The home-sharing economy is heating up. Inevitably, more and more of us have been getting fleeced on fake vacation rentals.
Vacation planning often begins with excitement, optimism and nowadays the Internet. The online search leads far into a world of glossy photos, descriptive blurbs and, of course, countless promises of customer satisfaction. Even if you’re not inclined to rent a stranger’s house, you may find that for the most popular destinations, traditional hotels are booked or inadequate. So renting a vacation home is a natural alternative. According to the Vacation Rental Managers Association, 24 percent of leisure travelers report having stayed in a vacation home, up from around 11 percent in 2008.
Before the Internet, the search for a private vacation rental was slow and impractical. It involved trading a lot of phone calls, mailing printed packages and coordinating to solve all kinds of problems. Hoteliers like Marriott, Hilton and Hyatt Hotels built empires based on the wealthy traveler’s desire for luxury and reticence to deal with this process.
Then along came online portals like VRBO, Airbnb and Craigslist. All of a sudden, we’re in the mood to share.
For the most part, the rise of all of this house sharing has been positive. Sophisticated channels like Airbnb and HomeAway try especially hard to protect renters by providing secure payment, user comments and star ratings. But even they are not immune from deceit.
Vacation rental scams come in many different forms. Some Web portals are run by technologists with no connection to the actual real estate. Through smart search engine optimization, these sites attract users, and then sell the lead to the true agent, who offsets the cost with higher rent.
The worst rip-offs seduce would-be vacationers with fabulous pictures of fictitious properties. Once the renter is hooked, the phony landlord collects an up-front “security deposit” and runs for the hills. Victims are left unaware they’ve been cheated until weeks later, when they show up at the address with their luggage in hand.
Other variations on the scam are only slightly less fraudulent. Some fakes use the bait-and-switch method by showing unavailable properties, only to divert the renter to another, less desirable spot. Other tricksters may double-book a property, then send whichever vacationer arrives last to a second-rate backup, along with sincere apologies.
You’re too sharp to be ensnared in any of these scams, right? Real estate is my business, so I used to believe the same thing. Then I tried renting a vacation home in Aspen, Colorado, for a summer holiday.
I found many remarkable online listings — only to discover after contacting their presumed representatives that the properties were always booked. After many failed tries and long phone calls I realized I was being conned. I stopped browsing and hired a high-quality local real estate broker to show me real listings.
My experience could have been worse — some friends from Germany were recently snared here in Miami. Fortunately, they insisted on withholding their security deposit from their seemingly delightful contact until after completing a property inspection. Still, she pressured these visitors to wire funds — right up to the time they were driving to the property after their long flight. Having stood their ground, they arrived at the home, which appeared exactly as it did online. Unfortunately, it was occupied by its unsuspecting owner — who had no intention to rent. Of course, my friends never again succeeded in connecting with their agent and had to scramble to locate a hotel room.
Why aren’t authorities cracking down? Perhaps because the dollar figures involved in each case simply aren’t enough to justify an intercontinental examination. The victims, by definition, don’t live anywhere near the jurisdiction of the reported crime. Most often, the crooks don’t either.
So how do you protect yourself? Here’s a list of 10 ways to combat this scam:
- Don’t be fooled by photography. In particular, be wary of the nicest-looking, most Photoshopped property photos. Ask the owner for additional photos — an honest lessor will always have them. Or ask your agent to use technology like FaceTime or Skype to show you the property live. At the very least, use Google GOOG -0.11% Earth and Google’s Street View feature to confirm that the property you’re renting actually exists at the address advertised. You can also use those Google tools to get an unvarnished look at the property’s exterior.
- Be careful of the cheapest properties. If prices seem too good to be true, they probably are. If you don’t have a feel for what a reasonable price is in an area, get one. Scammers often go after people who aren’t that savvy. And drive a hard bargain — not just to get a better deal, but also to detect odd behavior from the other party.
- Never pay with cash. The preferred methods of payment among criminals are cash and cash-transfer services like MoneyGram and Western Union WU 0%. Use a credit card instead — Visa, MasterCard and American Express will all allow you to recover money you lose to fraud. Reputable sites like Airbnb will hold your security funds in escrow. They play middleman, making sure you’ve put the funds in place before you get keys. (Some portals offer insurance against fraud — but it’s expensive and may not cover much; read the policy closely.)
- Use a trusted local agent. Yes, you should expect to pay them. But they can show you bona fide listings or go look at the properties that you’ve seen on the Internet for you. Be sure to check their license.
- Confirm legitimacy. For ownership and all documents, confirm that the owner’s name on the lease is the same as the one shown on public property appraiser records. Then have a lawyer review the lease, just like you would a full-year agreement.
- Read the comments. The feedback from previous renters that appears on sites like Airbnb and VRBO is invaluable. And in some cases, you’re even allowed to pose questions to other users.
- Trust your instincts. If you apply some skepticism to the process, you’re more likely to see red flags. You’re also more likely to catch suspicious behavior. My Germans looked back after their experience and realized their phony realty agent had exhibited all kinds of weird tics. They were so excited about their trip to Miami that they failed to pick up on them.
- Take your time. No need to rush. For long vacations, consider going ahead of time to check out the property, or not renting a house for the first week — stay at a hotel for a few nights. It will give you an opportunity to see the property you’re renting in person before turning over your security deposit.
- Be a regular. If you rent a home you like, stick with it. You’ll develop a relationship with the owner if you go back to the same place year in, year out — and avoid the risk of being scammed on a new property. If you’re traveling to a new place, try to find a friend who lives there and will give you honest feedback on potential rentals, good neighborhoods, etc.
- Beware group think. If you’re vacationing with a half-dozen other people, everybody tends to figure that somebody else is paying attention to the details and making sure the group isn’t getting ripped off. Then, when the amazing six-bedroom place you all rented together is nowhere to be found and your security deposit evaporates, everybody’s pointing fingers.