Buying a property can be a stressful but exciting time.
Scammers are probably the last thing on your mind.
But unfortunately, they need to be.
Cyber scams, hacking, data breaches, fraud, and data theft is consistently on the rise, and your property purchase isn’t immune from scamming risk.
According to Scamwatch, Australians handed over well over $560 million to scammers, 12.1% of which has never been recovered.
And our property market isn’t immune.
Have you ever heard horror stories about unsuspecting property buyers falling victim to redirection scams?
They buy a property and secure the deal by transferring their entire hard-earned house deposit to what they think is a conveyancer or real estate agent, but then they find out it was a hacker and the funds are gone…forever!
Or even the stories about someone putting a deposit down for a rental property, never to receive the keys and the ‘owner’ disappears, taking their bond with them.
Property scams and fraud has been around for a long time, and scammers are getting bolder and more imaginative in the ways they try to get your money.
Here’s a rundown of 5 types of scams targeting the property market, and how to avoid falling victim to them.
It’s something we’ve all heard about, but we never think it’ll happen to us.
But you’d be wrong.
Payment redirection scams are where scammers get into the email database of official and legitimate businesses (such as a real estate agent, broker, or conveyancer) and use it to target clients.
They can intercept emails, edit bank details and send them on to you, the client, so that you unwittingly send over funds to the scammer's account instead of the legitimate account.
Scary thought isn’t it?
After all, why would you suspect anything untoward if you’re expecting to hand over a deposit and have an email request with bank details from the person you’re expecting to pay?
Sadly, these scams often involve very large sums of money and are difficult to recover.
Rental scams are a worryingly common method of identity theft, with prospective tenants losing thousands of dollars by paying rental bonds and advance rent to fake landlords or property owners.
The scam is particularly ripe in the current market when rental stock is tight and many prospective tenants are desperate to secure a rental property.
Under the promise of cheap rent, a quick move-in date, and easy conditions, these people are being asked to hand over money so they can receive keys through the post.
Obviously, the keys never arrive and the contact disappears with the money.
Scammers contact their victims directly or are replicating websites and using company logos to appear genuine.
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- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
Phishing scams are becoming increasingly common in Australia.
The way it works is a scammer hacks a legitimate business or businessperson (such as a real estate agent) and then steals sensitive personal information from their clients.
Confidential information, such as online banking logins, credit card details, business login credentials, or passwords/passphrases are at risk from these criminals.
Australia is one of the most expensive and strongest, residential property markets in the world and as people are priced out of capital cities, some are beginning to look overseas.
But the internet is littered with stories of people who have lost a fortune investing overseas following various property spruikers.
It is hard enough to get your due diligence right in a familiar culture, let alone in a foreign country with a foreign residential property market.
You may be tempted to buy that run-down home in Sicily, which is worth a car space in Sydney, but if something seems too good to be true, it generally is.
For many years prior to Covid, I used to present seminars and I regularly conduct webinars to educate property investors.
But, we don’t sell properties at the back of the room – in fact, we don’t sell properties at all and never have.
But that’s not how everyone operates.
I’m sure you have received an invitation like in the past:
Come to our ‘free’ seminar or attend our free webinar and hear about how they can deliver you financial freedom in six easy steps.
They’re often highly sophisticated sales operations with everything conveniently available to tempt inexperienced investors to buy on the spot.
You may even find they have mortgage brokers ready and waiting in-house to assess your financial situation and approve your loan.
You’re pressured to make decisions instantly or risk losing out.
My advice would be to give these schemes a wide berth - often these seminars or webinars on residential property are fronts for developers wishing to offload stock to investors.
Sure they may promise huge rental returns and great properties, but you have to ask yourself the question: if the properties are so great why are they not brought to market where more people can fight over them and potentially up the sale price?
The truth is, that many properties sold this way are often priced well above their worth.
- Before transferring any money, always call the person and confirm the bank details over the phone to ensure they are correct
- Double-check that all email addresses are correct and legitimate
- Never click on a link or text message if it looks odd, always call the person to confirm first
- While no one can blame those looking for a bargain, sadly, if something sounds too good to be true - it usually is
- Never hand over money without first inspecting the property
- Use official and verified platforms, such as realestate.com.au, which has a data security team that seeks out and deletes fake accounts
- Never use the same password/email combinations across multiple sites, especially for banking or email logins
- Check your credit score regularly - if you notice there are changes it could be a red flag that something is wrong
- Avoid public wifi wherever possible (or if you have to use it, don’t access sensitive information such as your bank accounts)
If you notice something is amiss on your credit card statement, bank statement, or even your credit history, report it immediately.
It’s important to notify the appropriate agency (this will depend on the type of scam - it could be your bank, the ACCC Scamwatch, ASIC, Centrelink/Medicare, or the Police) so they can investigate and warn others who might fall victim to the same scam.
When it comes to property investment, it's important to be aware of potential property scams.
Before passing over money, make sure to verify the person you are sending it to, verify what it is for and that the bank details are correct.
Failure to do so can see you lose your hard-earned money forever.
At the same time, before making any investment, make sure that you get independent advice from someone who takes a holistic approach and who has nothing to sell other than advice.
After all, knowledge is power and while it’s often said that experience is the best teacher, in my mind you have too much to lose getting it wrong in property investment.