San Diego’s luxury real estate market is highly competitive, attracting serious buyers from around the world. However, it has also become a target for real estate scammers posing as wealthy buyers. One of the most dangerous schemes involves fake buyers providing fraudulent proof of funds, entering escrow, and moving in before closing—only to become squatters.
This scam can leave home sellers in San Diego dealing with costly eviction proceedings and months of stress. As an experienced San Diego real estate broker, I have seen tactics like this firsthand and know how to protect home sellers from fraud.
How the Luxury Squatter Scam Works
The scam follows a calculated pattern where fraudsters gain access to a luxury property and refuse to leave. Here’s how it typically unfolds:
1. Fake Wealth Presentation
- Scammers pose as high-net-worth buyers looking for luxury condos or single-family homes in Downtown San Diego, La Jolla, Coronado, or Del Mar.
- They provide fraudulent proof of funds or fake bank statements.
- Some claim to be foreign investors, celebrities, or tech entrepreneurs to avoid deep financial scrutiny.
2. Viewing the Home & Entering Escrow
- They tour the property and show serious interest.
- A purchase offer is submitted, and escrow is opened—often with a low or fake earnest money deposit.
- They may offer to buy the home fully furnished, negotiating a separate bill of sale for furniture to create a legal loophole.
3. Requesting Early Occupancy
- The fake buyer asks for early possession before the sale closes, citing reasons like:
- The need to start renovations.
- A delayed move-out from their current home.
- A job relocation or personal emergency.
- If the seller agrees, the scammer moves in before escrow closes.
4. Escrow Falls Apart & Squatting Begins
- The buyer never funds the escrow, and the deal collapses.
- Since they now have possession of the home, they refuse to leave.
- The seller must go through a formal eviction process, which in California can take months due to strong tenant protection laws.
How Sellers Can Protect Themselves from This Scam
As an experienced San Diego listing agent, I take proactive steps to protect sellers from real estate fraud. Here’s what you should do to avoid becoming a victim:
✅ Verify Proof of Funds Thoroughly
- Always confirm bank statements directly with the financial institution.
- Require a verified proof of funds letter from the buyer’s bank.
- Be cautious if a buyer refuses to provide recent bank statements.
✅ Require a Significant Earnest Money Deposit
- Legitimate luxury buyers are willing to put down a substantial deposit.
- Request non-refundable earnest money to prevent fraudulent buyers from backing out easily.
✅ Never Allow Early Occupancy Before Escrow Closes
- Do not allow buyers to move in before closing and title transfer.
- Even if they offer additional money for early occupancy, it’s a major red flag.
- In California, once someone takes possession, they could claim tenant rights, making removal difficult.
✅ Work with a Trusted Real Estate Professional
- As a San Diego real estate expert, I ensure all buyers are thoroughly vetted before entering escrow.
- I work with reliable escrow and title companies to track funds and prevent fraud.
Selling a Home in San Diego? Let’s Protect Your Investment
Selling a luxury home in Downtown San Diego, La Jolla, or the 92101 area requires an expert who understands the risks and knows how to navigate potential scams. If you’re thinking about selling, I can help ensure your transaction is secure, smooth, and successful.
📞 Contact me today to discuss your home sale strategy and how I can help you maximize your sale price while avoiding real estate fraud.
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