What is Nigerian 419 fraud?

Most of you probably receive dozens of annoying spam mails every day. The majority of these emails is harmless and aims to make you buy some useless product. There are many spam mail senders, though, who aim to con you. In order to succeed, they may ask you to type your credit card number or your web banking access codes claiming they are your bank, or pay a small deposit in order to receive a large amount of money that you've won. Methods are countless and in most cases the worst that can happen to you is loosing your money. Still, there is a group of spam mails which, among others, is extremely dangerous and can cause you even more harm.

Let's see an example: Someone receives an email from a lawyer's office that claims he inherited a large sum from a distant relative who lived abroad and passed away. If the recipient contacts the senders, then he sets out a circle of frequent contacts that aim to convince him of the initial claim. Finally, the heir is asked to travel abroad in order to obtain what he inherited, carrying an amount that will cover lawyer and notary expenses. As you've figured, no part of this story is real but, if the victim decides to travel abroad, then he will have done a tragic mistake. Victims of this type of fraud usually loose huge amounts and, sadly, in many cases they end up abducted for ransom or even murdered.

Fraud cases where the victim is asked to pay an advance fee in order to receive a larger sum are called Nigerian 419, due to where they initially showed up in a large scale. If you believe that you couldn't possibly be duped by the above story, then note that Nigerian 419 frauds come in many variations that evolve and get more and more convincing every day. Victims are convinced by several means; what would you believe, for example, if they claimed that they've deposited $100.000 into your banking account which you would be able to see with your own eyes by checking your balance online?

Nigerian 419 real estate fraud

"Hello, I am interested in the property of this advert and would like some further information. Please, contact me at 0039.349.610.XXXX.
Regards, Michael Fares."

No matter how innocent or common it seems, this is one of the many Nigerian 419 emails that we have received in the mail addresses of our agency. The past few years, Nigerian 419 scams have spread widely into the field of real estate. And, as the financial crisis continues, the number of such emails hits top due to the ease of convincing people who are desperate for cash. For one of our agency's expensive properties, for example, 70% of the requests we've received until now was a Nigerian 419 mail.

How to distinguish a fraudulent email
The above email does look like an actual buyer's request but it's not exactly the same. Fraudulent real estate request emails are usually sent through contact forms by automated programs and in large numbers all around the globe. What this means is that the sender has never read your advert before sending the message and, as a result, he has no idea what it is that you are selling. The fact that the sender is asking for “further information” instead of, for example, how many bedrooms the house has, is a warning that this is a fraudulent request.

Any seller, though, would call that telephone number in order to find out what this is about and common sense agrees with that. In that case, try to find out if the sender knows what you are selling. If it is a fraud, then this will be the first thing he is probably going to ask. If your advert included important characteristics of the real estate property (such as selling price or location) and the person at the end of the line has no idea about it, then this is almost certainly a fraud and what we recommend you to do is hang up the phone.

If you didn't realize this was a fraud from the beginning
Nigerian 419 impostors are most times persistent and will try to convince you to their identity by many ways. Even if you rudely hang up the phone from the very first call, you may still receive a second call where they will try to convince you that they really want to buy the property. A common tactic of cons is to ask you to visit their website or check their name in a big brand's employees' lists. But remember that, even if you see the number you dialed on hilton.com, nothing is impossible on the internet, especially when it comes to criminals trying to steal a huge amount. In general, the impostors will do their best to convince you and gain your trust, even if it takes them months to succeed.

Commonly, what you will be asked to do is to pay an advance fee for a reason that in some cases may even sound reasonable. Another possible outcome would be you receiving their advance fee by a counterfeit check. The scammers will then ask you to cash the check and send them the money through bank or wire transfer, claiming they want to cancel the purchase. Some scammers may ask you to travel and meet them abroad, which is extremely dangerous. No matter what the reasons or circumstances are, do nothing from what they ask you, even if it sounds completely safe.

If you suspect that you have been dealing with scammers, ask for advice from an expert and report the incident to the local authorities. Be very cautious if you have revealed your personal data to the scammers, such as your credit card, bank account or even your passport number.

Let's see what has happened in Greece since the beginning of the crisis.

Unlike what happened in other countries, the Greek real estate market followed a different path. Sales started to drop a bit earlier at the end of 2006. That year's government pre-announced an increase in real estate objective values and taxes in newly built houses. As so, many buyers were forced to an earlier purchase, bringing a 35% increase in real estate sales. As expected, this caused a mini-bubble in the Greek real estate market, followed by a subsequent sales decrease that was continued in 2007 due to the financial crisis.

