1. Wire Fraud

Imagine you’re closing on a million-dollar investment property deal, and a hacker intercepts wire instructions at the last moment. Before you know it, your $500,000 vanishes into a fraudulent account. In 2023, Business Email Compromise (BEC) scams accounted for $2.9 billion in reported losses via wire fraud, mainly in the real estate industry.

• How to spot it: So, how to catch a rent scammer? Beware of last-minute emails or phone calls that request changes to wire transfer details. Scammers are increasingly using AI to clone voices and mimic trusted contacts.
• Expert advice: Never rely solely on email for critical information. Companies like CertifID verify identity and detect rental fraud in real estate transactions, backing all wire transfers with insurance. This tool has helped recover $60 million in stolen funds​. Always confirm wire transfer details by phone with known contacts.
• Report it: Contact the FBI’s Internet Crime Complaint Center (IC3) immediately and notify your financial institution to attempt to freeze the funds

2. Squatting Scams

Squatters taking over your property while you’re unaware can cause legal nightmares. In many cases, squatters can forge ownership documents and list a vacant property on short-term rental platforms like Airbnb or websites like CraigsList and Facebook Marketplace, collecting rent from unsuspecting tenants​.

• How to spot it: If your listing or property is vacant, ask neighbors to monitor it. Utilize security cameras that don’t rely on Wi-Fi so that you or the owner can monitor it regardless of where you live. If they notice strange activity at the property or if you see it listed on platforms like Airbnb, act quickly.
• Expert advice: Use a service like PropertyShield, which offers real-time surveillance to detect unauthorized use of your property that will automatically delete the fraudulent listings. Regular inspections and establishing communication with neighbors can prevent such real estate scams. Set up Google Alerts for the property as a secondary step to address and catch unauthorized listings.
• Report it: Contact local law enforcement immediately. If a short-term rental platform is involved, report the fraudulent listing to Airbnb or the relevant platform.

3. Phishing & Email Hacking

Scammers send seemingly legitimate emails requesting sensitive information or changes to financial details. 3.4 billion phishing emails are sent out each day. Property owners click on these emails, and phishers can automatically access their accounts and data.

• How to spot it: Look for small inconsistencies in email addresses or strange phrasing. If you receive a request to change bank details, proceed with caution.
• Expert advice: Always enable multi-factor authentication (MFA) for your email accounts, especially those tied to financial transactions. Never click on links in suspicious emails. Cyber insurance is also a must for today’s investors. Companies like Pro Group International specialize in cyber insurance policies that allow investors to get broad coverage to protect against financial damage caused by cybercrimes, including phishing.
• Report it: Report phishing emails to the Federal Trade Commission (FTC) or your email provider and change your passwords immediately.

4. Rental Fraud on Short-term Platforms

Fraudsters create fake listings for properties they don’t own on platforms like Zillow or Airbnb. Investors lose rental income while rent scammers collect deposits from unsuspecting tenants​.

• How to spot it: Unauthorized listings of your property on short-term rental platforms should raise a red flag as a rent scam. Monitor rental platforms regularly for any signs of rental fraud, set up Google Alerts, or utilize a company like PropertyShield.
• Expert advice: Watermark all property photos so scammers can’t easily reuse them in apartment fraud listings. Tools like Google Alerts can help you spot fake listings. TetherRE can verify the legitimacy of tenants, preventing fake listings from exploiting your property.
• Report it: Contact the platform hosting the fraudulent listing (e.g., Airbnb, Zillow) and file a police report for identity theft.

5. Deepfake Document Creation

Scammers use AI to generate fake deeds, ID cards, and other documents that trick investors into believing a fraudulent transaction is legitimate.

• How to spot it: Check for inconsistencies in the paperwork. Always cross-check with public records and title companies to verify ownership before moving forward with any deal.
• Expert advice: Investors should use tools like Forewarn to verify the identity and financial details of potential tenants and buyers, including bankruptcies and foreclosures. When dealing with significant financial transactions, don’t rely on visual confirmation alone—ensure documents are verified through official channels.
• Report it: If you suspect you’ve been handed fraudulent documents, report the crime to your local law enforcement and reach out to your title insurance company so they can address housing scams.

