Property scams on the increase due to advances in internet technology
05 Sep 2018
Technological advancements are proving to be a mixed blessing when it comes to the South African real estate industry. On the one side, buyers and sellers are privy to the added convenience of instant access to a myriad of information as well as electronic communication, which is a lot swifter than the conventional methods of decades ago. Unfortunately, these advances in technology have also created a host of opportunities for brash fraudsters who are targeting buyers and sellers out of copious amounts of money according to Craig Hutchinson, CEO of Engel & Völkers Southern Africa. It is therefore of paramount importance that prospective home buyers, as well as sellers and conveyancers, are fully aware of the methods being employed to scam honest people out of their hard-earned money.
Property scams are becoming increasingly more sophisticated
One of the most disquieting cons affecting the real estate industry is undoubtedly the interception of sensitive emails. The fraudsters will contact the conveyancing firm via an email that appears to be from the seller, altering the legitimate bank account details assigned to the sale of a property. The email will look completely legitimate to the untrained eye with the actual seller being blissfully unaware of the interception until it is too late. It is for this very reason that conveyancing attorneys have become extra vigilant when dealing with electronic correspondence, ensuring that funds do not get transferred to a fraudulent bank account where it will surely vanish. There has been such a substantial increase in the prevalence of this sort of scam according to Lara Colananni from Guthrie Colananni Attorneys, that the Attorneys Indemnity Insurance Fund no longer covers attorneys who find themselves in the middle of these scams.
The rise of the fake rental agent
Home buyers should be very wary of a number of property scams and hoaxes such as those run by syndicates that pose as sellers, estate agents, and even attorneys. One of the methods they employ is to sell houses that are not even for sale. In order for the title of a property to be successfully transferred the original title deed as well as a special power of attorney from the owner authorising the conveyance to make the transfer is required. The requirements make it evident that these scams can only succeed if the conveyancer is either in on it or negligent to the extent that he is unable to determine that the seller is fraudulent. The scammers also target home buyers by finding properties that are up for sale and then posting them on internet sites such as Gumtree and OLX. To execute this scam, one syndicate member will pose as an estate agent representing the property owner while another will fulfill the role of the lawyer that underwrites the sale. Once the buyer pays the sales amount into a designated bank account the funds get shifted around immediately, making it virtually impossible to trace. Due to the increased incidence of these scams, Lew Geffen Sotheby’s International Realty highlights the importance of only working with accredited property professionals.
Technology isn’t all bad
Despite technological advances making it easier for scammers to make contact with (and ultimately con) their targets, it has also revolutionized the real estate industry in a very constructive way. Gone are the days where a potential home buyer had to trek from one estate agent’s office to the next to look at photos of available properties. Today, with a few simple clicks of a button, you can access the websites of just about every estate agent in South Africa and view the properties that meet with your requirements. Most of these sites also have a ‘subscribe’ option that will see you receive notifications via email every time new properties matching your search criteria are listed. If browsing the internet still seems like too much work you can download phone apps for various renowned estate agencies such as Pam Golding, Seeff, and Realty-1.
Now that the real estate industry is very much online, there are countless ways in which homebuyers and sellers can be scammed over the internet through falsified documents, cloned email addresses, and intercepted documentation. When dealing with an estate agent it is of paramount importance that a buyer verifies that the agent is registered with the Estate Agency Affairs Board and has a valid Fidelity Fund Certificate. Everyone is at risk of falling victim to property scams and cybercrimes but, by taking the necessary precautions, the risk can be eliminated and prospective home buyers and legitimate sellers conduct business is an authentic and honorable manner.(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)