Property Shortages and Increased Rental Costs Leading to an Increase in Scams
by Don Drake, Connelly Law Offices, Ltd.
"There are so many things I enjoy about the practice of elder law, and one of those things is helping seniors transition from a larger home into a smaller condominium or apartment," stated professional fiduciary and certified elder law Attorney RJ Connelly III. "This move is often an exciting time for older adults; the kids have left the nest, the couple has finally retired and has a significant retirement fund built up that allows them to travel, and searching for a new place to call home brings a sense of adventure for them as well, something they have not experienced in decades. Unfortunately, scammers are waiting to prey on older adults entering this phase of their lives."
"Today, much of this is due to skyrocketing rental prices, the shortage of properties, and the exploding crime rate in urban areas forcing individuals to seek safer locations, combine to make the real estate market highly competitive," said Attorney RJ Connelly III. "What real estate scammers are doing is cashing in on these concerns and renters who feel pressured to make a quick decision for fear of losing out on a property that meets their needs, and it's costing individuals thousands of dollars, and for seniors who are retired, the money lost, in most cases, cannot be replaced."
Jim and Rosalie's Story
A couple recently discussed how they were victims of a real estate swindle. Jim and Rosalie decided to sell their spacious home after their youngest child married and moved to Arizona. They found a one-bedroom, two-bath townhouse after responding to an online ad and getting a call to view the property from someone claiming to be the homeowner.
"It was beautiful, absolutely perfect," Rosalie stated. "It had a balcony that opened towards a wooded area and a spacious garage. The price was right and fit our needs as a retired couple. We were given the access code to the house, and we planned to have our belongings moved into the house."
"Sadly, the guy we signed the lease with did not own the property," Jim said. "On the day we chose to move in, all hell broke loose. When the movers started to unload our belongings, the police showed up and told us we were trespassing. It turned out the guy we were dealing with never had any rights to the property, and our attempts to reach him were futile. We discovered the property belonged to a local real estate agency."
"We had turned off cable and gas services to our home, which was on the market, and switched our accounts to the townhouse property," Stated Rosalie. "Thankfully, we had something to go back to, but not everyone who is a victim of this type of scam does."
"We are out $5400 for the property rental, as well as time, and had to put a hold on the sale of our house," Jim said. "We did file a police report, but according to them, they will probably never be caught. We warn others not to use any online service or listing to rent a property; only use a licensed real estate agent. It would have saved us a lot of trouble, money, and aggravation."
How a Rental Scam Occurs
"These scams occur when the scammer advertises an empty property and is contacted by the potential victim," said Attorney RJ Connelly III. "According to the FBI, a rental price is discussed, usually at a price that is too good to be true, and the victim is told that many others are waiting for the property and suggests you act upon it immediately. Then the fraudulent plan goes into action. They can be straightforward cash transactions or elaborate schemes." Below, the FBI explains a couple of scams.
The scammer insists on a cash payment for an application, the first and last month's rent, and a security deposit. They claim it is a cash deal because they have been "burned by bad checks," which has caused their property to be vacant and income lost. It sounds compelling, and the potential renter is willing to produce the cash out of fear of losing the chance to rent the apartment. After the money changes hands, no further contact occurs, and the money is lost.
Another type of swindle involves real estate that is advertised online. The scammer duplicates postings from legitimate real estate websites and reposts these ads after altering them. The scammers often use the broker’s actual name to create a fake e-mail, giving the fraud more legitimacy. When the victim sends an e-mail through the classified advertisement website inquiring about the home, they receive a response from someone claiming to be the owner. The "owner" claims they cannot show the property without payment because they are either out of town or out of the country. If the victim is interested in renting the home, they are asked to send money, and shortly thereafter, the property is no longer available.
Local Scams Abound
"The FBI's Internet Crime Complaint Center reports that there has been a steady increase in real estate scams in the past three years," stated Attorney RJ Connelly III. "Nationally, in 2021, 11,578 people reported losing over $350 million, a 64 percent increase over the previous year. The FBI's Boston Division, which includes Maine, Massachusetts, New Hampshire, and Rhode Island, reported 415 victims losing a total of $13 million, an increase of 27 percent over the previous year." The numbers broke down this way:
Forty-two victims in Maine lost $489,309.
Two hundred ninety victims in Massachusetts lost $8,944,041.
Forty-one victims in New Hampshire lost $2,576,210.
Forty-two victims in Rhode Island lost $1,414,709.
Here are some examples from Rhode Island as reported by the Boston FBI office:
An Idaho man was in the process of relocating to Rhode Island and responded to a Craigslist ad for a year-long rental in Narragansett. After securing a $21,756 advance from his employer, he wired that money to the “owner” and set up a time to gain access to the residence. Before the agreed-upon meeting, the man received a text canceling the meeting because the “owner” was in Chicago tending to his sick son. The man went to the residence and was greeted by the actual property owner, who told him it was not a rental property and he had not posted an online ad.
An East Providence man responded to an online advertisement for an apartment in Cambridge, MA, requiring the first and last month’s rent and a security deposit. The man was told he would not be given the keys and allowed to access the apartment until the $6,000 check cleared the bank. As soon as that happened, he made an appointment to collect the keys to the apartment, but no one answered the door. After calling and texting the purported owner, the victim received a text stating, “You got scammed, do not text this phone anymore.”
A University of Rhode Island student responded to an online advertisement on Facebook Marketplace for an apartment in Wakefield. The student wired $1,800 to secure the place after he was told he wouldn’t be allowed to see the apartment before moving in because the landlord is always traveling. When he showed up to move in, the address he was given was for the leasing office, and he was told there were no units available.
Here are some tips to avoid being a victim of real estate fraud:
When asked to wire funds, check where the money is going, check the phone number and website of the agent, and ask for references.
Never put money down on a property you have not seen or been allowed to walk through.
Check the identity of the landlord or property owner by researching public records to determine exactly who owns the property you are moving into.
Do not complete any applications online until you have met with the property owner face-to-face. Many of these applications require a social security number for a "credit check". So not only might you be out of money when you make a down payment, but your social security number could also be stolen.
Always research the local rental and property prices. If the numbers you have been given seem too good to be true compared to similar properties in the area, be very wary.
Check online reviews, references, and other information from previous clients who might have dealt with the owner.
Be wary if the landlord or owner states they are out of the country and want money wired to an offshore bank account.
"If you think you have become the target or victim of a rental scam, stop all contact immediately," said Attorney RJ Connelly III. "If you have already sent money, you must report any funds transfer to your financial institution and file a complaint with the FBI’s Internet Crime Complaint Center as soon as possible."