6. No Intention of Paying Rent

Tenants pay the first month’s rent and deposit but then stop all payments, forcing you into lengthy eviction proceedings. If they pay by check, they may also request you refund the overpayment. Even if you confirm the balance at their financial institution, it could be a stolen check, and you will lose all the proceeds.

• How to spot it: Be cautious if a tenant offers more money upfront or tries to rush the process. This behavior could be a sign they intend to exploit your property without any intention of paying beyond the first month.
• Expert advice: Screen tenants thoroughly. Tenant screening tools like Avail can verify rental histories, employment, and creditworthiness, ensuring you work with trustworthy tenants.
• Report it: Initiate eviction proceedings early and document all communication for legal purposes.

Need a quick and efficient way to send rental applications and screen tenants? Check out the tools from Avail. Avail includes credit reports, rental history, and income verification as part of their screening process. These tools will allow you to find highly qualified tenants for your rental properties. Did we mention it’s free? 

7. Service Animal Fraud

Tenants use forged emotional support animal (ESA) letters to bypass no-pet policies, and landlords are left with damages caused by untrained animals.

• How to spot it: Be wary of tenants providing ESA documentation from questionable sources. Always verify the healthcare professional who signed off on the ESA letter. Do not trust the name in the document, but call the organization directly to confirm the documents.
• Expert advice: Know the laws surrounding the ability and legality of verifying service animals. Contact the healthcare provider directly to verify the authenticity of the ESA documentation. Validate such documents, ensuring the ESA claim is legitimate.
• Report it: If you’ve been scammed by false ESA documentation, consult with legal counsel about your rights as a property owner.

8. Unauthorized Subletting

Tenants sublet your property without permission, often collecting rent for months while you’re unaware.

• How to spot it: Sudden changes in behavior from your tenant or requests for early termination could be signs of unauthorized subletting—complaints from neighbors involving increased traffic or a steady stream of visitors.
• Expert advice: Include strict no-subletting clauses in your lease agreements and perform regular inspections and drive-bys to confirm compliance with lease terms. Check local laws regarding having external cameras to monitor the property. Ask neighbors to report any odd behavior to you.
• Report it: Address unauthorized subletting quickly by issuing a lease violation notice and pursuing eviction if necessary.

9. Deepfake Voice Calls

Scammers use AI to clone voices, impersonating property managers or real estate agents to convince investors to wire money or make other financial moves.

• How to spot it: Be cautious if a voice call comes with unusual urgency or if details don’t match previous communications. If in doubt, verify in person or through video.
• Expert advice: Always verify the authenticity of any significant request through a secondary channel—call back using a known number.
• Report it: Report fraudulent voice calls to local authorities and consult your bank to freeze unauthorized transactions.

10. Fractional Ownership Scams

Scammers present attractive fractional ownership deals, which means being a partial property owner with other investors, by luring investors with promises of high returns on properties they may not own. Once you’re in, it becomes nearly impossible to verify the ownership, and you’re left holding a worthless piece of the pie.

• How to spot it: Any deal that offers “too good to be true” returns and has vague or complex ownership structures should raise red flags. Always check the authenticity of the property ownership with a reliable title company.
• Expert advice: Conduct due diligence before committing to any fractional ownership deals. Research county property ownership and tax records to verify ownership details.
• Report it: Contact your title company and local law enforcement immediately if you suspect fraud. File a complaint with the FBI’s Internet Crime Complaint Center (IC3).

11. Fake Real Estate Investment Seminars

Fraudulent investment seminars push attendees into “can’t-miss” deals that require significant upfront payments. These events are often packed with fake testimonials and exaggerated success stories, leaving you with a massive hole in your wallet.

• How to spot it: Be wary of high-pressure sales tactics, unrealistic returns, or demands for hefty upfront fees. Legitimate investment opportunities won’t require you to make decisions on the spot.
• Expert advice: Research speakers, companies, and past seminar attendees. Seek independent reviews before committing to any deals pitched at seminars.
• Report it: Report fraudulent investment seminars to the FTC and local consumer protection agencies.

