deal immediately.
4. Messages use poor spelling and grammar and, frequently, religious terms like “God Bless.”
5. The house has a “For Sale” but not a “For Rent” sign.
6. The lock box is broken or the “agent” appears to have his own, different key to let you in.
7. The “owner” or “managing agent” is based out of town.
8. The home appears to contain someone else’s personal belongings.
9. The rental sum is lower than the going rate for the locality.
10. The inquirer asks questions that are already answered in your flyer or ad (like when the place is available or what the rent will be).
11. The “renter” claims he’s prepared to take the deal sight-unseen (usually a prelude to an advance fee scam).
12. The “renter” requests that you buy things or hire a contractor to do some work on the place first (usually in such a case the scammer is the “contractor”).
There are various things that landlords and tenants can do to avoid a scam, but only one method will ensure a scam free property deal: work with professional, renowned and registered real estate companies or people.
“Most agencies make use of the TPN (a South African Credit Bureau) system to do credit checks on clients and therefore they can see if the client has previously defaulted in rental payments with another agency,” says Estate Agent for Go!Letting Property Rentals, Lara Gomes, “We can also see if other agencies have performed a credit check on the client and then we can follow up to why they did not rent to them. We also have a good relationship with many other rental agents in our area and we warn each other against bad tenants.”
Most con artists are clever though, and know exactly how to manoeuvre around a credit check. This is where private renters are more at risk, and where humanity can blind the average landlord who empathises with the soppy stories usually provided by the scammer in order to avoid a credit check.
“Due to agencies having access to TPN and communicating with each other,” says Gomes, “many tenants rent privately as they know the owner will not have access to this information and will not be doing credit checks.”
Avoid dodgy deals, even though you are tight with money and even though the deal sounds amazing. Follow these tips to counter scam/con artists:
- Ensure that the landlord or tenant you are dealing with has confirmable identification. Either request a certified copy of their ID and proof of address, or if you’re a renter, request property and deeds information (which can be done online at www.mydeedsearch.co.za).
- Ensure a matching local rental price by checking with local real estate agencies or rental companies what the average local rental price is. You will realize whether your offered fee is either too high, too low, or clearly a scam.
- Ensure a property viewing before you agree to anything else. There’s no point paying for something you haven’t even seen and touched yet.
- Ensure that you only start working with money or deposit transfers after you have confirmed the above steps and have thoroughly attended to the lease agreement.
- Ensure to keep a close eye on your property, if you’re a landlord. Remember to change locks after every tenant moves out and ensure that you have proper security measures installed.
- Ensure legal safety with thorough documentations of everything. Lease agreements, contracts, notes, letters, copies of ID’s and the like, important emails, etc.
Always keep in mind that scammers can be dangerous people, so aim to take the correct steps. If you feel unsafe, contact your local security or police services. If legal actions (like evictions) need to happen, then approach your lawyer to go about the correct procedures.
“Between a fellow who is stupid and honest and one who is smart and crooked, I will take the first. I won’t get much out of him, but with that other guy I can’t keep what I’ve got” – Lewis B Hershey
Don’t let ignorance be your downfall. Stay updated with all the latest tips and news from Go!Letting Property Rentals, situated in Vanderbijlpark.