“Fraud and investment scams thrive in all degrees in the real estate market, from developers who expect payment for work not done or a pretend agent who embezzles money. Working with a legitimate estate agent at your side will ensure that you will be protecting yourself against common types of real estate scams. When dealing with an agent, buyers and sellers must check that the agent is registered with the Estate Agency Affairs Board and has a valid Fidelity Fund Certificate. It's illegal for an agent to practice if they are not in possession of this important document. These certificates are issued on an annual basis and must reflect that the agent is licensed to practice for the current year. Always obtain certainty on the banking details were payments or deposits are being made” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.
We single out the most predominant property scams you may encounter while searching to buy or rent property.
This involves scammers, hacking into the email of people involved in the transactions, such as agents or lawyers, by tricking home buyers into wiring funds to them instead of the appropriate parties. They often will use a generic email address indicating that the funds should be wired to a specific account which will then vanish without a paper trail.
Changes made regarding payment details must always be done by the seller in person if possible, or telephonically verifying the email, and not via email alone. Protect yourself by double checking everything, verifying all emailed instructions that deal with the purchase even if they're from trusted parties, any bank detail changes need to be accompanied by the required verification of the bank accounts in question.
Criminals have become much more experienced and are using stolen identity details not only to empty bank accounts but to obtain various credit accounts and even home loans. They are able to delay detection of the fraud for long periods while the unpaid bills and installments mount up. The scammer will use false documents to pose as the property owner, register forged documents transferring a property to their name, and then get a new mortgage against the property. After securing a mortgage or line of credit, the criminal takes the cash and disappears.
This occurs when a prospective buyer offers an ‘above market value’ price to a seller. The seller, impressed by the high offer signs the contract, meanwhile the deceitful buyer has no intention to purchase the property. Once the seller signs the contract, the seller may only sell to that buyer for a specified time, when that time ends the fraudster asks to extend the contract a few weeks to work out closing details. Sounding reasonable, the seller agrees to the extension blinded by the high offer.
In the meantime the seller keeps paying taxes, maintenance, utilities and insurance the buyer comes back to the seller with an excuse as to why
this price no longer works, and requests a reduction to below market value and threatens to cancel if their demand is not met. Stressed by
time and on-going costs, the seller agrees to the reduction.
‘Agents’ copy legitimate rental listings and advertise for a much cheaper price. Unfortunately, many people fall for these fake listings and wire money to the owners of these fake listings. When searching for a rental, do your research and make sure you are working with a reputable company or agent.
When you find a property you really like, you call the agent to arrange a viewing and they say they will meet you there. Later they call and say they won't be able to make it anymore, but no need to worry the landlord will be there to show you around. The agent then promises to negotiate a lower price with the landlord. When you arrive at the house you find many other people interested in renting the same place. You call the agent back to
negotiate a better price that you're happy with; they will phone you back shortly to inform you of the new price, all you have to do is transfer the money for the first two months to secure the place. On moving day, you find someone else is moving in and the agent wasn't an agent; they just found the property online and reposted it with their own contact information. They purposely send several people at a time to view the property to generate a sense of urgency for the potential renters.
When dealing with an agent, buyers and sellers must check that the agent is registered with the Estate Agency Affairs Board and has a valid Fidelity Fund Certificate. It's illegal for an agent to practice if they are not in possession of this important document. These certificates are issued on an annual basis and must reflect that the agent is licensed to practise for the current year. Always obtain certainty on the banking details were payments or deposits are being made.