12. Fake Checks for Rent & Security

Tenants submit fake checks for their initial rent or security deposits, only for those checks to bounce after they’ve moved in. This scam leaves investors without the promised income and with a legal eviction process to manage.

• How to spot it: Be cautious of tenants eager to move in quickly and provide checks that seem too good to be true, such as those for higher-than-required amounts.
• Expert advice: Always verify funds before granting access to your property. Use trusted payment platforms that authenticate payments.
• Report it: If a check bounces, notify the tenant immediately in writing and consult a lawyer about starting eviction proceedings.

Many landlords are making life easy for themselves these days by collecting rent online. Baselane is a free resource for investors to get their money automatically every month. They also offer bookkeeping and tenant management tools to make your experience even more seamless.

13. Timeshare Scams

Scammers prey on real estate investors by offering attractive timeshare deals with promises of high returns or easy resale options. Once you commit, you may be left with a worthless timeshare or a resale that never materializes. In many cases, victims are charged upfront fees for properties that don’t exist or cannot be resold. The ongoing financial burden can also include hefty maintenance fees that investors pay without any actual benefit from the property.

• How to spot it: Timeshare scams typically involve unsolicited offers, high-pressure sales tactics, and requests for hefty upfront fees. Beware of any company promising quick sales or unrealistic returns on timeshares. Always be skeptical of unsolicited offers from unknown companies or individuals.

• High-pressure tactics: Scammers create urgency, telling you the deal is available only for a short period or is the “last opportunity.”
• Upfront tees: Legitimate companies will not request substantial payments before completing any sale.
• Too good to be true offers: Unrealistic promises of returns should raise red flags.

• Expert advice: Always conduct due diligence before entering any agreement to avoid falling victim to timeshare scams. Verify the company’s legitimacy through the Better Business Bureau (BBB) or consult a real estate attorney before signing any contracts. Use tools like CertifID to verify the identities of buyers and sellers and to secure wire transfers, ensuring that your money is protected from fraud​.

• Consult a real estate attorney: Having a lawyer review any contracts will ensure the deal is legitimate and can protect you from costly mistakes.
• Don’t rush: Take the time to research the company and the property. High-pressure sales tactics are a clear sign of a potential scam.

• Report it: If you suspect fraud, report the incident to the FBI’s Internet Crime Complaint Center (IC3) and file a complaint with the FTC. Additionally, notify your state’s Attorney General for local-level investigations and consult a fraud attorney for recovery options.

14. Lying About Co-tenants

Tenants fail to disclose additional people living on the property. This scam can lead to overcrowding, property damage, and difficulty enforcing the terms of the lease.

• How to spot it: Pay attention to tenants who seem secretive about who is living in the property. Regular inspections can also reveal unauthorized occupants and rent fraud.
• Expert advice: Include clear language about the maximum number of occupants allowed in your lease agreements. Real estate safety apps like TetherRE can help verify all occupants before lease signing.
• Report it: If you discover additional unauthorized tenants, send a formal violation notice and follow your local procedures for tenant disputes or evictions.

15. Social Engineering With Deepfakes

Fraudsters use AI-generated deepfakes—videos or images that convincingly impersonate real estate professionals or property owners—to trick you into sending funds or making key decisions under false pretenses.

• How to spot it: Look for inconsistencies between video or voice communications and previous interactions. If something feels off, trust your instincts and verify the person’s identity via in-person meetings or communication channels.
• Expert advice: Never make important financial decisions based on a single video or audio communication. Always verify through multiple channels. CertifID can help secure transactions involving significant amounts of money.
• Report it: Contact local law enforcement and file a report with the FBI’s Internet Crime Complaint Center (IC3).

Bringing It All Together

Real estate investment is all about building wealth and security. By staying informed and implementing these critical tools and practices, you will keep your investments safe from rent fraud and stay ahead of the scammers targeting your properties. Stay vigilant, stay protected, and keep growing your portfolio without fear of the unknown.

