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Scam alert: Property sellers warned of 'fake buyers'

Aug 03 2019 13:57

Real estate agents and property sellers can fall victim to "'fake buyers", warns Gerhard van der Linde, Seeff's managing director in Pretoria East. In most cases, these scammers make cash offers on properties and then disappear without a trace.

"Most cash transactions are above board and concluded successfully, but we often see cash buyers who are reluctant to disclose where the money for the transaction is coming from. When the time comes for the money to be transferred to the attorneys, the 'buyer' then discloses that the money is coming "from abroad," says Van der Linde.

Time, costs

"A situation like this is not only extremely time and cost consuming, but it is also fraudulent and puts everyone involved with the potential sale in an unfortunate position – including the estate agency, estate agent, seller and the transferring attorneys."

Van der Linde says it is difficult to determine exactly what these "fake buyers" are trying to accomplish, especially since the sale will never go through, nor will the property be transferred to the fake buyer. Van der Linde says he has experienced certain patterns with regard to "fake buyers".

"They say they are willing to pay the full price for the property and will frequently show interest in buying a second property at the same time. There is also a trend where fake buyers become extremely specific in terms of their requirements and where they always express a great level of urgency to conclude the transaction," explains Van der Linde.

"They are also typically very well informed and extremely convincing, which makes it difficult to spot a fake buyer as a scammer."

In the view of Van der Linde, one should not believe that a cash transaction is necessarily better compared to a transaction where a bond has to be applied for.

"In essence a bondable transaction requires milestones that need to be achieved. The loan has to be applied for, the loan must be accepted by the client and documentation must be submitted by the buyer in order to apply for the loan," explains Van der Linde.

"With a cash transaction there are no guarantees until the day the money is due."   

Don't get caught

He suggests that sellers insist on a sizeable deposit payable within three to five days of the acceptance of the offer.

A seller also has the right to ask for proof of the existence of the funds before accepting a cash offer.

Furthermore, do not make any changes to the property as required by the purchaser until such time when the transferring attorney confirms that everything is in order - that is costs paid, guarantees received and all documentation signed.

Should the seller wish to proceed with the purchase of another property, make sure that the transaction is linked to the successful conclusion of the sale of the first property.

Never give occupation to a buyer unless guarantees have been delivered. Obtain confirmation from the transferring attorney.

The seller has the right to appoint the transferring attorney who will then act on behalf of his or her client.

The parties can contractually agree to continue with the marketing of the property until guarantees have been delivered. This possibility can be discussed with the agent or the attorney who will be attending to the transfer.

seeff properties  |  property  |  money  |  scams
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