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Posts Tagged ‘scam’

Too Much Money is a Red Flag!

Realtors, attorneys, and home sellers should be alert to red flags that indicate fraud, scams, or troubled deals. One major red flag is when a buyer offers too much money. Sellers should beware of any offer with a purchase price that is far higher than expected or earnest money that is far more than customary in the market.

Common Scams

Foreign Buyer Blindly Purchasing Home

One common scam involves foreign buyers emailing Realtors asking for help purchasing a home. After a few emails, the buyer (usually from China, England, or Canada) will make a full price offer on a home the he has never seen. He will then send earnest money in a certified check. If the red flags weren’t waiving already, they should be when the Earnest Money is way too high. For instance, in Madison, Wisconsin, earnest money typically ranges from $1,000 – $3,000. The foreign buyer will send $100,000 or more in earnest money. They will then ask for a return of the excess money. If you return the funds via wire, as requested, you will soon find yourself in a bind when the certified check bounces. It was fake.

Too much earnest money is a red flag!

For more information on this, common scam: Link here.

Local Buyer Seeking Occupancy

Another potential scam occurs when a buyer seeks to purchase property with an extended, pre-closing occupancy. In this case, we have seen buyers offer substantial earnest money (10-20 times the typical amount) and request occupancy for many months prior to closing. The buyer then moves in, fails to close and refuses to leave. The seller must file an eviction proceeding to remove the buyer.

Again, too much earnest money raises red flags. In additions, extended, pre-closing occupancy should raise a red flag worthy of retaining an attorney.  Interestingly, one of the ways to mitigate the risk of an extended occupancy period is to ask for an unusually high amount of earnest money.  Thus, red flags don’t always lead to fraud.  But they can indicate additional risks.

Unrealistic Purchase Price

Any time a buyer offers far more than the reasonable value of a home, it is a red flag for fraud. In some cases, this kind of fraud can benefit both buyer and seller. But, it may be fraud nonetheless and can expose the Realtor or other professionals to liability and harm.

For additional resources on avoiding Real Estate Scams, check out the following links:

Various Real Estate Scams: http://realtormag.realtor.org/law-and-ethics/law/article/2010/08/5-real-estate-scams-you-need-know-about

Foreign Buyer Scam: https://homesteadtitle.wordpress.com/2010/06/15/real-estate-scam-warning/

Corporate Records Scam: https://homesteadtitle.wordpress.com/2013/02/01/scam-alert-annual-minutes-requirements/

Deed Copy Scam: https://homesteadtitle.wordpress.com/2012/07/20/deed-copy-scam-alert/

Better Business Bureau False Complaint:
https://homesteadtitle.wordpress.com/2012/01/20/better-business-bureau-false-complaint/

 

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There is a new scam targeting Wisconsin small businesses. A company called Corporate Records Services is sending out very official looking forms that request information about the company, the submission of an Annual Minutes Form, and the submission of $125. The form appears to be required by state statute. Businesses are not required to fill out this form. In fact, it is difficult to see what, if any, services this company provides.

The Wisconsin Department of Financial Institutions has issued and official statement cautioning business owners against this scam:

http://www.wdfi.org/newsroom/press/2013/AnnualMinutesFormAlert.pdf

Other states, including Illinois, New York, Maine, Indiana, and Tennessee have also issued warnings against this scam.

Wisconsin business owners who have questions about this form are urged to contact the Department of Financial Institutions (DFI) at 608-266-1622.

 

Thank you to the WRA for alerting the Real Estate industry, many members of which have been targeted by this scam.

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Scam Alert: It’s Not A Real Bill!

Homestead Title just received a very realistic looking bill from DNS Services. The bill is for “Managed DNS Backup Business Services.” Man that sounds important. Its not – its a scam.


As with many fake bills, this one contains the hidden warning that it is “a solicitation for the order of goods or services, or both, and not a bill…” Other scams involve fake phone bills, yellow pages ads, and printer toner. Don’t fall for the scam. Throw the bill in the garbage.

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DEED PROCESSING NOTICE – Don’t Fall For it!

Home owners are being targeted for a simple, yet effective scam. At least two companies are offering to send copies of “grant deeds” for a charge of $86. They recommend that homeowners obtain this deed in order to confirm their ownership in the property. Yet, these public records are readily available for almost no cost.

Why Do Many Officials Call This A “Scam?”

These companies send official looking notices that often include warnings of late fees, compliance response deadlines, or the phrase FINAL NOTICE. While these sales pitches are not illegal, they are deceptive. As the Lake County Recorder of Deeds in the Chicago area noted: “It is not against the law, but it breaks the spirit of the law . . . It is very, very deceptive.” Officials Warn Homeowners of Deed Scams, Chicago Tribune.

The companies often charge $86 for the deed but also include a $35 late free for not meeting a fictional deadline. It is only in the fine print that they disclose that this is not a bill and that you could receive the same information from the County Recorder (or register of deeds).

