Scam Alerts Now on AAROnline.com

by Sage Dillon on November 2, 2011



Scams & Frauds FlagIn an effort to help you reduce your risk, AAR’s Risk Management Committee has put together a new webpage intended to bring possible scams or fraudulent activity to AAR members’ attention. Below is one example of a scam to watch out for. For more information about scams in our marketplace, visit the Scams & Frauds page.

A FOREIGN BUYER TRANSFERRING FUNDS TO U.S.

Submitted by Jerome King, Designated Broker, Long Realty Company – Tucson, Arizona

Agents continue to get inquiries from alleged buyers outside the country with requests to purchase a property. The inquiries often appear, in the words of one agent, “too good to be true.” The alleged buyer often requests the name and email address of an attorney. Please do not provide the name/email of an attorney without that attorney’s expressed permission and understanding. This seems to be a gambit these guys like to use to appear to be legitimate.

James Robertson, Jr., an experienced commercial agent, has helped me understand what information is needed to present to a possible international buyer and what we should require before we begin working on such a buyer’s behalf.

James explains that there are important federal laws to observe, and this buyer is probably in no position to perform. For example, JP Morgan Chase, China Bank in LA, Deutsche Bank, Barkley’s Bank and others have international cash transfer departments.

You should first refer this buyer to one of these institutions to have the currency transferred and converted to US currency. The bank will do the federal notifications and prepare it for transfer to the escrow company when instructed. If there are any taxes due or disclosures needed, the banking institution will do this as part of their fee, which is usually 2 to 5%. There may be a waiting period for seasoning of the funds, which may take as long as 90 days, depending upon what country it is coming from and how much cash is in the transaction.

Some banks were requiring the transferring entity to buy a liability policy on the transfer, covering the banks loss margin, if any, and fraud. This could be as much as 500 basis points.

Bottom line: Only do international deals if you really know what you are doing and always verify that hard funds are in a legitimate escrow account before you start to work with an international buyer. A scammer will disappear when you insist on this process of transferring funds first.

If you are aware of a possible scam, please send it to scamalert@aaronline.com for possible inclusion on the new page.



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Sage Dillon

Sage Dillon is the Communications Manager for the Arizona Association of REALTORS®. You can find her on Facebook or Twitter.

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