An update on property scams

 

Property scams have reach

 

An update on property scams that offers insights on what to be suspicious of. Property scams in Australia can have a profound impact on various stakeholders, including individuals, businesses, government agencies, and the overall economy. These scams can take many forms, such as fraudulent property sales, rental scams, investment schemes, and mortgage fraud. The consequences of these scams extend beyond financial losses, affecting trust, confidence, and the reputation of the real estate industry. These scams also impact every party to a scam.

 

Key points of scams in a sale/purchase

 

Delays

 

When selling a property you will encounter delays. However, delays that are the result of ‘misadventure’ of money are now more suspicious. For example, the first working day after the auction is when many purchasers need to provide banking details for the exchange deposit. Delays such as the purchaser having a theft on that day where identity is stolen are now more suspicious. The vendor and their solicitor may consider that a small delay and we often do not think people are involved in nefarious acts. Unfortunately, technology is a boon for thieves so insist on calling the bank in a solicitors/conveyancers’ office to verify the account and that funds exist – technology works for us too! Ensure both solicitors/conveyancers are satisfied.

 

Allowances that once were acceptable

 

When buying and selling property there are instances where consideration of circumstances was accommodated. Small extensions were permitted as an act of empathy from either party. Indeed solicitors/conveyancers had less need to doubt a person who appeared to be in distress and was very apologetic. In the past money in the online space did not exist and we had more face-to-face transactions and time delays.

 

Unfortunately, acts of empathy are the nexus of many scams and frauds. Fraudsters seemingly examine any ‘kindness’ and exploit that EXACT point of the transaction as a weakness. These acts are subtle but fraudsters have examined who are most vulnerable and more likely to be accommodating.

 

In business, most people blur the hard transactional lines of commerce with empathy because we are human. However, any money exchange needs to revert to its original intention of ‘arm’s length’. We should trust and be obliging but with evidence.

 

Evasive language

 

Listen carefully to the way people speak when buying and selling real estate. Always write your questions to the parties – either by text or email – to ensure the respondent answers what you ask. Evasive answers are a huge red flag. It would be best to insist on accurate answers such as dates, amounts and identification. Any deferring, wavering, or evading questions is of concern.

 

Evasive language provides time to complete reprehensible actions such as fraud. Further, the vendor or purchaser wants to complete and that is the priority not the needs of a person who has made no tangible commitment.

 

Use of technology

 

Scams are not exclusive to buying and selling. The rise of rental scams during COVID-19 has a strong correlation to the changing uses of technology. Stealing emails and identification are much easier with current technologies. Scammers also steal real identities by pretending to be real estate agents. Again stealing agents’ emails can appear very legitimate and that creates even more fear – as we all rely on legitimate intermediaries. The Scam Watch website offers valuable information but unfortunately, many people check after the fact rather than before.

 

Many parties are affected’

 

Individuals and families

 

Property scams can devastate individuals and families who fall victim to them. They may lose their life savings, investments, and homes, leading to financial distress, homelessness, and emotional trauma. Victims may also face challenges in recovering their losses, navigating legal processes, and rebuilding their lives. The psychological impact of being deceived and defrauded can be long-lasting, affecting mental health and well-being.

The other party to the scam often has to delay the transaction until the scam is investigated as well! Further frustrating the transaction and causing even more stress for the aggrieved party.

 

Businesses and investors

 

Property scams can harm investors, renters and businesses involved in real estate transactions. Investors may lose confidence in the market, reducing investment flows and hindering economic growth. Renters are burdened with revealing personal details that they are unsure are being used legitimately. Legitimate businesses may suffer reputational damage if their names are associated with scams, leading to loss of customers, partnerships, and revenue. The uncertainty created by scams can also deter new businesses and investors from entering the real estate sector.

 

Government agencies

 

Government agencies are responsible for regulating the real estate market and protecting consumers from scams. Property scams can strain resources and budgets as agencies investigate complaints, prosecute offenders, and educate the public about fraud prevention. Taxpayers may bear the cost of enforcement efforts and compensation programs for scam victims. Moreover, scams can erode trust in government institutions if they are perceived as ineffective in addressing fraudulent activities.

 

The real estate industry

 

The real estate industry as a whole suffers when scams occur. Trust and confidence in the market decline. Agents feel helpless and become paranoid about issues that once were ‘normal’. Clients question what we could have done to prevent the scam and that results in increased scrutiny from the public. Legitimate businesses may face increased compliance burdens and regulatory requirements to prevent scams, impacting operational costs and profitability. Agents may also experience reputational harm if they are associated with fraudulent activities.

 

Economy and society

 

Property scams can have broader economic and societal impacts. They undermine consumer confidence, leading to reduced spending and investment in the economy. The perception of a risky real estate market can deter foreign investment and tourism, affecting overall economic growth and employment opportunities. Scams also contribute to a sense of injustice and inequality, as vulnerable individuals and communities are disproportionately affected.

 

In response to the impact of property scams, stakeholders must collaborate to prevent and address fraudulent activities effectively. This includes implementing stricter regulations, enhancing consumer education and awareness, improving fraud detection mechanisms, and imposing severe penalties on offenders. Additionally, industry stakeholders should prioritize ethical practices, transparency, and accountability to rebuild trust and confidence in the real estate sector.

 

Insurance providers

 

Insurance providers play a crucial role in mitigating the financial impact of property scams on stakeholders. Victims of scams may turn to insurance policies for compensation and recovery of losses. However, insurance providers face challenges in assessing claims related to scams, verifying the authenticity of fraudulent activities, and managing risks associated with insuring real estate transactions. Balancing coverage and premiums in the face of increased scam risks can also be a challenge for insurers.

 

Technology and innovation

 

Advancements in technology and innovation have both positive and negative implications for combating property scams. On one hand, technology solutions such as blockchain, artificial intelligence, and secure digital platforms can enhance transparency, traceability, and security in real estate transactions, reducing the risk of scams. On the other hand, scammers may exploit technological vulnerabilities and loopholes to perpetrate sophisticated fraud schemes. Therefore, stakeholders must leverage technology responsibly and proactively to stay ahead of scammers.

 

Consumer education and awareness

 

We at EWRE want to empower consumers with knowledge and awareness about common property scams, red flags to watch out for, and preventive measures you can take to mitigate the impact of scams. Educational campaigns, workshops, and resources provided by government agencies, industry associations, and consumer advocacy groups can help individuals make informed decisions and protect their assets.