As the economy continues to flail, many people – including caregivers and the elderly – are looking for ways to get ahead on finances – or in many cases, just to stay afloat.
The sale of real estate might be a good strategy for a fast cash infusion (unless of course, you are upside-down in equity). Elders are often looking to sell their home to move to Assisted Living and working with a licensed real estate agent can pay off.
But many elders weren’t even thinking of selling – until a fraudster showed up their door. The scammer sweet-talks vulnerable elders with “a sure-fire way to sell their home and make a great profit.”
“Current real estate market conditions have opened the doors for financial elder abuse by obtaining property through undue influence or fraud,” says Elizabeth Ernster, an attorney with Ernster Law Offices, P.C., in Pasadena, California (www.ernsterlaw.com). “The unfortunate reality is that many seniors are being swindled by real estate agents who have convinced them into selling their home for less than its market value, and then making a large profit off the sale.”
Ernster has extensive experience representing seniors and their families in real estate fraud. Of the scammers, she says, “These people are smart. They know what they are doing. They throw around industry lingo that confuses the elder. They require the elder to make pressured, fast decisions.”
Oftentimes, it takes an elder a little longer to comprehend what is being said, process the information and decide whether the offer sounds reasonable. Fast-talking thieves take advantage of this weakness.
Ernster says elders and their caregivers should look for these red flags:
Unsolicited offer to sell
The person who contacts you calls themselves a real estate agent or a broker in the real estate industry. They claim they already have a pre-existing buyer set up. The buyer is interested in buying the home right away. The “agent” has a contract. All the elder needs to do is sign the contract.
A real estate agent contacts the elder and says they have an out-of-town purchaser who wants to get a contract signed before they leave. If elders fall for this, they have no way of tracing that person; no way of knowing if they actually exist. This scam usually involved a spur-of-moment decision. He or she may say something like, “My out-of-town buyer is getting on plane in 30 minutes. If I don’t tell them before they leave, the deal is off.”
An “agent” who doesn’t answer questions directly may be a scammer. Being vague about the buyer, what real estate company they represent, or why the buyer doesn’t want to look at the inside of home are all red flags and means the deal is very likely a scam.
Pressured decision making
The “agent” has a valid-looking contract in hand – all it requires is the elder’s signature, right away. The reason for an immediate decision is typically tied to the other red flag – the out-of-town buyer is ready to leave.
To protect the elderly from real estate fraud, Ernster recommends two strategies:
Put assets in a trust
The best way to prevent elders from any type of scam is to ask them to put their assets in a trust, Ernster says. That way, the elders are no longer personal owners of that asset. As an example, an 85-year-old might sign a contract as an individual to sell his home under duress. However, if the property is in trust, the trustee must be the party to sign the contract for sale in order for it to be valid and binding.
Keep open dialogue
If a caregiver or family member has regular, open communication with the elder, frauds can be prevented. Ask your elder to never sign anything or give any personal information, such as a social security number or credit card numbers, without calling a family member first. “I see cases where the elder did not tell kids because they were embarrassed,” Ernster says. “This could have been prevented if the elder knew to call a trusted advisor first.”