Pete Howlett has a message for them: buyer beware.
“Craig’s List has become a haven for the unscrupulous,” he said. “It’s not what it used to be, and Craig’s List is not trying to fix its problems. They just let anyone put their ads up.”
Howlett’s biggest concern is with Craig’s List’s housing category, which include ads for rooms to rent or share, sublets, temporary housing, housing swaps, vacation rentals, office or commercial leasing, and real estate for sale. With the Florida housing market still struggling to recover from a sky high home foreclosure rate, scams and bad deals have become all too common, Howlett said.
“I think if people stay away from Craig’s List as far as real estate goes, they’re probably in a better situation,” he said. “An ad for a five bedroom home for $600 a month — that doesn’t make sense. Nowadays, you get a person out of Africa saying ‘Send me the money and I’ll send you the key.’ There are some deceptive people out there who prey on the uneducated.”
Howlett is a Realtor in the Four Corners area, and sells houses from his office, Orlando Vacation Realty, in Davenport. He also runs a property management business that has struggled at times to learn if property owners are facing foreclosure when they attempt to rent their home.
“Most consumers are not able to access that information,” Howlett said. “A title insurance company can check to see if any liens have been put on the property or if there have been any public notices, but your average tenant can’t check that. That’s why they’ve got to be careful.”
Howlett said a big problem is property owners who rent their home, accept a security deposit, and begin collecting the monthly rent – but don’t apply that to their mortgage. As a result, they collect what they can before walking away from the property, leaving the tenants in limbo once the bank starts foreclosure proceedings. In some cases, Howlett said, it’s the tenants who get served the foreclosure notice, not the owners.
“It could be a case where it’s an owner who is not making his mortgage payments and just wants to collect the rent. They say, ‘Pay me directly,’ and they don’t have a management company,” Howlett said.
When the tenants get left behind after the homeowner walks away from the property, “There’s no one to help them. Sometimes they have a security deposit that they give to the owners, and the owner uses that as well.”
In Florida, property owners are required to put the security deposit into a separate account and not comingle it with their own personal bank account. But Howlett said very few property owners bother doing this.
“There’s definitely that requirement for real estate brokers,” he said. “I think the percentage of people who take that money and put it in a special account is less than 5 percent.”
Howlett said prospective tenants should contact a reputable real estate agent when they want to find a home or apartment to rent, and skip the Craig’s List ads altogether. Property owners, he added, should hire a management firm to oversee their property rather than try to go it alone. And tenants should contact a management firm as well, to see if they have properties available that are not at risk of foreclosure.
“I think they need to go through a reputable management company that screens the owners, too,” he said. “The good part of going through a management company if you’re a tenant is at least you know your security deposit is safe. A management company can show you they have proof they’re the actual person allowed to market the home. And you should go through a Realtor. If we’re deceptive, we could lose our license.”
Because all too often, he said, sites like Craig’s List have become a better deal for scam artists than legitimate property owners.
“There’s too many people saying ‘Hey, this is a great deal,’ “ Howlett said. “Well, why is it a great deal? It’s not.”
Brooke Thompson, a Realtor who runs Premiere Realty in East Orlando, said she has used Craig’s List to find clients or run ads for sellers in the past, with success. But she acknowledged that tenants are more anxious these days about getting into a home that might fall into foreclosure.
“I know a lot of people will ask me if the mortgage is current, and they want some proof of that,” she said. “They’re heard about people who rent a home and then it goes into foreclosure and they get kicked out, and they want to be sure that won’t happen to them. I’m able to show the people proof that the mortgage is current. But if you’re a tenant in that situation, there’s not much you can do.”
She said Fannie Mae – the agency that provides financial products and services to increase housing options for low and moderate income families – is working out deals with some tenants to allow them to live in a home a bit longer, even if it’s being foreclosed on.
“Other banks just don’t care,” she said. “It’s gotten bad. A lot of tenants now don’t want to deal with Realtors, because I think their credit is a problem, and what I think is happening is the Realtors are being strict with the requirements, and it’s forcing people to go to the private owners. That’s what’s creating these opportunities for scam artists.”
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