A decade ago in our super-heated real estate market, this area was ground zero for a number of housing scams designed to separate folks from their money. Perhaps the most notorious local scheme was the infamous “Stonewood Financial” debacle. That incident resulted in the ringleader eventually being convicted of over 300 felony counts in a $142 million scam that jump-started our local foreclosure crisis.
The Southwest Riverside County Association of Realtors attempted to sound the alarm as early as 2007 but was met with yawns from various agencies as not being “sexy” enough or of having insufficient impact. But as the national economy plummeted and real estate prices softened precipitously, the scheme ground to its inevitable conclusion leaving entire neighborhoods in Murrieta and surrounding areas blighted with dead lawns and vacant homes. Legal actions started against the perpetrators in 2009 and finally concluded just months ago with convictions and jail time.
To improve their advocacy position, SRCAR joined forces with neighboring Realtor associations, local police and title and escrow officers in coalition with the Riverside district attorney’s office to form the Real Estate Fraud Advisory Team. Meeting bimonthly for the past several years, the partnership is credited with having a significant impact on real estate fraud in Riverside County. Aggressive action and reaction by the DA’s office has stemmed the tide of fraud that, at times, had permeated the market.
Of course as has been discovered, fraud never sleeps; it just morphs. At our most recent meeting, the team discussed current incidents of housing fraud and how to avoid them. First rule of avoidance? Be smart. There’s a reason for the old saying “if it sounds too good to be true, it probably is.”
First on the hit parade is rental listing scams. Often referred to as “Craigslist” scams, these scams continue to dominate the complaints. The local rental market is very strong right now with more people looking for accommodations that aren’t there. As a result, rental rates have been rising steadily for the past few years. So when a needy home seeker sees an ad like “military relocation or divorce, or job move. Don’t want to sell my house as I’ll be back in a few years. 2,500 square feet, 4 bed, 3 bath, large lot, pool. Willing to rent to the right party for $1,500. Inquire.” Often, the scammers even include interior and exterior photos that they’ve scraped from an online website.
Or renters will peruse the want ads and see that a 1,600 square foot condo is going to rent for $1,800, they’ll want to “inquire” right away. Chances are the “owner” has already relocated and can’t meet them with the keys. But if the renters will wire them first and last month payments, they’ll overnight the keys. If the renters don’t want to do that, the scammers tell them to just wire $500 earnest money and they can wire the rest after they get the keys. They’ll “trust you.” Of course no matter how much is sent, the keys never show up, and their email and phone number no longer work. If it’s any consolation, they weren’t the only ones that “rented” the place.
A variation of the rental listing scam is the person who actually breaks into a vacant home and puts it up for rent. They advertise an open house for the weekend, again usually below market rate. If renters decide it looks good, they sign a rental agreement and leave a deposit – first and last, earnest money or whatever – cash is king. He’ll bring the keys Tuesday. Over the course of the weekend, he may take deposits from a dozen or more families. Checks are cashed Monday morning, but the keys don’t show up Tuesday although several prospective renters arrive with their moving trucks.
I know, it’s no more believable than the idea of being related to a Nigerian prince. But to the desperate, to the hopeful or to those who have never been fleeced, it can be a siren’s call. It is surprising how many people can’t avoid rushing headlong into the void.
Keep in mind the DA’s office can only be reactive to complaints; it’s up to renters not to become a victim in the first place. If it’s too late for that and real estate fraud has claimed another victim, file a complaint with the DA’s office. The complaint form is available online by visiting the DA website at www.rivcoda.org. Or call the Fraud Hotline at (877) 723-7779 and ask that a form be mailed out.