Realtors say the number of legally dubious apartments on the Moscow market has risen as much as 40 percent since the crisis hit, and while swindlers aren’t using any new tricks, buyers are still falling for them.
Yekaterina, who asked that her last name not be given, says she helped the director of her son’s school avoid falling into an apartment scam. A criminal investigator she knew made inquiries with property officials and found out that the apartment, which was offered through a realtor at an alluring price, was being sold under false documents.
People who don’t know a criminal investigator should check out the seller and documents independently, said Georgy Mamyrin, deputy head of criminal investigations for the Northern Administrative District.
Even with real estate prices plummeting, legitimate housing is not sold for one-third or even half the market price, even in the most urgent sales. Realtors say it is important not to make important decisions in a rush and not to let sellers hurry you into a foolish decision.
Never give money in advance, no matter what reasons are given, warned Svetlana Kondachkova, a managing partner at Urban Realty.
It’s also important to follow three steps when choosing a realtor to avoid falling victim to unscrupulous firms. First, look into the company’s reputation, its licensing and the credentials of any middlemen. Second, make a prepayment after signing a contract and only pay the agent officially (never accept just a receipt, letter of guarantee or other such scraps of paper). Always demand confirmation of payment; ideally, pay agents by bank transfer. Third, demand confirmation that the realtor has the authority to be selling the property, typically in the form of a letter of attorney from the owner.
But unfortunately, there is no sure way to avoid all swindlers. “Since the crisis hit, con men have really stepped up their ‘business activity,’” said Mikhail Kulikov, director of Inkom-Nedvizhimost’s department for the secondary market. He said he has seen 40 percent more legally questionable apartments on the market in the past year.
Official statistics are hard to come by, however, since police only count property scams as a type of fraud. The press service for the city police said as of September, there have been 5,000 instances of fraud registered this year, including about 300 involving apartments.
Kulikov said unscrupulous private brokers, who were often fired for dishonest work or in layoffs at real estate agencies, organize most of the dirty deals. They attract clients with low rates and nearly round-the-clock service.
“You’d think you wouldn’t have to warn people that the only free cheese is in mouse traps, but there are always folks who think there’s just no fooling them,” he said.
With improving technology, swindlers can forge virtually any document, including contracts, proof of ownership and passports, by gluing in different photographs. “Apartment scams are usually committed by a group of people, which unfortunately can include local police, passport office officials and the heads of real estate agencies’ branches,” said Mamyrin, the police official.
The authenticity of documents is the main guarantor of any deal, so it’s best not to rely too heavily on middlemen when checking them.
“Many companies have either cut back to the bare minimum or are in the process of doing so, and that has taken its toll on the depth and quality of property inspections,” said Oleg Samoilov, chief executive of Relait-Nedvizhimost.
Because of the cost cutting, many of these specialists have been laid off, he said. And unfortunately, that really opens up opportunities for swindlers.
A well-meaning buyer can think that he’s getting a legal apartment where no one else is registered. But then, half a year later, a recently released convict shows up and says the flat is his. In such cases, the buyer is usually given a fake document showing that no one has left the apartment for service in the army, a prison term or study in another city.
Sometimes the problems only come up years later, like when the legal rights of minors are violated during the privatization of an apartment. Once the children grow up, they often decide to go to court to get their property back.
Criminals will occasionally also fake the property rather than the documents, by showing a buyer one apartment and selling another. One scheme involves switching the street number on the building or the apartment number on the door. It doesn’t take long to do, and many people coming to see an apartment won’t bother to double-check something so mundane.
Summer is the most dangerous period, when many families leave for dachas for long periods. Scammers sometimes manage to sell apartments whose owners are gone for extended periods to work, study or vacation abroad.
Criminals can also target people who rent out their apartments, since they can show the apartment to potential buyers anytime without having to worry about stealing the keys.
Samoilov said crimes committed under Article 179 of the Civil Code have flourished lately. In part, the article says a court can invalidate deals signed under difficult circumstances and at very bad terms for the seller. Providing proof of hard circumstances is no challenge these days, and if the purchase agreement indicates a below market price — which is still common practice — then it’s even easier for a court to side with the seller.
One of the more recent scams that Samoilov had heard of involved misleading statements about the final work done on the property. Most new apartments are sold unfinished, and doing renovations can be too expensive for some buyers who barely scraped together enough money to purchase the flat, so those that promise at least some interior work are a real find.
In July, realtors from Relait-Nedvizhimost ran into a situation where a seller — a major Moscow real estate agency — tried to sell an unfinished apartment in a nearly completed building with “an interior to be completed after the building is finished.” When the actual circumstances were uncovered, the seller apologized for the “confusion” and returned an advance.
But the confusion could very well have snared less attentive buyers. All of the apartments in the building were being sold “in finished condition.”