The post Rental Fraud: 15 Common Scams & How You Can Avoid Them appeared first on The Close.

As a former real estate agent, host of the National Association of REALTORS(R) “Drive With NAR: The Safety Series” podcast, national speaker, and real estate safety expert for over 29 years, I’ve seen many ugly real estate scams. I’ll review the seven most common real estate agent scams and provide actionable tips on how to show your value and help consumers detect and avoid these issues. 

1. Wire Fraud & Financial Scams

Agents must be aware of numerous wire and financial real estate frauds and scams. But let’s first look at the data.

The numbers: 

• In 2022, Business Email Compromise (BEC) reported there were 2,284 reported attacks totaling $446.1 million in losses in the real estate industry. 
• Over 71% of consumers surveyed in the 2024 State of Wire Fraud Report by CertifID, a wire fraud protection company, stated they weren’t warned about the potential for wire fraud. 
• Approximately 25% of all real estate transactions involve some kind of fraud.

Cybercriminals use AI tools such as ChatGPT, Gemini, CoPilot, Midjourney, etc., to write fake phishing emails, texts, videos, photos, and voice impersonations. These criminals also create phony websites to steal information and trick targets into making payments on non-existent properties and sharing their financial data.

Over 60% of consumers state that their real estate agent didn’t discuss the possibility of wire fraud during the transaction. With the growing popularity of generative AI, cybercriminals can now write grammatically correct and persuasive fraudulent wire change emails. In the past, real estate scam emails were easy to spot, poorly written, and in broken English.

Warning Signs

Cybercriminals use generative AI tools in real estate fraud to create realistic-looking deepfake images of people or properties that do not exist in real life. They can utilize tools like Google Lens to do image searches.

Phishing emails from lenders seeking financial or personal data could be infected with malware and ransomware links.

How to Avoid Wire Fraud & Financial Real Estate Scams

• Encourage clients to independently confirm all transaction details, property information, and identities through official sources and your counsel. 
• Advise clients to refrain from responding to wire change instructions or requests for financial information emails that could be written with AI tools. 
• Establish code words for each client to confirm whether transactions and requests are legitimate.
• Protect your clients from AI home buying scams by implementing rigorous security measures and providing confirmed authentic contact details for all real estate professionals involved in the transaction, including the lender, inspector, etc.
• The National Association of REALTORS(R) provides an email template with a wire fraud warning that should be added to all outgoing email signatures. This can be used by agents to show their value and expertise while protecting consumers from housing scams.

2. Disaster Contractor Scams

If you have listings or work in an area that experienced a weather-related disaster, you must inform your homeowner clients about contractor real estate scams.

The numbers:

• In 2023 $9.3 billion was lost to post-disaster fraud.
• Last year set a record for billion-dollar weather and climate disasters in the US With 28 separate events, each costing at least $1 billion, the total catastrophic losses exceeded $93 billion.

Real estate scam artist contractors target neighborhoods with storm damage. They go door to door and offer to help homeowners work with their insurance agent to file a claim to cover the damage. Their next step is to convince the consumer to let them negotiate on their behalf and receive payments for the work to be done. Or they convince the owner to pay upfront. Once they start the work, they abandon the job, leaving victims in unsafe and unrepaired homes. In addition, some criminals also collect donations for fake charities for disaster relief. 

Warning Signs

Dishonest contractors demand upfront fees for repairs 

Beware if the contractor cannot show proof of insurance, bonding, a business license, verifiable credentials, and legitimate past clients

Aggressive sales tactics, unclear or evasive responses, and hesitation to provide written estimates or contracts

How to Avoid Disaster Contractor Scams

• Offer to assist homeowners by vetting contractors, confirming business locations, checking licenses, insurance, and reviews. 
• Advise them never to pay the total for repairs upfront; establish a payment schedule tied to completed work.
• Homeowners should get at least 3 professional quotes.

