LEWISTON — Today’s housing market is, by many measures, the tightest it’s ever been in Maine and across the country. There are simply more potential buyers than inventory – an imbalance that is not likely to even out for months, or years to come.
Despite fears over inflation and rising mortgage rates, the insatiable demand for new and used homes continues.
Home sales of existing, single-family homes in Maine declined 21.48% in March 2022 compared to March 2021, due to recent lack of inventory, coupled with pent-up buyer demand, according to the latest figures released by the Maine Association of Realtors. But the price of homes continues to skyrocket, with the median sales price up 21.4% to an average price of $325,000 compared to March 2021, which showed the median sales prices at $268,500.
Androscoggin County bucked the trend in March, seeing sales rise 9.22% in March 2022 compared to March 2021 from 217 homes to 237 homes.
“The market is more fast-paced than it has ever been,” said Madeleine Hill, president of the Maine Association of Realtors. “And when you’re in a fast-paced environment and in a highly competitive environment, you have to think and act quickly.”
The frenzy to buy and sell has created an atmosphere of pressure and stress in an already demanding process. Buying a home is, for most people, the single largest purchase they will make in their lifetime. And for some it’s the only purchase of this magnitude. But even for the experienced home buyer and seller, buying or selling a home has taken on a whole new set of variables not seen before in the industry.
All this pressure has created opportunities for scammers who see potential for gain. Make no mistake, today’s transactions and payouts are bigger with most transactions happening virtually, opening the door for professional thieves and hackers working together.
REAL ESTATE CRIME GROWING
Nearly 3 million consumers in this country reported losing $5.8 billion from all types of fraud in 2021, up 70% from 2020, according to the latest report from the Federal Trade Commission. Imposter scams followed by online shopping scams were the most popular categories of fraud.
Real estate is the third most common sector for fraud attempts behind construction and commercial services, according to the findings of a 2019 report by the Department of Treasury.
Housing scams are prevalent across all aspects of the housing industry, with criminals targeting renters and owners. It’s a crime that’s growing exponentially and it’s easy to see why – more and more real estate transactions are being done virtually and the amount of money involved has also grown into the hundreds of thousands of dollars or more per transaction.
In its 2021 Internet Crime Report, the FBI identified 42 victims of real estate/rental crime in the state of Maine, with total losses reported from the crime at $489,309. It identified 14 subjects, which the report defined as “the individual perpetrating the crime.” Losses tied to the subjects reached $528,953 in Maine. All the statistics come from victims reporting to the FBI.
Nationally, there were 11,578 victims of real estate/rental scams, who reported losses in 2021 at $350,328,166, a figure that jumped dramatically from 2020, when losses were reported at nearly $213.2 million.
The federal agency is tasked with investigating, tracking and reporting internet crimes through the Internet Crime Complaint Center, known as IC3. It depends on victims of crime to report details through its internet portal.
HOW REAL ESTATE SCAMS OFTEN WORK
The thieves behind internet fraud are increasingly sophisticated, tech-savvy and convincing. You probably won’t ever speak with them if you become a target, as they almost always communicate through email and text. That’s the first red flag. They are engaging, even to the point of responding to questions like, “will I have access to the kitchen and the rest of the house” from a would-be renter.
By far, the most common real estate crime is wire fraud. What usually happens is a real estate agent or title company’s email gets hacked, revealing a buyer’s information and closing details. The scammer will then impersonate the seller, asking the title company to wire transfer the escrow funds to the scammer’s account instead. Or the impersonator will mimic the title company’s letterhead and email and ask for closing funds to be wired to them.
That’s what almost happened to a buyer working through Portside Real Estate Group. Mike LePage, a designated broker with the Yarmouth agency, explained: “Well, we got a call from a bank saying they uncovered wire fraud from a buyer trying to buy a property, who was closing in like two or three days.”
LePage would only say that the amount of the transaction was more than $100,000. “He received wiring instructions from the title (company), from someone who looked exactly like (they represented) the title company.”
LePage said the closing statement from the buyer’s deal was attached to the wiring instructions, before the real estate company even got the statement — something that should never happen.
LePage believes what happened is that the real title company emailed the closing statement to the real estate firm, which then emailed the information to the buyer, which is customary, but it was somehow intercepted by scammers. The scammers then impersonated the real title company and sent the information to the buyer, with instructions to wire the money to the scammer’s account.
So how was it all exposed?
“When the buyer called the number that was on the wire fraud, they answered it by the title company’s name,” LePage said. “(But) when the bank called the number, it rang and rang and rang and rang.” Bank personnel immediately became suspicious, more than likely because the phone number given by the scammers didn’t match the actual title company’s number.
The bank stopped the wire transfer, and no funds were lost in this case. The FBI is investigating.
Other types of real estate scams
There is also title or deed theft, where the title to a home is illegally obtained and the thieves then assume the identity of a real estate agent or other professional and then try to sell the home to an unsuspecting potential buyer.
Finally, there is the age-old rental scam. The Maine Attorney General’s Office posts the following description and warning on its website:
“This scam is usually seen on Craigslist or other websites. Recently, a Maine homeowner discovered his house, as well as photographs of the property, were listed for rent on Craigslist without his knowledge. The ad listed a Nigerian email address for responses and payment for the fictitious rental. One shopper was ready to rent the home by sending her money to Nigeria. Fortunately, the shopper contacted the Maine homeowner and discovered the scam before sending any funds to the scam artist.
Other consumers haven’t been so lucky only to arrive at their paid vacation home for the week or new apartment to find out that it isn’t for rent at all. Remember — never send money in response to an internet or rental offer without first confirming that the ad is legitimate or from a known and trusted business.”
What can you do to protect yourself? Most people don’t know where to turn when they become a victim of real estate fraud. Some turn to the local police. Many don’t do anything, embarrassed by being scammed and unfamiliar with how to deal with the situation. Officials acknowledge the number of scams and fraud reported to them is far lower than the actual number.
There are a number of precautions you can take to protect yourself, but perhaps the best advice is never wire money to someone you don’t know, no matter how desperate you are for a rental, and never give your Social Security number to someone who emails you an application. Never.
Take the time to check the real owner’s name in the city or county where the home is located. If the name does not match up to the one in the rental ad, it’s more than likely a scam.
In Maine, the Attorney General’s Office doesn’t prosecute wire fraud; most of the scams done through the internet are federal crimes and many times involve interstate commerce. However, the office can offer assistance. A spokesperson for the office last week acknowledged real estate scams are increasing and vigilance is needed.
“It’s clear that real estate-related scams are becoming more common and increasingly sophisticated,” the person said. “We encourage anyone who has experienced a scam in a real estate transaction or wire fraud to reach out to our Consumer Protection Division so our office can assist directly or guide victims to the appropriate enforcement agency.”
People can call the Attorney General’s Consumer Hotline at 207-626-8849 or 800-436-2131 toll free in Maine. The hotline accepts calls from 9 a.m. to noon and from 1 to 4 p.m. Monday to Friday.