Why buy when you can rent? You don’t need to buy everything you own, especially if you want it temporarily. Renting becomes convenient for both the renter and the tenant.
If you rent, however, someone else has control of the asset: nothing wrong with that if you trust the person. In the worst-case scenario, this control could lead to multiple scams:
- You rent a property you didn’t visit.
- You sign a contract, thinking it matches the renter’s word.
- You close the deal with an unreliable payment method.
- The renter raises the price unfairly, or he tries to reclaim the asset one day.
Since the client doesn’t own it, he’ll look for the lowest price possible. Scammers will respond with prices that seem too good to be true to sell assets they don’t have.
You might close the deal thinking you talked to the owner, but the real one has never heard of you. Instead, you dealt with a disguised broker.
Renting is already expensive in the short term. If you don’t want to pay more, learn how to stay protected from rental scams. The following is an example of a craigslist apartment rental scam.
- To Rent Or To Buy?
- 5 Warning Signs
- Rental Fraud Variations
- How To Avoid Rental Scams
- The Bottom Line
To Rent Or To Buy?
Depending on the case, renting may be better than buying. However, falling for a rental scam may cost you as much as if you bought the property. How is it possible? A rental con man could:
- Forge documents to misrepresent your duties and rights
- Steal your information on the contract
- Process your payment but cancel the contract, meaning the renting never happened.
- Pose as if they owned someone else’s property.
Miss the red flags, and you may lose all your bank account money. Rental scams specialize in promoting offers— usually too cheap to make sense— profit from the tenant and reclaim the property without consent. Since they own the property, they use several loopholes to control the rental.
Often, the person behind these schemes is unrelated to the asset. You pay a phantom broker who “sells” the property without the owner’s consent. They duplicate listings and manipulate documents so that it seems like they own it.
Sometimes, “predatory renters” may offer low prices to make you accept the deal. Then, they find a way to inflate the price, or they kick you out of the property.
5 Warning Signs
Luckily, you can prevent the scam before you sign the contract with the landlord. Don’t set expectations until you verify the offer is legit. If you find these red flags, you may end up paying for a deal that doesn’t exist.
#1 You Can’t See What You Rent
If you sell a property you don’t own, you can sell it for as little as a dollar and still make profits. But don’t clients realize the property doesn’t exist?
The fraudulent broker will add as many images to the listing as he can. Often, he sells a listing that others have already sold, or he sells an existing property for a lower price as an unregistered broker. Anyway, you pay to get nothing.
Be ready for excuses:
“Although I own the property, I moved to another city.”
“I’m on a business trip and brought the keys with me.”
As a seller, there’s no better tool to close the deal than showing the product: in this case, the house or car. As a rule of thumb, a property you can’t see is a property that doesn’t exist, unless you want to pay for the listing photos.
#2 They Sell Someone Else’s Asset
They may admit they’re not the owners. However, they prove to have permission to sell it under their name.
“I’m an associate for this property.”
“Oh, I’m selling my friend’s car. He’s too busy to do it.”
Interestingly enough, you never get a chance to contact the real owner. Instead, they give you fake contact numbers or excuses:
“The owner requested me to take care of 100% of the deal.”
“He doesn’t have time to talk.”
Fake sellers may show you the property interior, but the pricing/payment is wrong. If you buy from the person who doesn’t own it, he could disappear at any time.
#3 Upfront Deposit
Prepayments show the landlord you’re serious about buying. It proves you can meet rental payments, and it secures the deal in case many tenants request it. Just make sure you pay the owner, not the seller: most expect both to be the same person.
If you pay the renter, they may deduct that amount from your rental price. A scammer, however, will keep asking for payments without ever doing anything. You’d have given away cash to a person the owner never allowed to involve.
Advance fee scams work for any service.
“Pay me this service fee, and I’ll negotiate a lower rent.”
“If you pay X before tomorrow, the property is yours rented for three months.”
#4 Instant Or No Application
The seller instantly accepts your deal. It may seem they’re desperate to rent, or nobody else is looking for that property.
Responsible renters will thoroughly revise your background: they don’t want people to commit to payments they can’t make. Scammers, however, will sign the contract with the first person that responds to their listing.
