The US housing market has been red hot. The national median listing price for a new home has increased over 10% during the last year, while available listings and total inventory remain at or close to all-time lows. Economic rebound and a shift to remote work have enabled a growing number of relocations as renters and buyers are not as geographically restricted in traditional ways. This booming market has resulted in record prices that have prevented many potential buyers from finding their ideal home. It has also led to rising demand for rental properties across the country, with the national average price for one and two bedroom apartments seeing sharp year-over-year increases.
While these trends may be a good thing for anyone who already owns property, those looking for housing face a competitive and expensive situation. Bidding wars that have been commonplace for buyers over the last few years are now occurring in popular rental markets as well. Housing scams seem to match market pace and pose a real threat to anyone looking for a place to live. They also pose issues for landlords and property owners. These scams are not always identity theft related but knowing how to spot them and limit risks is critical for all those working hard to put a roof over their heads.
Housing Scam in Action
Most rental scams appear in the form of fake rental listings. The primary goal of the scam is to con the victim out of money in the form of a phony deposit. Personal information that can be used for other types of fraud is often stolen along the way as well. Renters and property owners are both at risk for these scams and need to remain cautious during the rental process.
For renters, bogus ads and listings on popular housing and rental websites are the most common setup for the scam. Scammers will create a legitimate-looking listing for a property or will use hijacked ads to further facilitate their means. A response to the listing sets the scam in motion. The ad is the bait that lures a victim in, and the trap is set when eager potential renters begin the application process.
A fake application is often sent to the victim to add authenticity and to make it seem like a legitimate transaction. Once information is sent, and the renter is ‘approved,’ the scammer asks for the first month’s rent and a security deposit using a money transfer app or service. Unsuspecting victims don’t spot any issues and send over the funds, hoping to get the lease signed before another renter comes along. But the entire process is a sham, and once money is sent, the fake property owner goes silent, and the potential renter loses out on a place to live and their hard-earned cash.
Property owners can also fall victim to this type of scam. Because many of the fake listings are ‘hijacked’ from legitimate postings, an actual ad may get flagged for removal if informed individuals spot the scam and report it. Some of these hijacked listings show up on different platforms at a much lower price, prompting inquiries from interested renters but limiting the successful outcome for everyone except the scammer. Owners might not be as at risk for the direct financial loss associated with the scam, but they can still be victims, nonetheless.
How to Spot and Avoid Housing Scams
These rental listing scams are relatively easy to spot and avoid – if you know what to look for and are cautious in your approach to securing a rental property. Popular rental websites such as apartments.com and Craigslist are prime targets for scammers to plant fake listings. Highly competitive markets have more potential victims and see higher numbers of fake ads and listings. If you live in a popular city for renting, be aware of this scam and inform other renters you know to spread the word.
Other than having a general awareness of scams, here are a few red flags to lookout for during a rental search:
- If a rental seems too good to be true, it probably is. A property that is listed well below the average market price of similar units is an enticing bait that scammers use to lure in victims. If the rental you are looking at is listed at an amazing discount, it’s probably not real.
- A property owner makes an excuse for why they cannot meet in person or show you a property. Be suspicious of any potential owner that refuses to meet you in person or will not show you a property before asking for money. If you send funds before seeing a tangible asset, you fall right into the rental scam trap. This seems like an obvious warning, but pandemic considerations and competitive rental markets have made this particular scam easier to get away with.
- Listings or communications have an abundance of grammatical errors. This is another glaring tell that the rental ad is a scam. Similar to email scams that you might already be aware of (think Nigerian Prince money-transfer), when a rental listing is written poorly, there’s a good chance it’s fake. This applies to communication with the supposed property owner as well.
- Be aware of forceful pressure tactics attempting to coerce you into quick action. Even if a rental market is hot, you should never make a decision or send money because you are pressured into doing so. If a potential landlord urges you to wire money quickly because of competing renters or any other reason, exercise caution.
- Conduct a search on the property and its owner. A simple search of a property’s address can flag the scam. If the property pops up on another real estate or rental website with different details, it’s phony. Similarly, asking for the owner’s name and looking into their background can help verify that they are who they say they are.
- Don’t pay any money until you’ve signed a lease. This is a simple safeguard that any legitimate landlord will understand.
- Don’t provide any personal information without confirming the identity of the property owner. Never give out any important personal information such as your SSN, driver’s license number, or bank account until you know that the person to whom you are entrusting that information is legitimate.
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*LibertyID defines an extended family as: you, your spouse/partner, your parents and parents-in-law, and your children under the age of 25.