We were recently the victim of a scam. It is not fun, we wasted time, energy and money and honestly feel taken. We were not the only party that was burned, in fact there were several parties involved in the scam that lost out too. This includes the buyers agent, the sellers agent, the sellers and others. We aren't looking to complain about the lost opportunity, that is over and done and we have moved on, but rather, the purpose of this message is to communicate the occurrence, indicate the red flags, and hopefully, collectively, as a real estate community, we can work together to protect each other from scams.
What is the scam?
I hate to admit it, over the last few years, this is the third time it has happened to our home inspection company. The scenario is this, the buyer books a home inspection with our team, nothing seemingly out of the ordinary. In two of the times that this has occurred, the house has been very luxurious and one time the house has been more of a standard size. We then speak with the buyer (yes we talked to them), obtain access for the property and we also reach out to the buyer’s agent. We were able to speak to all parties to confirm the inspection. Up to this point, everything seems normal and we conduct the inspection as usual. At the completion of the inspection, the buyer does not arrive on the property, but the buyer’s real estate agent has been in contact to receive the findings of the report. Again, nothing is out of the ordinary.
When does it start to go wrong?
We deliver the home inspection report to the client and the real estate agent. As a protection of the information that we have produced, the home inspection report is not released to the agent and to the client prior to payment and signature of the client is received. This is where things get weird…
Client #1: He had a multi-million dollar house under contract and said that payment would be made from his New York brokerage account. He had to liquidate some assets and it was slightly delayed… sure
Client #2: She had a multi-million dollar house under contract and provided us with a credit card that was declined. She made up several reasons why it was declined that included fraud, changing to a new card, etc. She then mentioned that the funds would be available in a few days… they never were
Client #3: He offered to pay with a check. He said to send him the invoice and it would be mailed… It never was (nor would I have cashed it)
What is the most common early indicator?
After analyzing all three events and discussing with all parties the chain of events in hindsight, all three “clients” failed to deposit earnest money for the purchase of the property. Not only did they not make the deposit, but they also made up a plethora of excuses why they could not make the deposit that included liquidation issues, divorce, banking problems, wiring mistakes among others.
What are my takeaways?
While I can't exactly figure out what the purpose of the scam is to the “client,” I do know that people are affected by the scam. There is the potential for security risk to the sellers and their home, the process of selling the house takes longer, several parties involved incur the loss of time and money.
We personally have had to learn some lessons from this scam. In speaking with the other parties involved, they learned some lessons as well. My primary takeaway is this, if something does not feel right, it probably is not right. Do not forgo protective steps and procedures implemented by the real estate industry and get blinded by the possibility of conducting a home inspection or selling a house. Listen to your gut, even if it could make things a little more difficult in the short run. If multiple excuses about payment arise, do your homework. Communicate and protect your industry partners.
In all three cases, I would have much rather postponed or canceled the home inspection than to have been scammed and manipulated. I feel if we can openly communicate our experiences, then we can prevent it from occurring again in the future.
Best,
Sean Garvey, CEO
Dwell Inspect Arizona