How To Avoid Rental Scams

In big cities, rental costs are so high that they dwarf monthly mortgage costs in other parts of the country. And as rents have increased, rental scams have become ever more sophisticated.

Among the most common home rental scams is when a fraudster attempts to lease a property to you despite having no legal right to do so. The scammer will frequently demand a security deposit and the first month’s payment. After you fork over your hard-earning savings, they abscond with your money never to be seen again.

Another brazen tactic is to meet with prospective tenants at the home location and then claim to have forgotten the keys but demand payment without giving you the chance to view the property.

Many other apartment rental scams exist so the question is how do you avoid them before your pockets are picked for thousands of dollars?

How To Avoid Rental Scams:
Know Market Rates

In cities like New York and San Francisco, rental rates are famously high. A common way to deceive the public is to list a property just below the market rate in order to attract a lot of viewers. For the fraudster who plays a numbers game, the goal is to cast a wide net and hope to catch a victim among the many interested parties.

san francisco skyline

If the average rental cost for a 1-bedroom apartment is $3,500 in a high-priced city and the renter spots a 1-bed listing with all the amenities desired for $700, the renter will probably be suspicious that the price is too low and conclude something is not right.

But if the listing is priced just below the market price, at say $2,800, they might be more inclined to believe that they found a deal. Sophisticated scam artists know that pricing rental homes below the market price but not too low attracts a lot of interest, and then they pounce on unsuspecting victims.

To avoid becoming the victim of one of the craigslist rental scams, Zillow rental scams, or Trulia rental scams, check out local market rates so you can more easily spot when prices seem to good to be true.

Avoiding Common Rental Scams:
Pay By Check

Cash is a criminal’s best friend. It is easy to hand over and cannot be tracked. Unlike regular checks or even wires that require personally identifying information, which could allow police to quickly locate a criminal, cash is virtually untraceable.

In the old days, cash was the most common and prefered payment method demanded by tricksters but these days cryptocurrencies may be requested, whether bitcoin, litecoin or ethereum.

If your landlord demands cash or cryptocurrencies as payment for a security deposit or first month’s rent, red flags should immediately pop up in your mind, warning that the supposed “landlord” could in fact be a cheater.

It is much better to pay by cash, cashier’s check, or even consider ACH or wire transfers that can be more easily traced. Even payment methods like Western Union are usually best to avoid because it can be difficult to track down the recipient of your money once it has been sent.

Housing Rental Scams:
Get Your Lease In Writing

In the good old days, a handshake was sufficient to consummate a deal. Warren Buffett famously agreed to buy ‘Mrs. B.’ Rose Blumkin’s Nebraska Furniture Mart with a shake of the hands. But these days, while you can still trust the person purporting to be your new landlord, you should still verify they are who they claim to be.

Not only should you demand a written lease but you should also request an executed lease document, meaning the contract is signed by your landlord. A common tactic among imposters is to attempt to make an oral agreement over the phone and quickly demand payment.

Even if the person you are speaking with is a legitimate landlord, you should still request an executed copy of the lease agreement so that you don’t run the risk of the landlord making you sign but refusing to do so themselves.

A landlord who fails to sign may subsequently deny responsibility for claims that arise. For example, if you were to discover carcinogenic materials on site that should have been removed or leaks that are the responsibility of the landlord to repair, you may end up footing the bill yourself if the landlord claims to never have signed the original lease.

Ideally, visit with the landlord in their office premises and, at the time of signing, make sure you both put pen to paper during the meeting so you can both walk away with a copy of the signed lease agreement.

House Rental Scams:
Hire A Licensed Agent

Scammers may be daring enough to post a fraudulent listing on a free site, such as Craigslist, but few have the gall to list a property with a licensed real estate agent.

It requires much more effort and increases the risk of being caught to reveal personally identifying information to a professional agent, so your chances of being duped diminish significantly when you rent from a licensed agent.

But before you get too gung-ho on renting from a licensed real estate agent, factor the costs of paying an intermediary into your budget. Go ahead and run the estimates through a personal finance budget tool like Mint or YNAB before hiring an agent. If the numbers check out and you know you will have greater peace of mind, you are almost set to go.

