How To Avoid A Rental Scam When Searching For A New Apartment
So, you're searching for a new apartment and you visit one disappointing dump after another. Eventually you learn that "cozy" means tiny and "character" is synonymous with falling apart. Then you see a spacious dream pad well below market value that's too good to be true. This is why knowing how to spot a scam when searching for a new apartment is so important — if it looks too good to be true, it probably is. If you think you're too smart to become the victim of an apartment-rental scam, an analysis from Apartment List found that people ages 18-29 are more likely to fall for rental scams, perhaps because millennials are used to doing everything online without talking to or meeting the person they're dealing with.
Scammers know this, and they use it to their advantage to trick you out of your hard-earned money. Fraudsters are also becoming more sophisticated, and Apartment List reported that rental fraud has cost apartment seekers in the U.S. $2.5 million. As someone who's moved around 20 times, I consider myself pretty skilled at sniffing out a scam. However, I was minutes away from falling for one this week when I decided to trust my gut and back out after the property manager requested a lot of money up front but was super vague about when I would get the keys.
"Of renters who have lost money in rental scams, one in three have lost over $1,000, likely after paying a security deposit or rent on a fraudulent property," Apartment List noted. If you're not sure how to spot a rental scam, here's what to look for so you don't end up out money and out on the street.
1. The Property Is Listed Well Below Market Value
Apartment prices can fluctuate wildly, especially if you live in a city without rent control. However, you likely know the average going rate for most places in your city or town. If you see a three-bedroom listing that's priced similar to most one-bedroom listings, this should be a red flag. According to Zumper, scammers copy other listings, change the price, and repost them to try to entice bargain-seeking renters. When you contact the person, they ask for a deposit to reserve the apartment before you've even seen it, and then they take your money drop off the map.
"The best way to avoid this scam is to ensure you’ve physically seen the apartment and refuse to pay any money before seeing the apartment in person. Common excuses for not being able to show the apartment are that the landlord will say they are out of town, living overseas, or dealing with a family emergency," Zumper noted on its blog. Don't be afraid to google the person and demand an in-person showing. If they refuse, move on and flag the listing for removal.
2. You Rent A Property That's Already Leased
This one is totally bananas. You've done your due diligence, seen the property, signed the lease, paid the deposit and first month's rent, gotten the keys, and showed up to move in. Then you find out that someone else has already started setting up in your new pad. This is a pretty sophisticated scam, and aside from being out hundreds or even thousands of dollars, if you're a victim of this kind of fraud, you've likely already vacated your old place and are left with nowhere to live.
"Just ask Kaeti Bancroft, owner of Metro Brokers in Littleton, Colorado. Upon arriving at a vacant rental property she owns to show it to a potential tenant, she found a woman storing things in the backyard shed," Devon Thorsby wrote for U.S. News & World Report. "The stranger reported her granddaughter had just rented the place and was ready to move in after sending $500 for the first month’s rent." In this case a scammer had copied the original ad and "rented" the apartment without the real owner's knowledge.
To avoid being a victim of this scam, always search the address before seeing a listing. Almost all rentals are listed on multiple sites, and if it's a scam you should immediately see differences in the listings. The scam listing will usually be vague and have a lower rent than the legit ad. You should also be able to find out who owns a property by searching for property tax records. If do you fall for this scam, by the time you realize what's happened the fraudulent landlord has already skipped town with your money.
3. False Claims About The Property
This scam is more annoying than anything else because it wastes precious time that could be used to find a legit place to live. It usually involves a detailed list of amenities that justify the price. "A real rental is listed as having features and amenities it lacks in order to collect a higher rent, the rental market equivalent of catfishing in online dating, when someone fakes their identity," Sydney Bennet and Igor Popov wrote for Apartment List.
"The leasing agent tries to get renters to sign the lease before they notice the missing amenities." Don't be afraid to ask to see everything that's advertised in the listing including the laundry room, parking spots, gym, and pool. If the person showing the property is reluctant to show you these things, there's a good chance that they don't exist.
4. Non-Existent Rentals
If you're moving across the country, you might have to rent a property sight unseen. This can leave you vulnerable to renting something that might not even exist. Scammers create fake listings for properties that either aren't for rent, or don't exist at all. You might even sign a lease and hand over money before you arrive at your new home to realize it's actually a gas station. If you're moving to a new city, and you don't know anyone there who can help you search for rentals, it's best to work with a trusted real estate agent or property management company.
Don't be afraid to do an extensive search of the company and read the Yelp reviews. It's also fine to ask your agent to Skype or FaceTime so you can verify that they are who they claim to be. Most cities also offer short-term corporate rentals that allow you to stay for a few weeks or months while you get to know the area so you can select your permanent pad in person.
5. There's No Lease Or Background Check
If your potential landlord doesn't ask you to fill out an application, run a background check, or make you sign a lease, take your money and run ASAP. "The FTC warns against adhering to requests for a security deposit or first month’s rent before you’ve signed the lease and met the landlord in person," Thorsby noted. "You should never pay any amount beyond an application fee before you’ve confirmed the space is available, the individual you’re working with is associated with the property, and you’ve signed a contract that makes you the legal tenant."
6. Lying About The Neighborhood
If you're renting from across the country, or you're new to the area, you're more vulnerable to falling for this scam. Unscrupulous landlords might claim that something is walking distance when it's actually miles away. I once looked at a "spacious apartment on a quiet street near the arts district" that was a dark basement cave across the street from three boarded-up, abandoned houses and nowhere near the arts district. Don't be afraid to get on forums to ask about the area and to verify details on a maps app.
If the listing contains false claims, the person seeking a tenant is either trying to take advantage of people unfamiliar with the area, or is actually a scammer who doesn't know the area at all and has posted a fake listing. "Omitting details on utilities or mentioning an attraction that's more than a mile away as being within walking distance can be an indication that the poster isn't familiar with the area or doesn't expect you to be familiar with it," Thorsby explained.
7. Asking For An Unusually Large Deposit
If your potential landlord is asking for an unusually large deposit even though you have good credit, check the tenants' rights laws in your area. Online legal site NOLO has a links to rental-deposit laws in each state. Some states have limits on how much of a deposit your landlord can ask for, what they can deduct when you move out, and how long they legally have to return it. If you're landlord wants a lot of money, especially before you've signed the lease, without being able to explain why, chances are that they're counting on you not knowing your rights. Worst-case scenario, the "landlord" takes your hefty deposit and peaces out.
Overall, your instincts are your best ally when looking for a new place to live. If the landlord or property manager seems shady in any way, it's best to move on. Remember: This is the person you'll be reporting problems to and dealing with as long as you live there. If they don't seem trustworthy up front, you're probably in for more of the same during your lease. Even more important, trusting your instincts could save you from losing a lot of money if a scammer is trying to rent you a place they don't actually own or manage.
There's a reason that moving is often named as one of the top 10 most stressful life events. It's a lot of work. However, becoming your own apartment-hunting sleuth could save you big headaches in the long run. Double check and verify everything, and don't be afraid to ask a lot of questions. If the person your dealing with is legit, they'll be more than happy to answer everything to your satisfaction and to show you their credentials.