To help disaster victims, consider donating to credible organizations like the National Association of REALTORS(R) REALTORS(R) Relief Foundation. The Foundation provides housing assistance to those impacted by disasters.

Coni Meyers, president of Crisis Knowledge Management & Preparedness Foundation, advises agents to express their value proposition by guiding their clients in the aftermath of disasters. She offered tips for agents to serve the consumer during her guest appearance on “Drive With NAR: The Safety Series,” the safety podcast for the National Association of REALTORS(R).

3. Rental, Airbnb & Craigslist Scams

Short-term rental and other house-buying scams are on the rise. Check out these real estate statistics on tenant and rental scams.

The numbers:

• There were almost $400 million in losses due to short-term rental scams in 2022.
• In 2022, 12,000 people fell victim to real estate scams, including short-term rental schemes.

Cybercriminals create pictures of properties that don’t exist. These real estate scammers favorably manipulate property images designed to deceive visitors into paying to reserve the unit. Tenants seeking to rent are also targeted through platforms like Craig’s List. The goal is to facilitate wire fraud by requesting electronic payments and deposits through phishing emails and texts. Cybercriminals are making scam phone calls and videos created with deepfake impersonated voices.

Warning Signs

Criminals can create and manipulate pictures of properties that fool the unaware eye. ChatGPT, CoPilot, Midjourney, Canva, and other AI tools allow realistic images and photos to be easily created in seconds. 

Avoid requests to pay off the platform. Criminals will offer discounts and try to entice visitors to pay them directly. The official platforms provide protection and security measures.

Beware of videos depicting people saying things, text from people writing things that sound too good to be true, or requesting personal or financial information.

How to Avoid Rental, Airbnb & Craigslist Scams

• Before acting, advise clients to verify identities and information through secure channels and official platforms.
• Use encrypted communication channels and watermarked documents
• Encourage strict payment procedures only on the platform while warning clients about wire fraud risks
• Stay updated on deepfake technology and provide cybersecurity training.
• Scrutinize photos, videos, and written requests for data. 

4. Real Estate Land Scams

Land scams can be difficult to identify because they involve no inhabitants and locked doors, as is typical when selling a building.

The numbers: 

• According to the FBI, real estate and rental scams continue to rise, with more than $396 million lost in 2022.
• 77% of surveyed real estate professionals reported a rise in seller impersonation fraud attempts.

Scammers pose as out-of-state property owners selling land they don’t own, aiming to list and sell it illegitimately. Brandie Kittle, broker-owner of Trailhead Realty Group, thought she was dealing with a legitimate owner who had the deed to land because they knew the neighbors and didn’t seem rushed. However, she couldn’t get them to provide identification when asked. After listing the property, she learned it was a scam.

Warning Signs

The “seller” refuses to provide ID or evades questions.

If the seller can’t answer detailed questions about the property or location.

If the seller claims to be out of town or out of the country and unable to meet at the site.

How to Avoid Real Estate Land Scams, Protect Buyers & Sellers

• Verify ownership and identities through official records and documentation— test sellers’ property knowledge. 
• Use real estate safety apps like Forewarn to confirm identities, check for criminal convictions, and verify financial records.

• Trust your instinct: If something feels wrong about the land or seller, walk away or investigate further.
• Request identification from the seller.
• Do not allow them to use their notary. Require the seller to notarize the listing agreement using a remote online notary service, which includes multi-factor identification.
• Mail a short note to the owner on record at the address listed on the property tax records. Call them if a phone number is provided on the property tax card.
• Always use a reputable title company for the closing process.

5. Real Estate Social Media & Online Scams

Social media is an excellent way for real estate agents to promote their businesses. However, it is also like the Wild West, providing ripe opportunities for scammers to exploit people.

The numbers:

• Losses to scams on social media were $2.7 billion from the 1 in 4 people who lost money to scammers
• The FBI’s Internet Crime Complaint Center (IC3) registered more than 880,000 complaints of online fraud in 2023

Cybercriminals use social engineering to steal identities and hijack social media account access, allowing them to post damaging content or erase data and hijack social media accounts. Most dollar losses are to scams that use social media to promote fake investment opportunities. These include real estate investment deals, fraudulent business pages, and hijacking a real estate agent’s profile. 