Deeds Can be Obtained Inexpensively or Free

In fact, copies of deeds, mortgages, or any recorded document may be obtained from your local Wisconsin Register of Deeds office, for a very nominal fee. Generally the fees are $2.00 for the first page, and $1 for each page thereafter. Deeds are usually one or two pages.

In addition, homeowners should have received a copy of their deed from their title company when they purchased. Homestead Title and many other title companies will provide a duplicate to their customers at no charge.

Homestead Title Company is always happy to assist Dane County homeowners with such requests.

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Recently, a number of REALTORs in Wisconsin received emails to inform them of Better Business Bureau complaints. The emails may include official logos and request that the REALTOR open the complaint report. The emails often take the following form:

 

Good afternoon,

Here with the Better Business Bureau would like to notify you that we have been sent a complaint (ID 44265713) from your customer related to their dealership with you. Please open the COMPLAINT REPORT {WEBLINK OMMITTED} below to find the details on this case and suggest us about your point of view as soon as possible. We are looking forward to hearing from you.

 

Sincerely,

 

Fernando Grodhaus

Dispute Counselor

Better Business Bureau

 

This is NOT a real complaint and you should NOT open the link.

In all likelihood, this is a phishing scam or a virus. Most scams can be identified by the poor grammar or deplorably bad writing. The Better Business Bureau, for instance, is unlikely to request that you “Suggest us about your point of view” or state that your customer has a complaint about their “dealership with you.”

Whenever you receive a questionable email like this, the easiest tool to discover a scam is Google or another search engine. Try a Google search of portions of the email or of the author’s name. In this case, we discovered this to be a scam.

Google Search

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I am Dr. William Grey, M.D. and internist in Titchfield Engalnd. I am relocating my family to Madison, Wisconsin and I am interested in retention of you services to buy a house. Please send me information about homes that costing $400,000 to $600,000.

Sounds too good to be true? In most cases it is too good to be true – it is a complex scam that we first wrote about in 2010.  Its back and scammers are posing as oil rig workers from China.

Falling for the Scam

The scammers are sophisticated and even the suspicious, cautious REALTOR or attorney can fall prey. A wealthy, out of town buyer relocating to your area is every REALTOR’s dream. When you look up the foreign buyer’s name, you will find his information checks out. And, upon further emails, he will be very specific about his needs and wishes. He will tell you about his wife and children, his need to for 3 or more bedrooms, his desire to be near a school and he may even tell you the neighborhood he likes best.

Then, after sending 5 or 6 listings, he will tell you he is ready to buy MLS Listing 0654321, the beautiful colonial on the west side. “Please make a full price offer, unless you think, in your judgment, that a different amount would be appropriate.” He will also provide you with the name of his financial advisor in New York and ask you for a referral to a local attorney.

At this point, the deal still seems suspicious, too good to be true, and likely to be a scam. But how can it be? He’s using a local attorney. He has a financial advisor at Global Financial, Inc. in Manhattan. And, his emails are so specific.

How The Scam Likely Works

The buyer signs an offer to purchase remotely from China (or England or Canada) and then sends in the earnest money to either the REALTOR or the attorney. The earnest money check will be far larger than the customary amount — it may even be for the entire purchase price. Oops. And some cases, the buyer will also send another check for a hundred thousand dollars or more. OOPS! Then, after the checks have been deposited, the buyer will request that the excess funds be returned via wire or western union. Even if the funds appear to have cleared or been credited to the REALTOR or Attorney account, the check will bounce. It was a fake. The wire goes to a foreign bank and is gone forever.

Avoiding the Scam

If a transaction appears too good to be true, it likely is. Some red flags and similarities include:

  • A foreign buyer sends you large amounts of funds by accident
  • A buyer asks you to deposit funds that come in by check and, shortly thereafter, return them via wire or Western Union (Western Union is a major red flag!)
  • A buyer offers to pay full price for a house, sight unseen.
  • The Financial adviser either is named Karen James or Paul Jackson and may work at Global Financial, Inc. (While it is possible these are real names and individuals, scammers are using these names)
  • The Buyer is from China, Japan, England, or Canada (really any foreign country where the buyer is suddenly relocating and buying sight-unseen)
  • The initial emails contain typos or poor grammar
  • The Buyer moves incredibly fast, making a decision in hours or even minutes rather than days or weeks.
  • The Buyer’s name is Otake Iwao, Miki Watanabe, Han Cheung, Han Hung, or Yuji Inoue
  • The Buyer works or lives on an Oil Rig in southeast Asia
  • The email address comes from @asia.com or some other generic email .

If you suspect a scam, ask lots of questions and have verbal, phone conversations at a minimum. Don’t send any private information, bank account numbers or anything else that you would not want a scam artist to have. Alert your Broker or legal counsel whenever a foreign individual is sending funds, even if the funds originate within the U.S.  — this alone is cause for caution.  Do not send out wired funds if the incoming funds were not wired. And do not send back large amounts until your bank can confirm with 100% certainty that the incoming funds were legitimate and fully cleared. Having access to the funds does not mean they cleared. Work with your bank to provide solid assurances that the funds are real and cleared whenever you suspect fraud.


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