While this article is geared towards real estate agents, we feel it is helpful for others to be aware of. With the ever-increasing importance of the internet in our day-to-day lives, scams such as the one described below, and other email scams/solicitations, are becoming more and more common. The need to be cautious and confirm the legitimacy of any solicitation is more important than ever.
In this past year alone, HoganWillig has encountered half a dozen fraudulent internet schemes stemming from residential real estate transactions. Thankfully the scams were discovered before anything, other than a little time, was lost. Since these particular attempts at fraud began with the buyer/scammer contacting a real estate agent, we thought this information would be helpful to pass along.
The buyer/scammer initiates the scam by sending a real estate agent an email, generally regarding a high-end ($200,000 or more) listing. It could be based off of a listing found online, or he or she may simply ask for the agent’s help in finding an expensive home in a certain area within Western New York. The agent may even end up doing some legwork before finally finding a property the individual wants to buy.
The fraudulent schemes we’ve personally encountered all have a similar back story. The buyer/scammer creates a plausible back story. In many cases, they claim to be located in Japan or Australia – countries where direct telephone contact is made more difficult due to the differences in time zones. We’ve also observed that the scammer claims to be a real person and in most cases, utilizes the name of actual person. For example, recently, we had a buyer/scammer claiming to be an individual located in England. A simple search turned up the actual person whose name and address was being used. By contacting this individual, we were able to confirm that they were in fact not involved in any transactions to purchase property in Western New York.
Another good indication that the transaction may be fraudulent is the buyer/scammer asks to be put in contact with an attorney immediately. Once they are, the individual then makes arrangements to send a large cashier’s check to the attorney and the check is assumed to be the funds held in escrow for a cash closing. Afterwards, the buyer/scammer requests a return of a small percentage of the check for a variety of reasons (i.e. he or she claims to have overestimated the funds needed). It is not until after the attorney wires the funds back to the buyer/scammer that it becomes apparent the check is actually counterfeit.
To ensure that discovery is a slow and lengthy process, the buyer/scammer usually does a persuasive job of counterfeiting a cashier’s check, and “draws” the phony check on a non-US (usually Canadian) bank. It can take up to a month, or possibly longer, for a real Canadian check to truly clear. Until that time, the attorney’s bank has the ability to charge back the attorney’s account. This allows the buyer/scammer to successfully defraud the attorney the amount of the check.
To see an example of phony checks, proofs of identity, and bank statements, go to:
Although this page is over a year old, many of the names and accounts are still being used, and in fact, some of the quoted emails continue to be sent to agents, word for word.
If you have any questions or are uncertain about the legitimacy of a possible transaction, please let do not hesitate to contact us. An unsolicited request for help finding a high-end property should of course never be ignored; but if it results in the quick receipt of a large check (we’ve had instances where the phony check appeared before contracts were even drafted), the potential client should be carefully investigated.
*Written with assistance from Merika Wilson
Tags: preventing fraud