Warning Signs

You may have been hacked if you cannot log into your social media accounts. 

If your followers and friends message you and tell you they received inappropriate messages or requests, check your account.

Real estate scammers create ads or post salacious content. 

How to Avoid Real Estate Social Media Scams

• Implement robust cybersecurity protocols, including passphrases and two-factor authentication.
• If you’re a broker or manager, provide real estate agent tips and regular training for your agents and teams. 
• Do not click on links or download from sites or people you do not know
• Avoid connecting with strangers on social media without vetting. Cybercriminals can impersonate users and scam contacts, friends, and family. 
• Investigate tools such as Forewarn to confirm the identities of new clients, check criminal backgrounds, and verify financial status.

6. Moving Scams

Another one of the biggest real estate frauds is when people need to hire a mover. Check out these stats.

The numbers:

• A four-state operation in 2023 discovered more than 1,000 violations of Federal Motor Carrier Safety Administration (FMCSA) regulations. 
• Consumers lost an average of $836 to moving scams in 2023, 7% more than in 2022

Dishonest movers lure clients with lowball estimates, then demand inflated prices once belongings are loaded, creating a “hostage situation.” “The mover will lowball the price and, upon pick up and delivery, request that the shipper pay more, or they will not pick up or deliver. Both are now illegal to do,” said Anthony Booker, a moving consultant for Nationwide USA Movers.

Warning Signs

Lack of proper licensing and insurance

Extremely low estimates compared to market rates

Offering quotes sight unseen without an in-home inspection

Multiple negative reviews or history of complaints

Demanding large cash deposits upfront

Using rental trucks or lacking company logos/branding

No physical business address listed

Refusing to provide written estimates or contracts

How to Avoid Moving Scams

• Successful agents will advise clients to obtain binding quotes in writing, beware of fake reviews, and verify movers through the FMCSA website. 
• Report any problems to the appropriate authorities.
• Protect your clients from moving scams by guiding them through vetting and recommending movers with good reputations.
• Participate in NAR’s annual Realtor Safety Month to stay informed about the latest real estate scams.

7. We Buy Ugly Houses Scams

The numbers: 

• 22.6% of property fraud risks occur when the property is undervalued and its value misrepresented.
• According to the FBI’s Internet Crime Complaint Center, real estate fraud resulted in nearly $400 million in victim losses in 2022.

Buyers target desperate homeowners, often facing foreclosure or financial issues, with lowball cash offers below market value. They use high-pressure tactics or false promises to purchase and resell for profit. They can also target desirable neighborhoods and flood them with postcards and letters with cash offers. 

Warning Signs

Extremely low offers compared to market value.

Requests for large upfront payments.

Lack of company website/address.

Failure to provide required legal disclosures.

How to Avoid:

• Advise sellers to research the company’s reputation, online presence, and licensing
• Do not pay upfront fees before the sale finalizes
• Beware of high-pressure tactics
• Insist on a written contract detailing all terms, costs, obligations
• Encourage homeowners to work with a licensed and knowledgeable real estate agent
• Offer a comparative market analysis (CMA) or encourage homeowners to get an appraisal to determine the home’s value, even if you don’t get the listing. You can charge a nominal fee for CMAs, saving the seller tens of thousands!
• Trust instincts; walk away if something seems off or the investor is overeager

Bringing It All Together

Safety sells in today’s real estate market. In the aftermath of the massive $418M commission lawsuit, prioritizing client safety is no longer optional—it’s a necessity for survival and thriving and the perfect way to establish your value proposition. Agents can add robust safety practices woven into their business model. Build trust, credibility, and loyalty that keeps clients coming back. Clients who feel secure working with you will be loyal, increasing your earnings.

Your Turn

What real estate scams are you or your clients encountering? Let us know below!

The post 7 Real Estate Scams & Ways Agents Can Protect Their Clients appeared first on The Close.