Disclaimer: Any resemblance to actual luxury wives, persons living or dead, or actual events is purely coincidental.
Location, location, location? If you’re a buyer yes. If you’re a real estate agent, due diligence might be your mantra. There have been stories in the news for decades about real estate agents setting up their final appointments unbeknownst to them. There are some very sick and dangerous people out there. I’ve seen cold and/or vintage cases on Investigation Discovery just like I’ve seen modern cases play out in real time on the news. Fortunately, I find that agents are becoming more aware of the importance of not doing blind showings. Furthermore, access to technology has given us the resources required to separate our personal lives from our professional lives. We can use email to get acquainted (and leave a paper trail), have a google voice number, use a PO Box or use office sharing (for smaller operations) to avoid linking any of our activities to our primary residences. Some agents have even begun to arm themselves to various degrees (mace, guns, knives) and the team model is becoming more popular, giving us strength in numbers. But not every dishonest inquiry will lead to physical harm. How do we protect ourselves against scammers?
With real estate being an appointment-based business, it means that efficiency is the key to success. We cannot afford to waste time on buyers who are unrealistic about their purchasing power. Or worse, waste time on those with no purchasing power at all, but simply seek photo-ops for social media attention where likes feed their egos but not their empty lives. I’ve had my fair share of time wasted and I will tell you it is incredibly painful. You can’t help but think of all the serious clients you missed talking & spending time with those who did not buy anything or bought elsewhere. However it can also be a liability to both your overall livelihood and your short term income.
I was recently made aware that our resident dollar store Kardashians were claiming to be renovating a recently acquired multimillion-dollar mansion that was at some point the residence of actor/comedian Katt Williams. Perhaps in a desperate attempt to discredit my previous post about their true socio-economic status as routinely evicted squatters, they reached an apex in the web of lies they spun aggressively and without much foresight. They posted pictures and videos of the property online, including showing children playing in the pool. This would normally be very convincing, because, how many people get to hang out by a pool on 10 acres of land near prime real estate if we don’t have access to the upper echelon? Except, the pictures combined with the knowledge that the home was the residence of a celebrity, only made it easier for people to track down. The issue is that the home in question is still for sale. It was for sale at the time this post was written and it was definitely for sale when the pictures were being shared online last week showing children in the pool, while they claimed that they were settling in and renovating.
A perturbed individual with some superb detective skills (not me) was able to unravel the entire story within 24 hours. It turned out that the husband has a real estate acquaintance who was able to give them access to the property and allowed them to get a little too comfortable in someone else’s home. It has yet to be determined whether or not the showing agent was another victim of their scamming ways or a wiling participant but he was certainly instrumental in the (attempted) trickery. But I will give him the benefit of the doubt for the sake of this post & show how his lack of screening may have opened him up to liability.
Listing Agent: Within reason, the listing agent is responsible for securing the property & protecting their client’s privacy. That is why many sellers demand accompanied showings for properties over a certain price point. A listing agreement is a contract with the seller. While your primary duty is to actively market & subsequently sell for the highest price, there is a certain expectation from the seller that you will do what you can to protect their most valuable asset when they hand you the keys. After all, the house has not yet been sold, which makes it still the property of the seller & often times, their homes. Many people still reside in houses that are on the market until 24-48 hours before closing. This stunt could have cost the agent the listing, which at over $3 million, would have been quite the payday. As a seller, there is no way that I would be comfortable with continuing a business relationship with someone who failed to protect my asset. What would have happened if they began squatting & had to be evicted?
Showing Agent: Within reason, a showing agent should take responsibility for the potential buyers they bring in. While you’re not responsible for an unruly child who bumps into an expensive lamp, I cannot imagine the lack of ethics & professionalism it takes to allow 2 children in a pool at a house that is actively being marketed for sale. While the showing agent cannot control where the footage subsequently ends up, it is a clear indication that at the very least, there were no boundaries established, and at worst, he might have been a willing participant. He runs the risk of being reprimanded by his managing broker or worse, be reported to the licensing board.
This had the potential of being a PR nightmare for both brokerage firms. Rogue showing agents giving known grifters access to high end properties & listing agents perceived as careless for not keeping an eye on the foot traffic. But, could this have been avoided? Absolutely. A little bit of screening could have prevented this egregious violation of privacy.
First, interview your prospective buyers. An 30-minute long conversation might save you many hours of driving around people with no ability to buy or those whose tastes far exceed their financial capacity. Not to mention, lies are not very hard to detect. The more outrageous the story, the harder it is to keep it from unraveling. Ask questions and if you have any doubts, ask follow up questions.
Second, request documented proof. For anyone who will be financing their purchase, ask for a pre-qualification letter. Do not accept anything older than 3 months. The most important function is to make sure that you show them homes in their price range. If someone is qualified for up to $500k, there is no point in showing homes in the $650-700k range. The secondary purpose is to discourage any window shoppers or scammers for wasting your time. The people in question have been known to forge wedding dress receipts so this might not have deterred them, but the vast majority of con artists aren’t that committed to a scam and will likely move on to someone else who isn’t going to ask those questions. You can further protect yourself by requesting a letter with a phone number on it & the name of the loan officer who issued it. The possibility that you might call the financial institution to verify, should put forgers on ice.
Third, be ready for cash buyers. Not everyone finances a home purchase. Some really well-off people buy houses cash. Scammers might try and use that to try and circumvent the pre-qualification request. In that case, demand proof of funds. If it’s true, the seller will demand it anyway when they get an offer. If they aren’t comfortable enough to provide you with that information, perhaps, they should look to hire an agent they trust.
Fourth, sign a contract. In a previous post, I discussed my unwillingness to work for free & I presume you feel the same way. A buyer’s contract is your sole protection from someone making you do the leg work, picking your brain but buying from their cousin Deedee who’s efforts did not extend beyond completing the offer contract. That particular safeguard will not protect against scammers, but the hope is that all the other barriers will prevent you from getting to that point with a scammer anyway.
Finally, don’t be gullible. Discernment is a great asset and it is time we use it to its full capacity. You are a professional handling the most expensive transaction most people will ever make in their lives. You are not a follower of a fantasy social media account desperate for a fairy tale story. You are therefore held to a higher standard and it is unacceptable for you to see and yet ignore a multitude of red flags. Question the statements and behaviors you find suspicious.
It might seem difficult to implement these rules, especially when we are eager for business, but most clients will gladly provide the required information to ensure maximum efficiency. You just have to explain that it is for your protection as well as theirs. They are more likely to respect your professionalism & your time as you’ve demonstrated the value you place on your schedule.