Top 5 scams to look out for
Real Estate Agents are particularly susceptible to scams for a few reasons:
- Real estate agent’s contact information is public record.
- We go out of our way to market ourselves to strangers online.
- We know that a speedy response has a higher closing rate for leads.
We know there a ton of scams out there right now but we narrowed down the list to the top 5 we've seen and/or been really upset by.
That way you can keep yourself, your brokerage, and your client’s safe!
Scam 1: Commission advances
In real estate commission advance scams the scammer will pose as a legitimate commission advance company and offer to advance the agent their commission on a pending sale. The scammer will then ask for personal information from the agent, such as their bank account number, in order to wire the money. Once the money is wired, the scammer will disappear and the agent will never see their money again.
We don’t recommend commission advances as a practice – you never know when something will cancel last minute, but especially be wary of commission advance prompts that don’t include your broker in the approval conversation.
Scam 2: NAR Healthcare Insurance Agents
Because Realtor numbers are public we get a number of spam and scam calls but my goodness gracious, these guys are persistent. Some are receiving texts day and night about helping NAR members with their insurance needs. NAR does not endorse any provider for Health Insurance Coverage. If you get these messages respond “stop” and block the number. Unfortunately we think this one will be around for a while.
Scam 3: Clicking on things that you believe are from your broker
It’s easy to let your guard down when you see a familiar name come through text or email. Again, because Realtor and Brokerage information is public it is easy to find and create similar email addresses and have a go to list of where to send the spam out to.
These types of scams are often associated with phishing; a type of email fraud in which the sender attempts to trick you into revealing personal information, such as your login credentials or credit card number.
If you receive an email from your broker that contains an attachment or link, be suspicious. Double and TRIPLE check the spelling of the sender’s email address before pressing the link or opening the attachment because these emails often contain attachments that are infected with malware or links that redirect you to a fake website.
Scam 4: How to tell if your client is really a scam
A common scam from the past for female agents is that they start working with a client, look at a ton of homes, the client never makes an offer, but then asks them out to dinner. It was all a ruse to spend time together with the plan of dating. These days scammers have different goals for pretending to be clients.
We’ve seen fake proof of funds, fake pre-approval letters, fake names, and fake ownership claims to work with an agent so they look legitimate when they make offers or listing property that isn’t theres on the open market to access funds in the sale that don’t belong to them. Now you may be thinking – but how do they buy the house? This one was tough for us to figure out, but after working with our local police on this very issue it turns out they had lined up someone to purchase the property who had attended the showings the day after the closing so the scammer planned to issue a fake cashier’s check and be off with the money from the quick sale before anyone was the wiser.
The best practice is to verify whatever you are given. If you’re given proof of funds call the bank to verify that person is a customer and that they have more than XX amount in that account to purchase a house as they plan to do. The bank won’t give you the amount but they can confirm yes or no. Pre-approval letter? Call the lender to confirm. Vacant land they want to sell? Go to county records and verify ownership. If it’s in a LLC ask for their Articles of Incorporation for your Broker’s records that they have authorization to sign. And if nothing else look them up on Forewarn to check their public criminal and ownership records.
Scam 5: Wire Fraud
Wire fraud is real, it is here, and you should definitely be worried.
Because pending transactions and our contact information are a matter of public record you will be at risk of the potential attempt at phishing and fraud.
It happened to a Broker friend of mine. He had a phone call with a client, told them the title company would send wiring instructions, within 30 minutes the “title company” with a similar email to the one he mentioned on the phone sent the “wiring instructions” and the client sent $185,000 never to be seen again.
Tell and teach your clients from the beginning of the transaction that wire fraud is a very real issue right now. 1 in 3 transactions are targeted. You and your clients should look out for emailed wiring instructions where someone “is in a meeting” so they can’t confirm then by phone but “kindly send back confirmation”. They need to look out for a rush that confirmation of funds is needed, that no one is available to talk to them right now, and the word “Kindly.” These are the red flags.
And remember – YOU should never be handling wiring instructions as an Agent.
Just like the world of real estate is evolving, so is the world of scamming. Always stay vigilant when it comes to protecting yourself and your clients from scammers.
Any scams you’re seeing out there that should be added to our list, comment them at the bottom of this page!
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