Well, you do need one thing to qualify: an upfront payment. If you make too many questions or refuse to follow unreliable instructions, you lose your “application.”
#5 They Switch Platforms
Renters who want to sell fast will post at the mainstream renting apps, so more tenants can find their listing. As a tenant, platforms like Craigslist help you find a potential offer and give you a virtual-tour the property with the provided images.
Similarly on websites like Airbnb, the rental con man will use these websites for visibility, then switch to another platform for the payment. They promise you a lower price if you do this, so why should you refuse? How do these sellers look?
- They just signed into the platform this week.
- Those listings have no reviews or received less than five reviews within a week.
- They focus the listing description on payment instructions.
When a seller says: “Let’s resume outside of Airbnb,” they’re likely trying to take away your buyer protection.
#6 No Lease Agreement
Outside of writing, anybody can promise you anything. Renting without an agreement looks no different from leasing, except that the owner can evict you at any time.
Although you could rent from a broker, you can’t sign a lease without the real owner. As soon as the renter finds out, you may lose your property without warning. By that time, the broker is out of reach.
Rental Fraud Variations
In most cases, what you find are advance fee rentals or fake sellers. The con man pulls some confidence tricks to look like the real owner, and you pay them without legally renting the property.
For example, they say you need an upfront payment to do anything: secure the rental, visit the property, or talk to the landlord. If you pay, they’ll schedule you with the owner and walk away from the deal. After the misunderstanding, the renter will show you the real property and asking price.
#1 Fake Renters/Associates
In worse cases, you rent it from the broker, thinking you’re paying the landlord. Here’s an example.
- A landlord is trying to sell a property (nobody lives there).
- A con man agrees to sell it as an associate. He receives the keys.
- The con man creates a listing where he rents the property as if he were the owner. He can invite anyone to visit it.
- As long as the landlord doesn’t visit or sell the property, tenants may live there illegally without knowing it.
As a fake associate, it’s an opportunity to combine with the Double scam.
#2 The Double Scam
This scheme is an opportunity to scam two people at once, plus steal some valuable possessions.
- Like the previous example, you rent the space illegally.
- Give the tenants a few weeks to establish. They may bring their possesions, furniture, even make some minor home improvements.
- Keep promoting the rented property despite the current tenants.
- If an interested one wants to visit, ask tenants to leave one day for maintenance purposes.
- Show the property to the new tenants, so they agree for prepayment. Later that day, come back to steal any items they left.
- Collect payments from your first and second tenants.
- Allow your new tenants to live there, walk away from the property, and let both tenants “meet themselves.”
#3 Car Rental Scams
When renting properties, at least you pay a tiny fraction of what it’s worth. With vehicle rentals, the price-to-rent ratio is much higher. Besides, maintaining a car isn’t as easy as a property.
These factors lead to several loopholes renters use to inflate prices:
- You may rent a damaged car. But if you can’t prove you bought it in that condition, they could make you pay for damages you didn’t cause.
- If you refuel the car without bringing a receipt, you have to pay a fee.
- Your renter didn’t disclose that prices may change when renting internationally.
- Your renter may tell you only the due date, not the hour, then charge you late fees. For example, you arrive at the lot at 5 PM and not before noon.
- They make you buy their car insurance, even if your existing insurance covers rentals.
How To Avoid Rental Scams
As you can see, the listing doesn’t represent anything other than the asset. You don’t know:
- Does the price make sense?
- What’s the owner’s contact data? Is the seller the landlord?
- Are there duplicated listings? Can you find the same listing on other platforms with different descriptions?
Before you rent that property:
- Choose trusted platforms. You don’t just want low prices. Offers that seem too good to be true often fail to add detailed information. Legit apps will show everything about the seller.
- Inspect before you buy it. If you rent a property, visit it first. If you rent a car, especially an expensive one, inspect it with a mechanic.
- Meet a real person with real documents to avoid dealing with fake sellers.
- Avoid unsafe payment methods (wire transfers, cash, gift cards) and be on the lookout for fake escrow services as well.
The Bottom Line
If you take preventive measures, you should consider renting instead of buying. Although it costs more in the short term, you’ll never lose as much as if you got scammed buying it.