Be alert for potential fraud

The Pennsylvania Association of Realtors® has recently been made aware of a scam targeting real estate professionals and their attorney colleagues.

In this scam, a seller’s agent is contacted by a buyer located in another country. The buyer claims to be relocating and, like any diligent buyer, had found the property for sale online. The fraudulent buyer may also state that a family member or friend had been to an open house at the home and thought it would be perfect for the buyer.

The buyer offers a down payment of several thousand dollars on the full asking price of the home and asks to be represented in the transaction by a local attorney. The buyer will then send the attorney a check for a large amount from a foreign bank, with the instruction to hold the money for the initial down payment, attorney’s fees and the remaining amount due on the purchase price.

By now I’m sure you’re wondering, “How does the scammer get anything out of this?” Here it is—the checks sent to the attorney are counterfeit, but are from legitimate banking institutions located outside of the United States. When a check is drawn on a foreign bank, the process of clearing the check takes longer than usual. The scammer’s hope is that before anyone realizes that the withdrawal was not authorized, he or she will be able to cancel the agreement and get the deposit and escrow funds wired back.

Though this particular scam targets seller’s agents as the initial contact, there have been similar scams targeting buyers’ agents. In that instance, the buyer’s agent is contacted by a person from another country who is claiming to be relocating and is asked for property listings of a certain price range. The “buyer” then selects one, advises the agent to make a full-price offer and sends a check drawn on a foreign bank for the full purchase price to the agent. Then, the buyer “accidentally” sends another check, having “forgotten” that they already sent one. The buyer asks for the funds from the second check to be wired back before the funds have actually been deposited.

The best advice we can provide is that all members and their staffs should be on alert for these types of scams and to remember these tips:

• Don’t be in a hurry! Knowing that it takes longer for a foreign check to clear the bank, do not wire funds without proof that they have been made available.
• Be cautious when dealing with a buyer who wants to make a full-price offer without personally seeing the property.
• Be wary when communicating by email. Pick up the phone to speak to the client or to call the bank to verify funds rather than using only email.
• If you find yourself to be a victim of fraud, immediately contact law enforcement.