The real estate industry is a multi-billion rand industry which is very lucrative for those in the business of buying and selling properties and by extension, rentals. It is therefore not surprising that criminals look for loopholes to rob people of their hard-earned money.
January being the start of the year is a very active period of time in the property market with many tenants considering buying their own property and students and families begin to search for new rentals. Research info shows that these scammers capitalise on desperation to dupe prospective property hunters.
What are the most common scamming methods used?
It’s common knowledge that a great exchange of documents is done through emails. Scammers usually intercept emails at a critical moment of the transaction, which is at the point of payments. They intercept emails and end up providing their own banking details for payments.
Identity theft is very common in South Africa. Scammers often steal identity documents, falsify property ownership documents and end up obtaining a mortgage or financing based on that. In the end, the owner of the ID will be liable for debts accrued through stolen ID cards.
You need to carefully check property listings. Criminal elements go to authentic sites to duplicate legitimate ads but at a much cheaper price. Out of desperation, you are likely to pay a deposit and commit to a bogus advert.
Bait and switch scheme
The bait in this regard is a higher buying price offered by the buyer to dupe the seller into signing a contract. A delay tactic in finalising is deployed which often turns into an extension of time. The seller is in the meantime bound for a specific period of time to the signed contract. In the midst of pressure to continue paying for taxes, maintenance, utilities and insurance, the seller is often arm-twisted into further reducing the price of the property.
Paul Stevens, CEO of Just Property, in an interview published on Private Property warns that property scammers have become quite sophisticated:
We encourage those looking for rentals to be vigilant. It is vital that you look for ways to verify the integrity of the property listing you are interested in.
The only sure-fire way of ensuring you won’t be scammed, says Stevens, is to deal through a reputable property company and double check everything. “Scammers are clever conmen and women; the smartest ones are extremely charming, and adept at tempting their victims into a false sense of security, even using real properties that are really up for rent to lure the unwary into making their deposits and paying that first month’s rent into the crooks’ account.”
“At Just Property, we offer protection to tenants in a number of ways. For example, we place rental deposits in trust accounts (which can be identified on bank statements); we have partnerships with well-regulated providers like PayProp, an automated rental payment and reconciliation platform that is both easier to use and more powerful than solutions offered by banks and traditional software vendors and we offer products (like RentShield Zero Deposit) that mean a tenant does not need to make a large capital outlay at the beginning of a lease term.
“Our agents are well informed and can easily spot anomalies or indicators of a property scam. This is one of the many (often unacknowledged) ways that real estate agents add value to their clients,” Stevens continues. “Our agents also have systems in place to verify tenants and landlords alike, using third-party, expert verification tools, the cost of which is carried by our franchise offices.”
Stevens concludes: “By all means do your research on the online portals – they are the best way to see what is available and assess market value. But always work through a verified agent, and make sure you meet them at some point, face-to-face, in an agency.”
What type of signs should prospective buyers and tenants look out for?
Very low rent or selling price
Any property purchasing price or rental must reasonably match its value. Bargains do happen every now and then but you just need to be careful of ridiculously cheap rent or selling price.
Money transfer modalities
The method of paying is a big tell tale sign. Don’t fall for the trap of cash payments or odd payment methods. You need a proper paper trail for property payments and transactions.
Any demands of deposit before viewing or signing legitimate relevant documents should ring alarm bells. Only pay deposit once the right steps are followed and you are sure it’s a legitimate deal.
If you are dealing with an agency, you need to keep an eye on poorly worded adverts, non-existent online presence and no disclosure of property pictures. All these point to a scam.
The information outlined above will assist you to avoid being a victim of a property scammer.