Phantom Renters And Scammers Equal Serious Losses For Landlords

Renters aren’t the only ones losing money to fraud and scam artists. According to new data, a whopping 80% of property managers have fallen victim to fraud in the last two years.

A full 75% of those landlords were unaware of the scam until after move-in, only noticing when a rent payment was missed or another issue occurred. More than a quarter didn’t notice until seven months later or more.

By then, thousands of dollars in rent and other costs have already been lost. According to TransUnion data, an average of $4,215 is owed per fraudulent tenant, and that doesn’t even include the costs to evict, the lost rent during the months-long eviction process and the additional costs of marketing, readying and re-leasing the property.

An Even Bigger Problem

It doesn’t stop there, though. According to Mike Doherty, senior vice president at TransUnion, there are even more long-term costs to consider.

“Besides the huge potential financial losses, reputational damage is also a top concern of how fraud impacts the organization,” Doherty said. “With some of these emerging fraud types, such as synthetic fraud, the process can become even trickier as the ‘resident’ may not even exist in the first place. This saddles property managers with an even longer time frame for identifying and addressing the issue.”

Synthetic fraud — one of the more common types of renter fraud — occurs when the applicant creates a fake identity in an attempt to secure an address, open lines of credit using that address, and then run up the balances until they’ve been maxed out.

“Synthetic fraud has become a new weapon of choice for fraudsters in which the applicant is nothing more than a manufactured identity,” Doherty said. “In the rental industry, these fraudulent identities are used during the application process and if approved, the fraudster now has access to an address for the purpose of establishing credit. While the fraudster is running up high balances or maxing out credit cards under this false identity, property managers are left with a renter that does not exist and is likely not paying rent.”

The problem lies largely in online applications, which now account for 59% of all rental applications, according to TransUnion.

“Online applications are outpacing those that are submitted in-person,” Doherty said. “This shift to digital has increased accessibility and convenience but as a result, has also increased the propensity for fraud.”

Still, online applications aren’t all that’s at work here. According to James Hilliard, vice president of GM screening at RealPage, data breaches, cyber attacks, and easier access to falsified documents also play a role. Falsified documents only cost a few hundred dollars and take much longer to detect compared to other types of fraud, Hilliard said.

Proactive Prevention

Unfortunately, stopping fraud against property managers isn’t always easy — especially as scam artists get savvier. In fact, according to the TransUnion study, 95% of property managers say they have difficulty identifying, preventing and mitigating fraud.

There are certainly red flags landlords can look out for. According to Hilliard, these include things like exorbitant behavior, lavish income claims, refusal to meet in person or a thin credit file. Only listing friends or family as references is also a warning sign.

But noticing these things isn’t always a sure-fire way to recognize fraud — and denying a renter based on them could even pose legal issues.

“Oftentimes even these basic red flags can be deceiving,” Hilliard said. “Applicants live remotely, use a nickname or middle name, or are young or foreign-born and have no established credit history. What’s more, leasing staff individuals can open themselves to Fair Housing related legal issues if their fraud-seeking actions are not applied equally across applicants.”

Ultimately, the best approach is a multi-layered one, Doherty said. Properly pre-screening tenants, requiring all documentation and identification match exactly and using technology solutions designed to mitigate fraud can all help address the issue more comprehensively.

SOURCE: Forbes dot com, 

7958 Mission Center Ct Unit E San Diego, CA 92108

**For Lease, Available Now!**

2Bed-1.5Bath-1,008 sq. ft.

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Light and bright 2 bedroom, 1.5 bathroom, upper unit condo in the heart of Mission Valley! Freshly painted interior and brand new carpet throughout! Hardwood floors, private balcony, spacious master with walk-in closet and more! Two reserved parking spots directly in front of unit. Complex includes heated pool and spa, BBQ area with picnic tables and laundry room, all walking distance from unit. Close to all shopping, dining, freeways, beaches and downtown!

Housing tipping back to a buyer’s market as sellers cut prices

After several years of rich home price gains, the market appears to have found a limit to what people can afford. Sellers are finally responding by lowering prices more often.

Approximately 14 percent of all listings in June saw a price cut, that’s up from a recent low of 11.7 percent at the end of 2016, according to a new report from Zillow. In addition, home price growth is slowing in nearly half of the 35 largest U.S. metropolitan markets.

Rising mortgage rates and affordability are behind the change. As the housing market recovered from its epic crash in the last decade, home prices began to gain slowly. And then they suddenly took off in the last few years.

The simple reason was supply and demand. As millennials aged into their homebuying years, homebuilders did not and are still not meeting the rising demand. In addition, millions of single-family homes lost to foreclosure were purchased by investors and turned into single-family rentals, further depleting the for-sale housing stock. The market was thus suffering a critical shortage, just as demand was taking off. Prices had nowhere to go but up. Until now.

“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly,” said Zillow senior economist Aaron Terrazas. “A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsize price gains in recent years.”

While Terrazas admits it is too soon to call this a buyer’s market nationally, “the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”

All real estate is local

And of course all real estate is local, so certain markets are tipping faster than others. In San Diego, 20 percent of all listings had a price cut in June, up from 12 percent a year ago. In Seattle, which continues to be the hottest market in the nation, 12 percent of all listings had a cut, the largest share in nearly four years.

In Austin, Texas, also a very strong housing market thanks to a recent influx of technology jobs, more homes are seeing price cuts as well.

