Beware of House-Selling Scams
House-selling scams are a relatively new way of parting innocent people from their hard-earned cash. These real estate scams have caused a buzz in Western Australia (WA) and made the headlines for a few days as absentee owners returned home to find their houses sold.
Generally the absentee owner was living overseas and his house in WA was under the management of a real estate company and usually rented out. Following phone calls and emails from the supposed owner, quoting the necessity of selling their house for investment purposes or just because they suddenly needed some money, the estate agent has advertised their house for sale. The house is subsequently sold, settlement takes place and life carries on – until the real owner comes home to find an unknown family happily living in his house, having bought and paid for it some time earlier.
In 2008, a West Perth apartment came close to being sold for $775,000. Ten days before the sale was due to go to settlement, the owner discovered the transaction and was able to stop the sale.
Two years later, in the Perth suburb of Karrinyup, a retiree had purchased his parents' duplex. They had since died and the retiree was living in Cape Town, South Africa. In June 2010, the duplex sold for $485,000. The scam had gone so smoothly that the criminals decided to sell a second house belonging to the same man. Luckily his neighbour mentioned the sale in an email. On returning from Cape Town, the retiree found his house on the verge of being sold. The locks had been changed and a gardener and cleaner engaged to prepare the house for sale.
The scammers had told the agents they had the offer of a real estate deal 'too good to be true' and needed the money immediately. They asked the estate agent not to call or mail documents to the Cape Town home as there would be no-one there.
By paying out $35, the scammers had obtained details of the mortgage from the Real Estate Institute of Australia. They had accessed his first wife's death certificate to help verify his identity and had sourced a copy of the title deed from Landgate, the lands titles agency.
Just twelve months later, in 2011, a Ballajura family rented out the family home while they were overseas. When they returned they found a new occupant living in the home. The house had been sold for over $400,000 by a real estate company.
Following these events, some 400 West Australian property title transactions were re-examined. Home owners living overseas have been urged to make contact with their real estate agents. The West Australian State Government has introduced a compulsory 100-point identification system for would-be house sellers. Estate and settlement agents are now responsible for checking that sellers reach 100 points by producing a combination of primary and secondary documents. These may include passport, birth certificate, drivers licence and credit cards. This is to ensure that the person wanting to sell a house is who they say they are.
Estate agents had been chided for proceeding with house sales without making more thorough checks. In the case of the scams, the emails asking for the houses to be put on the market were very poorly written, showing a weak knowledge of general English terminology and grammar. Warning signs were changes in personal details such as a change of address (whether home or email), and change of telephone number.
Whenever there was a recent change of details, additional evidence should be sought. Requests for funds to be sent to a different bank account should also be regarded with suspicion as should urgent sales requested for investment in a business venture. Generic email addresses at Hotmail, Yahoo and Gmail should be checked thoroughly. Estate agents were warned to always work with original documents as opposed to photocopies. If original documents were said to be unavailable or lost, further stringent tests should be made.
Papers accepted by real estate agents had included false authorisation documents. These had been signed with a very child-like signature, using unjoined lower case characters. The witnessed documents were then stamped, allegedly by the High Commissioner of Lagos Nigerian justice system.
Prior to these changes, agents would check that the name on the land title matched that of the name of the seller. Further checks were rarely undertaken.
There are also been changes by Landgate which has also introduced new witnessing and identity checks for sellers who live overseas. In two of the fraudulent cases, owners were living in South Africa. The scammers' email addresses had been traced to Nigeria.
From July 2011, the Department of Commerce and the Commissioner for Consumer Protection has taken over regulation of the settlement industry from the Settlement Agents Supervisory Board.
The use of internet cafes and throw-away mobile phones make it unlikely that these types of scammers will be caught. Prevention is the best methodof avoiding house-selling scams and it is really up to estate agents to fully check their clients' credentials before listing houses for sale. If you live overseas you might want to talk to your agent about how you would go about contacting him if you should decide to sell.