By Holly Dutton
A smile and a set of keys does not a good broker make — in fact, it might not even make a real one.
A stark rise in the number of scam artist’s posing as rental agents has prompted a warning from the Governor’s office for apartment hunters to beware.
Since January, the New York State Division of Consumer Protection, an agency that focuses on educating the public on how to avoid scams, said the state has received 211 complaints from people conned out of cash by a fake agent, 121 of whom were in New York City.
The majority of victims have been immigrants, or younger residents new to New York. “It’s tough out there,” conceded New York City-based independent broker Kathy Matson.
“There are those who go on Craigslist and meet the so-called agent, give them cash, and then turn up to an apartment to find someone already lives there.”
But it’s not just the naive who are falling victim to con men — and women — who make false promises of securing rental apartments and illegally charging upfront fees, commissions and deposits.
Matson tells the story of a visiting Columbia University professor who met a so-called agent, gave him his money, got a key and then turned up at the apartment only to find someone else lived there. “And this was a smart guy,” said the veteran broker who has worked hundreds of real estate deals from each end of the spectrum.
But in a housing climate where there is very little inventory and prices seemingly going nowhere but up, it’s not just apartment hunters who’re being duped.
Ken Ferman, an agent with City Connections, found himself embroiled in a bizarre game of cat-and-mouse with a client from Britain some years ago.
When the Brit businessman responded to Ferman’s rental listing for a pricey apartment in The Sugar House in Jersey City, the agent arranged to meet with who he thought was the renter’s personal assistant.
“She was very nice and said the apartment was just what the guy was looking for,” said Ferman. “But once it was time to go over all the details and get checks, that’s when all the nonsense started.”
When the certified checks failed to arrive and the businessman continued to delay his arrival in the country, Ferman admitted he began to get a “weird feeling.”
When he started to really dig into the paperwork, he discovered that the would-be renter’s supposed office address was in fact a P.O. Box, and the floor where his office should have been was vacant.
“That’s really a red flag, and I realized, wow, we’re being scammed. The deal started to fall apart as more things on the application started to come up fake.”
Ferman talked to his manager about the situation and even contacted the FBI, since the client was from London and seemingly trying to take possession of an apartment in New Jersey.
Matson agreed, the business has become so competitive, a good broker really needs to be on their guard.
“People who are out there renting and buying have so much information, but very little knowledge of the market and think they can outsmart a broker.”
Unless she actually knows the person — or they’ve been referred personally — Matson said she tries to avoid the rental market altogether.
Regardless of which side of the deal you are on, Matson said that absolutely the best way to do business is through referrals.
“Ask a friend who they used,” she said. “Don’t necessarily trust a company name — check out the agent’s background to make sure they are who they say they are and to make sure they know what they are doing.
“When I get a referral from a client or another reputable broker, I am delighted. It shows I am doing my job right. Those who are successful in this business are the people who are smart, respectful and care about the people they are working with.”
And while she admits the market has stretched most folk’s pockets, Matson added, “When they go looking for an apartment in New York City, people should be prepared to pay their broker. There’s a reason good brokers keep busy — they know their market, their clients and they are ethical and hard-working professionals.”
Her advice to anyone pounding the pavements looking for a new home right now is to do their homework first.
“Where do you want to live? What’s your budget? How much space do you need?” she said. “Research agents on sites like StreetEasy; search for activity by agents in particular buildings that you are interested in and then call them up. Go see them.
“Even if you sign an agency disclosure agreement, that’s not a contract, and if you are not happy with the agent, you can walk away.”
Never, ever hand over cash or personal information, both agents agreed. “Unless you’ve confirmed it is an established, reputable Realtor and you’re signing a lease with someone, never, ever, give personal info out like a social security number, and never send money at any time,” said Ferman.
And go online to check with the NYS department of licensing. Anyone who is showing real estate, renting real estate, negotiating in any way has to be licensed with the State of New York.
Other advice is to always keep receipts for deposits or payments, avoid using cash so there is a paper trail, and ask for all copies of documents then keep them in a secure place.
Governor Cuomo said licensing investigators are being dispatch to canvass areas where scam artists have been concentrating their business.
“Real estate scammers who target vulnerable individuals will not be tolerated in New York and will be prosecuted to the fullest extent of the law,” said Cuomo in a press release.
“I urge all renters to remain vigilant about their rights, and report any and all violations immediately so that we can put these predators out of business.”
Or as Matson puts it, “Just be very careful. It’s like going on a website to find love and then being surprised to find a frog instead of a prince. You get what you pay for in New York City, or in this case, sometimes you don’t.ˮ