A new year brings new hope and a fresh start. Let’s begin but first… Today’s new true crimes in real estate, a deal you can’t refuse. Keep in mind by the time you read this someone is coming up with a twist on these scams or an entirely new one. It is a never-ending battle of you versus the scammer.
For Rent: A Deal You Can’t Refuse
- 3-bedroom 2 baths apartment located in a quiet neighborhood in Brooklyn.
- Close to transportation and shopping.
- The owner is okay with small pets.
- Apartment shows by key.
- Rent is 1400.00
- Heat and gas included
- Electricity not included.
- Note: The owner requests that you leave a deposit with his representative before getting the key, in order to prevent possible break-ins.
Deposit is 500.00
Note: If you like the apartment your deposit will be applied to the security, if not it will be promptly returned.
If you are interested please email the owner’s representative at the following:
A Real Ad, Eh Rental Scam
Yes, the preceding is a scam advertisement. This is a real ad reproduced here– minus the email address I substituted. I came across this add some time ago. Guess what? This scam is still in use today in various versions.
Now that I have your attention let’s talk about this rental scam. You would think that the scammer would have known better once he realized he was in contact with a real estate broker. Not the case, this guy was quite persistent.
Ad Breakdown
The ad gives enough info to see if you will respond. The “owner” tries to pull you by attempting to elicit sympathy and establish a relationship. You feel sorry for “his lost” and “pay the good faith deposit.”
Note: The part about the deposit was not given until after my first email contact.
I decided not to enter into a deal with this person. I did want to see just how far this guy would go. Time to play along.
His move
He supplies a house address. Next, he requested a time and date that I could meet his representative with a deposit in hand. He offered to lower the deposit a little if my customer had a problem coming up with the full deposit.
My move
I check ownership of the house. This guy was not the owner. The house was a two-family but not a three-bedroom.
I drive to the house. A check of the names on the mailboxes showed that the owner listed in public records lives at the house. As did his relatives. They lived in the “vacant apartment”.
Now, it is possible that the owner’s kin had moved out and that the apartment was for rent. However, the person offering the apartment for rent was not the owner.
Had I gotten it wrong, was this a sublet? No, this was not a sublet; it was a straight out rental. I mean rental scam.
His move
Continue to email me and try to get me to meet with his representative.
My move
Pass. I contact the owner of the house. Send all the information I had. Let him deal with this person.
Anatomy of a Scam
Let’s examine this scam and see why someone would think this would work.
- Most people do not check ownership, plain and simple. If the person claims to be the owner we tend to believe it.
- The address is real; a quick check-in Google Maps would verify this.
- The price and amenities – free heat and gas – are great lures.
- Most people will not use an agent, they will be unaware of real estate practices.
Important Note: Agents who are representatives of the owner and have the keys do not request deposits from prospective customers. They will ask agents for a deposit for the keys. This was $20.00. The money is returned when the keys are returned.
A Common Practice for Agents.
Agents that leave a deposit for the key can show the property without the listing agent.
How it works
- The agent shows his/her state ID and business card at the listing agent’s office.
- The agent leaves the money as a deposit for the key.
- This is recorded by the person giving out the key.
- The agent returns from the showing and returns the key. The deposit is returned.
- A note is made in a ledger tracking the key.
The deposit is to make sure the agent returns the key. No agent wants to pay 20.00 for a key.
Amazing, prospective tenants have paid up to and above 500.00 for one.
This scam, which sometimes is called, Cash for Keys should not be confused with the sanctioned Cash For Keys used by banks and owners who are facing foreclosure.
Summary of Legit Cash for Keys
So there is no confusion here is how Cash For Keys works in a foreclosure. Owners have used this to motivate tenants to leave an apartment as a condition of a sale.
Note: Either the bank, the owner or a broker acting on an owner’s behalf will offer the tenant cash to vacate the apartment.
How this deal works
- Both sides sign an agreement
- The agreement stipulates the cash amount.
- It states that the tenant relinquishes all claims to the apartment.
- The lease–if there is one–ends.
- The tenant will not return to the apartment.
- No legal action against the entity that is executing the deal.
- Cash paid out the same day the tenant moves out.
- The tenant surrenders the key on the move out day.
- The locks are immediately changed.
This is an abbreviated version of a Cash For Keys agreement. Some are quite detailed others are very basic. All have the same result; the tenant is paid cash to leave the apartment. Getting the keys is a result of the completed agreement.
Important: No one can be forced to agree to a Cash For Keys deal.
Contacting the Owner
With all the information I had amassed I attempted to contact the actual owner to see if he knew his property was up for rent.
- I received no response.
- I sent the owner a copy of the ad and the emails the person had sent me, again no response.
- In the end, I did my due diligence, didn’t like the deal and walked away.
To the skeptics that believe this may have been a legit rental, I submit the following.
Help Me, Howard
Here in New York on WPIX News, we have Howard Thompson of “Help Me Howard”. As the name suggests he helps people who contact him with various problems. Rental scams are something that crosses his desk quite frequently. He has tried and sometimes succeeded in aiding victims of scams like this time and again.
In watching these stories a common denominator begins to emerge. It points to a lack of knowledge and our lack of professional representation.
Owner’s Representative
Notice the ad said “owner’s representative”, not real estate agent. No real estate agent was involved. Just a person that “represented” the owner.
I never spoke to “the owner”–who claimed to be too busy to accept or return calls. The representative could just as easily have been the scammer pretending to be the rep. Got that…good.
Remember: Scammers like to control the situation. They only use as many people as necessary to pull off the scam. One person could easily pull this off.
Real Estate Scam Busting Sites
I do my best to make sure these sites are active. They are not under my control. Consider them a primer on real estate scams. If you come across a site I should know about leave me a comment about it. I will add it to the list.
Scam Busters (Search for Rental Scams)
http://www.scambusters.org/realestatescam.html
Federal Trade Commission: Rental listing scams
http://www.consumer.ftc.gov/articles/0079-rental-listing-scams
Disclaimer
Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.
Comments, Questions, Suggestions?
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