Rental Fraud Rising
Unlike buying a home, most renters are sourcing listings and touring properties without the guidance of a real estate agent. Without the help of a trusted professional, some renters lack the awareness it takes to spot red flags. Vacation and timeshare rental fraud typically target older renters, but younger renters like Millennials, are the prime audience for apartment and rental home schemes. Based on data analyzed by Apartment List, renters aged 19 to 29 are 42% more likely to lose money due to rental fraud. With many renters saving to eventually buy a home, these losses are even more financially detrimental.
From Apartment List, an estimated 5.2 million renters have lost money on a renter scam with one in three losing over $1,000. 43.1% of 1,126 renters surveyed encountered suspicious listings, 23.9% contacted the scam rental unknowingly, 6.4% lost money from fraud, and 4.8% signed a scam lease. Young renters are more susceptible to rental fraud because they are more likely to be renting and less likely to have experienced fraud in the past and know what to look for.
Some common rental scams include:
- Bait and Switch – in this scenario, the property listed does not accurately reflect the property to be rented. Once the renter has signed the lease or paid a security deposit online it could be too late to back out.
- Phantom Rentals – if it’s too good to be true, it probably is. Scammers lure renters with attractive listings and low prices. However, the properties do not exist.
- Fraudulent Ads – scammers copy real rental ads and change the contact information. Renters believe they are putting a deposit on a real property only to find out the representation is false.
- Missing Amenities – in this case, the listing is real but misleading. The property manager lists the rental as having features and amenities it does not include to charge a higher rent.
- Already Leased – the scammer reuses a real listing ad to collect a security deposit or rental fee on a property that is already occupied.
One of the easiest ways to avoid rental fraud is to visit the property in question before you pay an application fee or put down a security deposit. In a competitive rental market, renters may be tempted to sign a lease without seeing the property to avoid missing out on the rental. If you cut corners to save time now, it could end up costing big time later on.
Sources: Apartment List, CityLab