Time to read : 5 Minutes
Navigating the real estate market is a daunting process. With so much money tied up in every transaction, buying and selling real estate can be one of the biggest financial decisions you ever make.
Yes, but… that also makes it a very tempting opportunity for people that want to take your money. Real estate scams are part of the $2.7 billion Australians lost to scammers last year.
Luckily, there are steps you can take to protect yourself, and your finances. Here are some of the most common real estate scams so you know what to look out for.
Payment redirection fraud
Payment redirections, or wire fraud, has become a serious issue in real estate transactions. Scammers intercept communication between buyers and sellers to divert funds into their own accounts.
This usually happens through phishing or spoofing emails that appear to be from legitimate parties involved in the transaction.
The real estate industry is one of the most commonly targeted industries for this type of scam. It can include a fraudster taking control of a real estate office’s email inbox, or even just using a similar email address to intercept a payment.
When people are expecting an email from their agent, they often wouldn’t think to double check the email information or question any seemingly strange details.
How to protect yourself from payment redirection fraud
Verify payment instructions
Always verify transfer instructions by contacting your agent or conveyancer using a known and trusted phone number, not the one provided in the potentially fraudulent email. Ask them when the email was sent, and any other key details, to verify it’s legit.
Use secure channels
Ensure that all communication regarding financial transactions is conducted through secure and encrypted channels. If you’re worried, ask your conveyancer or agent for additional security.
Be wary of email changes
Be cautious if you receive sudden changes in payment instructions or urgent requests for funds.
Double check everything
Often when we’re stressed, we forget to check the finer details. Scam emails often have subtle spelling errors, so reading an email carefully and reading over it again may uncover mistakes or other incorrect details. This can save you a lot of heartache… and money!
Phantom rentals
Buyers and sellers aren’t the only ones in the crosshairs for real estate scammers. Renters are targeted by a scheme which offers fake rental listings.
During tough rental markets – like the ones many states are currently facing – these listings can appear too good to be true with low prices and convincing advertising copy. The lister will often ask for a deposit, or the first month upfront.
As soon as that money leaves your account, the person you’re dealing with disappears, and the scam is revealed.
How to protect yourself from phantom rentals
Use reputable platforms
Stick to well-known rental platforms or agencies with strong reviews and credentials. In a tough rental crisis it can be tempting to look at lesser-visited platforms, but the mainstream ones have processes to weed out scammers.
Verify ownership
Verify the legitimacy of the listing by checking public property records.
This can be as simple as looking it up on a real estate listings platform and checking the rental or sale history. If you’re still unsure, you can speak to the Records Office in your state and they can confirm if the details are correct.
Visit the property
Arrange a viewing before making any payments. Be cautious if the "landlord" is unwilling to meet or show the property without payment. Remember, if the rental property is legitimate, it’s in the agent’s interest to have it leased and they shouldn’t be difficult about accommodating any reasonable requests to find a suitable tenant.
Check with consumer affairs
There are now requirements and protections in many states about how bonds should be lodged. Check the requirements in your state / territory by searching ‘how to lodge rental bond’ and if you’re worried reach out to the governing body.
Be aware: these scams are most prevalent on social media. If you’re looking at a rental through a social media platform, be even more cautious and do your research before transferring any money.
Phoney agents and fake listings
Going one step further than phantom rental listings is the work of phoney agents and fake listings. These scammers are often targeting investors, posing as real estate agents with the dream investment listing which may or may not exist.
There are a couple of different versions of this scam:
people posing as real estate agents can use listing information from a real property – which can make it trickier to spot the lies
or
the entire listing is fabricated, in other words it doesn’t exist.
If you’re on the hunt for a good investment property and you’re approached by an agent for a 'rare' opportunity, tread carefully.
Be aware: these scams can be particularly prevalent for people looking to invest overseas or in another state, where the opportunity to see a property in person is less likely.
Remember, a scammer’s website, documents, listings etc may all appear very legitimate. These sort of schemes can be incredibly sophisticated, so it’s important to be vigilant.
How to protect yourself from phoney agents or listings
Check credentials
Ensure you can access identification such as their licensing details and check these with a governing body if you’re concerned. Look into the agency they claim to work for, call the offices and ask to speak with the agent you’ve been dealing with.
Verify contact information
Cross-check the contact details of the agent with any information you find through their online presence or agency. Many agents nowadays use online rating platforms such as Rate My Agent. If you can’t find any details about them online, that’s a red flag.
Double check the listing
If a scammer has replicated a listing, you should still be able to find the original online. Call the agent attached to the original and check the details with them.
Trust your instincts
If something feels off or too good to be true, it probably is. Don’t hesitate to ask for references and additional information. If they’re legitimate, they won’t be worried about giving them to you.
Never feel pressured by a “good” deal to rush a decision, or hand over money.
Bottom line
Real estate transactions can be complex, but being aware of these common scams can help you navigate the process with confidence.
Always:
practice due diligence
verify the legitimacy of all parties involved
be cautious with financial transactions.
Spending an extra few hours thinking about an opportunity might be the difference between losing a lot of money and keeping your finances safe.
And keep in mind the basics of security – nobody should ask you for your passwords, or expect you to provide important information through a platform that isn't secure. If a link looks odd, don’t use it, and if you’re worried, ask your agent or conveyancer if there’s a more secure way to conduct the transaction.
The unfortunate truth is that often, money lost to scams is unable to be recovered. But if you do think you’ve been the victim of a scam, report it immediately to your bank, and check ScamWatch for the right avenue to find help.
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Financial Disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