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The last step is to verify the credentials of the real estate agent. Scammers know that risk-averse renters will look to hire professionals to lower the chances of being duped and often pose as licensed agents to establish trust with their unsuspecting victims.

Regardless of which state you live in, your real estate agent will be registered with the state so you can quickly double check that they are who they claim to be.

How To Avoid
Craigslist Rental Scams

Craigslist rental scams are among the most common because the site is popular, free, and makes it easy to post listings.

Perhaps the biggest scam perpetrated on free sites like Craigslist is to demand payment sight-unseen.

The listing you view online may feature photos of a legitimate listing from another location. Ofen, the same scammer will post multiple listings featuring different addresses using identical photos. And in each case, they will demand immediate payment to secure your place.

To avoid Craigslist house rental scams like this one, inspect the unit you plan to rent and never send personally identifying information or payment upfront until you have confirmed the landlord is legitimate.

Rental scams on Craigslist often involve high-pressure sales tactics too. While competition for housing is intense in high-priced cities, be wary of a landlord who puts excessive pressure on you to commit to an agreement and make a payment sight-unseen.

Avoid Room Rental Scams:
Meet Current Tenants

While posting fake listings is common among cheats, you can lower your chances of being duped by meeting with current tenants.

Ask them how long they have lived in the property and how fairly they have been treated by the landlord.

Beyond verifying the integrity of the listing, you can also use this opportunity to enquire about any issues with the property, such as damp or mold, leaky faucets, infestations, unreliable electricity, cable or WiFi.

If the current tenants are moving out because of property issues, the chances of getting a solo meeting without the landlord present is low, but you could ask the tenants for their numbers before leaving to ensure a private conversation is possible at a later stage.

How To Spot Rental Scams

Legitimate landlords generally conduct extensive research on prospective tenants. An undesirable tenant can become a pain not only to the landlord but also to neighbors, so it is in the landlord’s interests to screen tenants carefully.

Usually this means conducting a background check to see what prior rental record and even criminal record exists. Your landlord may even charge a fee to conduct due diligence on you before issuing you a lease.

When a landlord is overly eager to get you to sign a lease without conducting any due diligence on your background, it is not necessarily evidence that you are being scammed but it should cause you to question whether the person claiming to be the landlord is the real owner or a licensed agent.

Signs Of Rental Scams

A telltale sign that you may be the mark for a rental scam is when the person pretending to be the landlord signs the lease agreement with a name that doesn’t match official records.

In general, either the property owner or authorized agent needs to be listed on the lease agreement so if you have done your homework beforehand and find neither name on the document presented to you, it is best not to sign.

If you don’t see the owner’s name featured, the agreement may be perfectly legitimate. In certain states, the owner does not always need to be listed on the agreement but their representative, who is a management agent should generally be named then.

Foreclosure Rental Scams

Another less common but equally dangerous trap scammers lay for prospective renters is the foreclosure rental scam.

foreclosure signThe way it works is that an imposter claiming to be a landlord invites renters to a property that had previously been foreclosed upon.

Sometimes the criminal will go so far as to change the locks on the vacant building. The victim is shown the property and has no reason to believe anything other than that the criminal is the official landlord – after all, they have the keys to the building!

After sending payment for a security deposit and first month’s rent, the criminal disappears into the night leaving the renter thousands of dollars short and egg on their face for having fallen for one of the most sophisticated scams.

Rental Scams Summary

Rental scams commonly begin when a criminal impersonates a landlord with a view to asking prospective renters to pay money upfront for a property they have no authority to lease.

To lower the risk of falling victim to a home rental scam, conduct as much due diligence on the person purporting to be the landlord, who may be listed officially as the property owner or a licensed agent on official websites.

Where possible, connect with current tenants and avoid signing any documentation until your landlord also executes the lease agreement.

If you do feel like you have been the victim of a rental scam, contact your local police department and report the incident. You will be required to fill out a report so make sure to record as much information as possible.

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