How to Avoid the New Home Renting Scam

I read about this a few months back but I never expected it to actually play out in my life. Here’s what happened. My wife and I were in the midst of renting a new home. Because my wife works in a corporate sales position her territory can change at any time and we don’t want the hassle of having to sell a home so we rent in order to keep ourselves mobile. Her territory was changed which caused us to search for a new home in April of 2012.

We found one we liked. It was a foreclosed home that hadn’t been touched for three years and recently purchased by an investor. They put a lot of work in to the home and listed it on the market. We saw the listing right away, checked out the house and signed a lease.

One day, while we were there for the second showing, a person showed up asking for the keys to their new home. Scratching our heads, we asked what they were talking about. The person said that they had seen an ad for this home on Craigslist and contacted the homeowner on the ad. The homeowner told them that they lived out of state and couldn’t show them the home but they were welcome to go to the property and look in the windows. The person did that and liked the property.

They contacted the “homeowner” again and sent them the security deposit and was told to meet somebody at the home at a certain time to pick up the keys. Of course nobody showed up at the specified time and that person can’t get their security deposit returned.

What’s even worse is that later, a few days after we looked at the home (we worked with a realtor and yes, we saw the inside) another person showed up with the same story. Two people had been scammed out of $1,500 each.

How it Works

By looking at the homes for rent online, thieves can research who owns the property. From there it’s easy. They place an ad on Craigslist posing as the homeowner with their name and address. They offer a rental rate that seems like a steal (because it is) which entices bargain hunters to take a chance. They tell the person that because they’re out of town, they can’t show them the property but they’re free to look in the windows and if they like it, they can send the security deposit to hold the property until the person gets back in town. Once they do that, the person disappears and places a new ad on Craigslist.

How to Avoid Being Scammed

First, look for rentals through a well-known real estate website and make sure the rental has an MLS number attached to it. Second, work with a realtor. You don’t have to pay anything for the service and they’ll be able to look in their MLS system for rental homes they know are real listings.

Finally, use common sense. If the person you’re speaking to is the true owner or agent, they’ll have keys to the home and even if they are out of town, they will have somebody available to show you the home.

Don’t send money to anybody. Only provide a security deposit if you’re working with a live person and an executed lease contract. I also will not rent a home that isn’t managed by a property manager to add another layer of security.

There is a lot of demand for rental homes right now and that has sparked a lot of scams just like this one. Remember that if the price seems well below the going market price, It’s likely a scam. Be careful.

Bob runs a financial blog and regularly writes about saving & making money, getting out of debt, and investing wisely.

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