Real estate agents are getting used to the term “fraudulent” being used to describe transactions.
But there is no escaping that this is a new word.
“Fake” is not an adjective that is normally used to categorize a transaction.
“Fraudulent,” says one real estate agent, is the new one.
“We are beginning to get used to that term, but in the future, it’s going to become more important.”
What does it mean to be “faked”?
If you’ve ever wondered why someone is asking for $100,000 in cash and saying, “I’m not a crook,” then the answer is simple.
It means they have a bad bank balance.
They are using a scam.
What’s the scam?
A scam involves a fraudulent payment that the seller promises to make in return for money.
The money is never given and, if it’s not paid, the scammer ends up paying the wrong person.
There are many forms of a scam, including those involving credit cards, cash and cheques.
There’s also a third form of a fraud called “re-selling,” in which someone who was promised something but never receives it sends the seller a different offer.
“There is no such thing as a ‘faked’ transaction,” says Brian McKeon, a partner at McKeons and Co., a real estate brokerage firm in Toronto.
“All transactions are genuine.”
Is this a new phenomenon?
There have been many instances of fraud in the past.
In 2006, the Securities and Exchange Commission charged a Canadian real estate broker, James Suter, with running a fraudulent business in New York.
The broker was charged with violating the securities laws by knowingly providing false information on the records of his brokerage company.
In 2014, a Florida real estate company, Sibbald Real Estate Management, pleaded guilty to $2.6 million in federal fraud charges.
But the Suter case is the first time the government has accused a broker of running a scheme that involves using a fake name, an incorrect address, incorrect credit card numbers and forged documents.
In Canada, the law allows for penalties of up to $10,000 for a first offence and $30,000 and/or five years in prison for a second or subsequent offence.
How will this affect Canadians?
McKeone says he is not sure what will happen with the new term.
“The term ‘faking’ is going to be more used by the real estate community, but the reality is there are legitimate transactions, and the ones that we are seeing more and more of are fake transactions.”
A fake transaction may be a simple mortgage loan, or it could be a real-estate transaction in which a company promises to buy a property for $10 million.
It’s the buyer that is lying to the realtor.
“It’s like, ‘You want me to send you $10M and you’re not even giving me a chance to actually get it?'” says McKeoner.
“That’s not what the real world is about.”
It’s what a fraudster wants You can call a realtor a scammer for simply not paying up, or for failing to follow the rules and pay up on a purchase, but that’s a different issue.
If a realtor is paying out a mortgage, but not paying on the purchase, he is a fraudmer.
“If the person is not following the rules, then he’s not a scamster,” says McKeefe.
“I would call it, ‘a scammer.'”
And if you do want to get in on the action, it can be a scamming business.
It can be one where the seller wants to buy property for an undisclosed amount and the buyer says they can’t make the payment.
It could be one in which the buyer makes a claim and the seller says, “Well, you just paid $10K on the mortgage.
So you can’t do that.”
A realtor may be the scum of the land, but it can also be a reputable broker.
And that’s because the realtors work for people who want to sell property.
“You want to do a deal with someone who wants to do something with you?
There are a lot of legitimate reasons why you might want to deal with a real agent,” says Mark Schmitz, a senior vice president at real estate agency McKeones and Co. “They are more knowledgeable than you or I. They will tell you what’s going on.”
But how will it affect Canadians’ housing markets?
“There’s no doubt there will be a reduction in the number of buyers who are able to get into housing, but also, we’ll see an increase in the supply,” says Schmitis.
In the short term, McKeoni says, there will likely be more demand for homes.
“In the long run, it could have a ripple effect on our economy, on our