From 2006 to now, sales have dropped by over 70%, changing drastically the way the Greek real estate market operates and reacts. This huge drop, however, seems to exceed the damage the crisis should have caused. In his analysis, professor I. A. Mourmouras¹ states that factors such as the informal economy, the large number of public sector employees and the small number of exporting businesses have mitigated the impact of the financial crisis in Greece. What this means for the real estate market is that, those who want, need and can afford to buy property are more than those who actually buy. In other words, the crisis is present but it is not enough to explain the huge drop of real estate sales.

As many analysts, realtors and constructors state, sales reduction is mainly caused by the fact that buyers are waiting for prices to drop. This is also confirmed by our experience, as well as by the large number of potential buyers who, nevertheless, do not proceed to a purchase.

Real estate 2010 estimates

In general, analysts agree that the real estate turnover will depend on whether constructors are going to decrease selling prices, on the number of loans that banks are willing to dispose, on the Greek government measures to enhance the market, as well as on the overall condition of the Greek and global economy.

No matter how many these parameters are to get to a clear conclusion, more views support that there will be no significant change in the market of 2010 in comparison to 2009. The major argument to support this scenario is that banks have already announced their intentions, planning to decrease even more the number of those who are eligible for a loan. The government has also announced its intentions (increase of objective values while decreasing real estate purchase taxes, taxing farm land properties) and the measures it is willing to take are going to have little effect on how the market will operate within the following year. The Bank of Greece shows a small decrease in selling prices and this seems to be another negative factor. In 1994 someone needed 2.6 salaries to get a square meter of a house in a regular urban area. In 2006 this same rate rose up to 4.8, while in 2008 it dropped back to 4. The large increase of this rate within a little more than a decade is thought by many to be the sign of the Greek real estate bubble that is yet to burst.

Before you rush to agree with the above aspect, let's consider a few more facts. For every 10 real estate property sales in 2006, today only 3 are carried out. As explained above, this decrease is largely due to psychological factors. Moreover, the market is flooded with approximately 190.000 offered properties, number which is extremely large, considering the small size of the Greek real estate market. This large number of properties generates a huge competition among sellers, forcing them to drop selling prices by even 40% in comparison to the prices of 2006. The estimate is that the combination of the large number of potential buyers with the continuously growing number of bargains will soon set off sales, even though they are expected at moderate numbers. It will probably take time for the market to rise up to the levels of 2006, but what we believe is that there will be many seekers of quality properties offered at low prices during 2010.

Buyers know that at this moment there are many bargains out in the market. They also know that these bargains will not be there forever. There are many investors who can afford to buy and who will gradually start to empty the market of underpriced properties. The intentions of our clients also seem to be at the same direction and as the global market begins recovering, a few international buyers have also started showing some interest. We are only left to see what 2010 is going to bring but what we strongly believe is that the worst is behind us.

References:

• «Naytemporiki» Newspaper: BoG: 48.8% reduction in real estate sales (in Greek)
• I. A. Mourmouras: The financial crisis and the prospects of real estate (in Greek)
• «To Vima» Newspaper: Hard times for the real estate market in 2010 (in Greek)
• «Imerisia» Newspaper: Properties: The BoG predicts new drop in house prices (in Greek)
• «I Kathimerini» Newspaper: There seems to be no recovery in 2010 (in Greek)

¹Ioannis A. Mourmouras is professor of Economic Sciences at the University of Macedonia and president of SOE.

Let's review a simple example;

A UK citizen bought a vacation property in 2005 at €150,000 which then equaled approximately £100,000. As his family budget was running low, he decided to put his property on sale in 2008, aiming to sell without losing any of his money. What he does is offering the property at the price that he bought, adding purchase fees and taxes to it. So, selling price is £110,000, which in 2008 equals to approximately €120,000. Summer is known to be the real estate selling season in Greece and, as summer of 2009 passes, the seller realises there is low interest in his property. The property remains unsold and he decides to reduce selling price at €95,000, even though he is going to lose a part of his investment.

In tourist regions like Crete, the above case is common. Moreover, even prices reduced by 35%-40% remain negotiable, fact which makes such opportunities especially attractive. As normal, buyers will pay much more attention on the property of our example and will force other prices to drop. Besides our example, a constantly growing number of owners and constructors who cannot pay their loans have also dropped selling prices down to 40%.

There always were and there will always be bargains in the real estate market but, at the time being, their number is impressive and, if you already have the budget, it's a perfect time for a profitable purchase.