Ask HomeGain – July-August 2010 Issue

As featured in the July-August issue of the HomeGain Agent Success Newsletter under “Agent Question of the Month”:

QUESTION:

“I recently received a request from a prospective client through the AgentView program. The client resides out of the US. He sent me a check for $150,000 as an earnest money deposit. I sent the check to my title company who then deposited it in an escrow account.

I have heard about other agents doing this and there were some problems with the situation. Can you tell me if this is legitimate?”

ANSWER:

This is a very good question and we are glad you brought this up. Sometimes this situation is legitimate, but considering the world we live in, the state of the economy and our industry, we would suggest that you be very careful.

We understand that agents need the business, but this situation is generally a scam. It is a way for disreputable entities to launder money. What happens is just as you described. Once the check has been deposited into an escrow account, the depositor has a fiduciary responsibility for those funds.

So, the next step would be for the scammer to request some of the money back, say $120,000. Once they receive that money back, it is clean and they can use it for legitimate business purposes.

There have been instances when Homeland Security has stepped in to investigate and we are seeing this type of situation arise more frequently. The old adage applies: If it appears to be too good to be true, it generally is.

Most of these requests come from off shore. So, look at the source of the funds and make your best judgment. If you question the circumstance, it is best to ignore the request and check with local authorities who can provide you further advice or assistance.