Here's A Scam We Came Across
We are selling one of our properties in New Jersey and decided to try the FSBO route. We've done this before but with much lower value homes. This particular one is much more up market and we listed at $500K list.
Within a few short weeks we were contacted by an investor from Beijing offering to purchase the property for $485K. A $15K reduction.
Being very wary of this guy we played along with it. We looked up the address he gave us and it was the address of a very nice restaurant in Beijing. He also provided a bank statement from an institution in Hong Kong showing $4 million. We were not convinced but proceeded with caution.
We advised him to obtain a US attorney for the transaction, which he did. Contracts were drawn up and he sent a check for $399K towards the purchase. However, his attorney wasn't convinced the check was valid because it was a third party check. The buyer explained that the check was from his investment company. It also came with a cover letter from his investment broker in Canada.
His attorney called the Canadian broker and was immediately suspicious because he did not provide any sufficient answers and was very vague. The attorney then contacted the third party company, the investment firm, and asked about the check. The firm informed the attorney that they had checks stolen and as such they don't even use that bank account any longer. The check is fraudulent.
So what's the scam? It's on the attorneys. See, had the attorney sent the check in to the bank, it likely would have taken some time to process. During this time, the investor would have likely pulled out of the deal and asked that his money be returned. Attorneys often don't wait for checks to clear and would have likely reimbursed this guy from their account. When the checks fails to clear, the attorney would have been out $399K.
My own attorney admitted that reimbursing monies prior to checks clearing, is a normal practice. After this incident, however, he said he will never do that again. Thank God, no one lost any money to this scammer...this time.