By Davis Pratt, PMI Public Relations Specialist
Imagine finding a great rental home for a young family; the location, size, and price range are all ideal for their needs and they even like the layout and color scheme. Everybody is happy until moving day, when you find a different family you’ve never met living in the house you’re about to rent, insisting they have a signed lease agreement and have paid the deposit and first month’s rent to the owner (a property owner you’ve never heard of whose contact info is different from the owner who hired you). Now, instead of making sure a simple move goes off without a hitch, you’re overwhelmed, not knowing what to do. Do you call the police, try to find the fake owner? The victims of listing fraud want their money back and obviously won’t be happy about being turned out on the street, while your tenants want their new house. How do you keep tensions from boiling over? The property owner thinks you made a mistake and wants an explanation you don’t have. Meanwhile, you’re trying to help your new tenants get safely situated like you promised while investigating what went wrong and trying to figure out how to get the wrong tenants who just moved in, out.
This scenario is far from uncommon. According to a July 2018 survey by Apartment List, 6.4 percent of United States renters said they had lost money to rental fraud, resulting in an estimated 5.2 million U.S. rental fraud victims per year. Furthermore, 43.1 percent of those surveyed reported having encountered listings they suspected were fraudulent.
For a property manager, fraud not only costs you time and money, it also damages your reputation, which can result in poor word of mouth that takes a bite out of your revenue later on, even years down the line. Whether you’re managing properties for yourself or as a professional property manager, taking precautions to avoid being scammed is worth your while.
How Rental Listing Scams Happen
There’s some variation when it comes to rental scams, but they typically have two elements in common: 1) the perpetrators advertise a rental property they have no legal right to rent and 2) attempt to collect money from unsuspecting renters who are interested in that property.
The scammer will:
- Search listings for vacant or vulnerable properties to target, often taking the photos and information from the official listing for their own use
- Make their own listings and advertisements for the property, offering rent below market value to attract consumers
- Sometimes scammers will claim to advertise the property for or on behalf of an owner who is a friend, family member, or business associate.
- Scammers will ask for application fees, deposits, rental payments or other charges from interested parties.
- Sometimes scammers will break into the home so that they can show it, or may even take advantage of the real manager’s automated key dispensers to give people entry to the properties.
- If the con is successful, the scammers will then make off with the money from early rental payments or other leasing and processing fees they convince clients who think they’ll be getting a secure place to live out of the deal to pay.
Criminals don’t need to be in your area, or even your country to attempt rental scams. Nigerian scams revolve around convincing marks to send money overseas, and in the rental scam sphere this usually means listing properties the scammers have never even visited and requesting an advance rental payment or a different fee through a money wiring service.
Scammers sometimes target property managers as well as tenants, like with 419 phone scams, where scammers will answer online postings and ask to pay an advance, usually through a money wiring service. The scammers ask for a refund or will overpay, and ask for the excess funds to be returned. If the manager returns the money without waiting for the fraudulent payment to clear the bank, they’re out that amount of cash.
6 Red Flags: Signs of Rental Scams to Watch Out For
Reading about scams in this kind of forum makes them sound very obvious to detect and avoid, and that’s true to a certain extent, but millions of people are still scammed every year. Warning signs can slip past you if you’re not vigilant. Here’s a list of common signs of con artistry that will help tenants know how to better avoid potential listing scams, and help property managers know how they can appear open and trustworthy throughout the entire rental process.
1. The Price is Too Good to Be True
If the price range of a property sounds too good to be true, it probably is. If you’re a tenant, take a look at other properties in the area to see how believable a listing sounds. Property managers ought to weigh price ranges in their area against the properties they are representing to find a fair and reasonable price.
2. The Listing is Poorly Written
Looking good may only extend to price, often scam listings are poorly constructed, low on information with poor photos of the property, and scam posts and emails can be riddled with misspellings and grammatical errors. Professional property managers will upload clear, informative, and thoroughly proofread listings. It’s a good idea to watermark the photos of your properties you use so scammers won’t want to take them to use themselves.
3. Research Comes Up Short
One great way for tenants to research a property listing is to look for reviews or messages from previous and current tenants who have worked with that property manager and management company. Often scams and scammers will have been identified online by past victims, concerned consumers, or financial experts. Potential tenants should also make sure the property is not in foreclosure and the property manager has legal right to rent it to them. They can check with their county recorder to confirm who owns the property in question.
4. The Manager Refuses to Meet
Scammers want their targets to send them money as quickly as possible, knowing as few details as possible. If a manager tries to dissuade a tenant from seeing the property in person before renting, that’s a red flag. Scammers will not want to meet face to face, and requesting to see the property and meet the manager before renting is a good policy regardless of potential listing scams because it will help tenants decide if the residence is really right for them. When tenants insist on seeing a property and meeting the person who made the listing, it’s a good idea for them to bring a friend or family member so they don’t show up alone, just in case.
5. Cash Only
There’s a reason why most rental scammers will try to get their victims to pay using cash, money wiring services, or even cryptocurrency. Criminals thrive on anonymity; the least traceable scammers are the least likely to get caught. Be careful of landlords who insist on payment in cash. Property managers who are completely above board will be happy to let tenants with pay with checks and otherwise leave a trail for your transaction that banks can follow more easily if any financial questions come up.
6. The Property Manager Doesn’t Want to Get it in Writing
Some regions allow verbal leases, but tenants and property managers should always insist on a written lease. A written document sets terms and qualifications so everyone is on the same page (no pun intended), and can be preserved as a permanent record. Both tenant and landlord should have signed copies of the finalized lease for future reference and to cover every base from a legal standpoint, and read it thoroughly before agreeing to their partnership.
Scam Free Property Management
Managers have the opportunity to be examples of transparency, educating both tenants and property owners on what the healthiest business relationships with property managers look like. As a property manager, you should also monitor your own vacant properties, online and in person, to confirm nothing illicit is taking place there. Screen your tenants and make sure every payment you receive clears the bank. Prevention is always preferable to falling for a scam in the first place and if you’re attentive to detail and follow the steps above, you should be able to spot the vast majority of rental fraud a mile away.
If you’re a victim of rental fraud, notify law enforcement and report all the details you can, it’s possible your information will be vital to making sure no one else will fall prey to that scammer again. It may be worth contacting an attorney who can help you figure out how you were scammed and what the best way to proceed is. It’s also worthwhile to get in touch with tenant’s rights groups or property manager organizations that are active in your area to make them aware of what perils befell you and learn how they can help.