“We saw intense bidding on homes over the past few years, but that is calming down with more inventory in the area,” said B Barnett, a real estate agent at Reilly Realtors in Austin. “Our inventory of homes is going up with new construction, and it is helping transfer power back to the buyer.”

Barnett, who said about 60 percent of her clients are relocating into the Austin market, is still seeing multiple offers, but there are fewer bidding wars, meaning prices are no longer out of reach. Buyers, she said, are getting negotiating power back and some are even able to get repairs in the deal. For the past few years, in most hot markets, buyers had to take what they could get — no contingencies.

There are still some markets where prices gains are increasing, but those are markets that have seen smaller price growth in the past few years. San Antonio, Phoenix, Philadelphia and Houston had fewer listings with a price cut in June compared with a year ago.

Among the largest housing markets, San Jose, CA, Indianapolis, IN and Charlotte, NC could see price growth slow the most over the next year, according to Zillow.

Source: CNBC dot com, Diana Olick

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**New Listing!** (SOLD!)

3Bed-1Bath-1,278 sq ft.

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3386 Mt Acadia San Diego, CA 92111

**New Listing!**

4Bed-2Bath-1,400 sq. ft.

Priced at $674,900-698,900!

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5345 Via Bello San Diego, CA 92111

**New Listing!**

3Bed-2Bath-1,343 sq. ft.

SOLD for $655,000!

Welcome Home to your Fully Remodeled Clairemont Home. Located in highly Desirable “Mount Streets” Neighborhood, this home sits on large 6,400 ft lot just above Tecolote Canyon. Gorgeous Remodel includes Brand New Kitchen w/ Quartz Counters, Stainless Steel Appliances, & Modern Design. Open Concept allows for Huge Living Room Space w/ Breakfast Bar Area & Unique Feel. Bathrooms are light & bright & absolutely stunning. New Roof, Plumbing, Electric, Floors, A/C Heat Combo, Custom Closets, Paint, & Patio Cover. RV/Boat Parking, Washer and Dryer inside, All Appliances Included. Close to all shopping, freeways, and only minutes to Mission Bay.

4422 Springtime Dr Oceanside, CA 92056

**New Listing!**

4Bed-3Bath-1,660 sq. ft.

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12551 Alcacer Del Sol San Diego, CA 92128

**New Listing!**

3Bed-2Bath-1,705 sq. ft.

Priced at $839,000-859,000!

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Housing Predictions Through 2020

Wed, 6 June 2018

Affordable home shortage to continue through 2018, new Reuters poll says.

An acute shortage of affordable homes in the United States will continue over the coming year, according to a majority of property market analysts polled by Reuters, driving prices up faster than inflation and wage growth.

After losing over a third of their value a decade ago, which led to the financial crisis and a deep recession, U.S. house prices have regained those losses — led by a robust labor market that has fueled a pickup in economic activity and housing demand.

But supply has not been able to keep up with rising demand, making home ownership less affordable. Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years.

The latest poll of nearly 45 analysts taken May 16-June 5 showed the S&P/Case Shiller composite index of home prices in 20 cities is expected to gain a further 5.7 percent this year.

That compared to predictions for average earnings growth of 2.8 percent and inflation of 2.5 percent 2018, according to a separate Reuters poll of economists.

U.S. house prices are then forecast to rise 4.3 percent next year and 3.6 percent in 2020.

“We are not seeing a temporary phenomenon. House prices have been outrunning family incomes for several years in the U.S. and while demand has cooled off a bit, the supply side is still very tight,” said Sal Guatieri, senior economist at BMO Financial Group.

“I think house prices will continue to outrun family incomes for at least another year and it will take some time for demand to slow and to some extent supply to increase.”

The latest poll comes after weak existing and new home sales data for April.

A further breakdown of the April data showed the inventory of existing homes had declined for 35 straight months on an annual basis while the median house price was up for a 74th consecutive month.

About 80 percent of nearly 40 analysts who answered an extra question said the already tight supply of affordable homes in the United States will either stay the same or fall from here over the next 12 months.

Existing home sales, which account for about 90 percent of U.S. turnover, are now forecast to rise slightly and average 5.60 million units in each quarter this year from about 5.46 million units in April.

That is well below the peak of 7 million units averaged during the previous housing market boom, which will keep prices elevated and make housing less affordable.

When asked to rate the affordability on a scale of 1-10 where 1 is extremely cheap and 10 is extremely expensive, the median answer was 7.

“U.S. house prices are slightly over-valued when looking at fundamental valuation metrics such as the median-home-price-to-income ratio,” noted Brent Campbell, economist at Moody’s Analytics.

A pricier market is likely to push many people to rent rather than buy.

But even renting a home in major U.S. cities will become more expensive relative to average income, according to about 60 percent of nearly 40 analysts who answered an additional question.

Another potential hurdle for home buyers are rising mortgage rates. According to the poll the average 30-year mortgage rate will rise to 4.60 percent by year-end and then touch 5.0 percent by end-2019.

Those figures are a slight upgrade from the previous poll in February but seem to be in line with economists’ expectations for the Federal Reserve to tighten policy more than what the central bank’s most recent forecasts suggest.

“With mortgage rates continuing to rise, affordability is getting steadily worse,” noted Jonas Goltermann, developed market economist at ING.

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**New Listing!**

4Bed-4Bath-4,286 Sq. Ft.

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