Real Estate Scams

Here we’ll go through some of the most common real estate scams and how to avoid them.

Rental scams

Rental scam warning signs

• If it sounds too good to be true, it almost definitely is. Look for advertised prices well below the rest of the market, the promise of water views, full furnishings and any other combination of benefits for an impossibly cheap rate.

• The landlord is overseas. This is an immediate red flag. Though it may on occasion be true, it should be treated as suspect for safety’s sake.

• You’re asked to hand over money before anything else happens. If you’re asked for a viewing fee, a holding fee to secure a property or any other kind of upfront fee (usually in the form of an electronic transfer), stop immediately. This isn’t standard practice and is deeply suspect.

• You’re being offered a lot of excuses as to why you can’t view the property. Just like that landlord who is overseas, something doesn’t add up. You should be able to go through all the usual channels without hinderance.

• There’s something off about the photos in the listing. They may be low quality images, stock images or taken from other websites. If you think you’ve seen a picture before, trust your instincts and run an image search on Google. Sometimes pictures show outdoor environments that don’t match up with the cities they’re advertised in.

• Text within images. If an image has text superimposed or is nothing but text itself (such as an email address), raise that red flag again. This is highly unusual and very suspect.

• The words in the ad may be clumsily composed and sound unprofessional. While agents can be accused of exaggerating, they know how to describe a property well and have a certain style of writing. A fake listing looks and feels different.

• Look for repetition elsewhere. Cut and paste the content of the listing (including the address and any contact details) into Google. If it’s a popular scam, you’ll likely find it elsewhere. It may be mentioned on blogs or amateur scam watch sites (you should always check with official sources like SCAMwatch as well).

How to protect yourself against rental scams

• Organise an inspection for the property. A drive by is not enough. With these types of scams, the property may genuinely exist, but it’s owned by someone else. If you press this point it may dissuade the scammer from pursuing you.

• Keep copies of any emails. Keep all correspondence you exchange with the landlord or representative you are dealing with in case you need to provide these to the authorities.

• Do thorough online research about the property. Search the name of the person or company involved. If they don’t have an online presence, you’ll affirm your suspicions and can stop the conversation before it progresses any further. Remember that even fancy, professional looking sites and profiles can be fake. Check other review sites for those names or for similar activity.

• If you’re checking references or recommendations, do so independently. Don’t rely on contacts provided by the landlord, owner or representative.

• Lay your own groundwork with money and finances. Don’t consent to a money transfer as this carries a high risk. If conducting an online transaction on the listing website, ensure it uses the latest in website security.

• Never hand over money or information to someone you don’t trust. Trust your instincts – it’s better to be safe than sorry. No landlord or agent can fault you for doing your due diligence.

Investment scams

Investment scam warning signs

• A scammer claiming to be a portfolio manager calls you and offers investments advice. They’ll claim what they are offering is low-risk and will provide you with quick and high returns. The scammer’s offer will sound legitimate and they may even have resources to back up their claims.

• An advertisement or seminar makes claims such as ‘risk-free investment,’ ‘be a millionaire in three years,’ or ‘get-rich quick’. Investment seminars are designed to convince you into following high risk investment strategies such as borrowing large sums of money to buy property or investments that involve lending money on a no security basis or other risky terms. Promoters make money by charging you an attendance fee, selling overpriced reports or books, and by selling investments and property without letting you get independent advice. The investments on offer are generally overvalued and you may end up having to pay fees and commissions the promoters didn’t tell you about. High pressure sales tactics or false and misleading claims are often used to pressure you into investing, such as guaranteed rent or discounts for buying off the plan.

• A scammer won’t have an Australian Financial Services licence or says they don’t need one.

• Scammers often use a name or claim to be associated with a reputable organisation to gain credibility, such as NASDAQ, Bloomberg.

How to protect yourself against investment scams

• Don’t give your details to an unsolicited caller or reply to emails offering financial advice or investment opportunities – just hang up or delete the email.

• Be suspicious of investment opportunities that promise a high return with little or no risk.

• Check if a financial advisor is registered via the ASIC website. Any business or person that offers or advises you about financial products must be an Australian Financial Services (AFS) licence holder.

• Check ASIC’s list of companies you should not deal with. If the company that called you is on the list – don’t deal with them.

• Don’t let anyone pressure you into making decisions about your money or investments and never commit to any investment at a seminar – always get independent legal or financial advice.

• Don’t respond to emails from strangers offering predictions, investment tips or investment advice.

Building contractor scams

Building contractor scam warning signs

• Up front payment. If your contractor explains that because they have to order materials and rent earthmoving equipment to get the job started, they need, say, 30%-50% of the project price up front. Once you’ve forked over this money, one of two things happens: they disappear on you or they start doing slapdash work knowing you can’t really fire them because they’re sitting on thousands of your dollars.

• No building permit. You’re legally required to get a building permit for any significant construction project. Permits allow building inspectors to visit the site periodically to confirm the work meets safety codes. On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you the council won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for an owner builder permit, an option available for do-it-yourselfers. But taking out your own permit for a contractor job means lying to the council about who’s doing the work. This makes you responsible for monitoring all the inspections — since the contractor doesn’t answer to the inspector, you do.

• Unforeseen problems. The job is already under way, perhaps even complete, when this one hits. Suddenly your contractor informs you the agreed-upon price has skyrocketed. He blames the discovery of structural problems, like a missing beam, termite damage or design changes you made after the job began. The additional fees might very well be legit, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If you’re unsure whether your contractor is telling the truth about structural problems, you can get an impartial opinion from a building surveyor or a structural engineer.

• Door-to-door contractors. This occurs when a person who claims to be a contractor comes to your door, telling you they were paving a neighbour’s driveway or resealing the roof just down the street and have some extra materials, would you be interested in getting some discounted work done? These ‘contractors’ are probably going to install inferior materials using shoddy workmanship and then quickly disappear. If you get a knock on your door from someone like this, it’s best to just send them on their way.

How to protect yourself against building contractor scams

• Only ever prepay a small percentage of the total price. That’s enough to establish you’re a serious customer so the contractor can work you into their schedule. As to the materials and backhoe rentals, if they’re a professional in good standing, their suppliers will provide them on credit.

• Make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it, too — all before you sign. If you don’t get all parts of a job in writing, unfortunately, you have few — if any — legal options against your contractor.

• Always demand the contractor gets a building permit. Yes, it informs the local council about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work.

• Before signing the contract, make sure it includes a procedure for variations. The extra work, whether it’s related to unforeseen building issues or homeowner whims, can proceed only after the variations are signed by both homeowner and contractor.

• Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Take your time to check contractors out to make sure they have a good reputation and do quality work.

What to do if you’ve been targeted by a scam

• If you suspect – or know – you’ve been scammed, report it right away. Contact the ACCC’s Infocentre or SCAMwatch.

• Pass on everything you can recall about the incident. Take a screen grab of any relevant online ads or listings, keep receipts, contracts and other necessary documents and advise the authorities of anything you’ve told the scammer.

• If you think you’ve been targeted by an online scam, report it to the website you found it on. There may be a report button, otherwise send them an email or call.

• Advise the authorities if necessary. If you have given anyone your personal or financial details, advise the authorities immediately and contact your financial institutions to alert them your accounts have been compromised.

• Contact the transfer service provider if you’ve moved funds. If you’ve sent money through a wire service, contact the service immediately and ask them to stop the transfer.

• Reset passwords. Reset passwords for online banking and other identifying accounts.