Why You Should Never Give Cash To Real Estate Agents (And What To Do Instead)

An alleged real state agent was arrested by the NBI for complaints that she pocketed money meant as payments for the purchase of house and lots. Let me share some lessons learned and tips so that you can avoid becoming a victim of similar real estate scams.

I often hear the same horror story from first-time home buyers I meet, and it makes me angrier and more sad because the victims are mostly OFW’s, and seafarers, who sacrifice a lot but end up losing their money.

I believe that when buyers become too trusting and give their cash payments to brokers/agents, that’s when the problem happens. Just listen to the victims in the video below.

Source: GMA News youtube channel

Lessons learned

1. Buyers should never give cash to their real estate broker/agents… period! When it comes to foreclosed properties, just about every bank/lending institution I know don’t allow their accredited real estate brokers/agents to accept cash from buyers. The same applies to properties from developers. It’s obvious that a lot of things can go wrong like:

• They (the real estate broker/agent) might get tempted to use or keep the money for themselves
• For scammers/con-artists, this is a perfect chance for them to get your money
• What if they get robbed before they’re able to remit the cash to the seller (or what if the money gets lost)?

2. Don’t be too trusting – Yes, we can all get easily swayed by nice words. In the video above, victims said the alleged real estate agent was very nice, sweet-talking, and very accommodating, which is probably why they entrusted their cash payments to her (later one lamented how hard it was for him to earn the money, only to discover it was not paid to the developer… so sad!). It’s still best to be NOT too trusting. Too much trust opens the door for scammers/con-artists (mga estafador) to get your hard-earned money.

3. Ask to talk with the alleged real estate agent’s real estate broker – In the video clip above, there was no mention at all if the alleged real estate agent was under a licensed real estate broker. Under the RESA Law, Real estate salespersons (also referred to as real estate agents) must be registered under a real estate broker. The lack of which may mean your agent is a colorum.

What should you do instead?

Here  are a few suggestions you can do instead, which should help you avoid the problems above:

• Issue checks to the seller/developer. If you really want to remit payments through your broker/agent, you should issue checks with the seller written on the check as payee. This means the check is worthless to anyone else, and it’s safe for you to ask your broker/agent to bring the check to the seller/developer for you. Of course, you need to monitor your checking account if your check has been en-cashed/deposited. However, checks can also get lost, and this brings me to my next suggestion…
• Pay directly via bank deposit/wire transfer/etc. – A smarter thing to do would be to just pay the seller directly via bank deposit/wire transfer/etc., you just need to secure the correct details of the seller/developer. Afterwards, you can just ask your broker/agent to do the legwork of bringing the deposit slip/transaction details to the seller/developer, if the seller still requires it. (You might be thinking “Why don’t they just check their bank accounts”. Well, you can expect big developers to have a lot of transactions so it might be hard to identify your payment.).
• Whatever payment method you do, always check if they were credited – In the video, one of the victims mentioned that he only checked with the developer after a year. If only he checked earlier, then he would have known that his cash was not reaching the developer. So please, make it a monthly habit to get your statement of accounts to verify that your payments do get credited!

Bonus tip: Always keep a scanned copy of the deposit slip/transaction, and keep it somewhere safe, and is easily accessible (ex. Dropbox, Evernote, Google drive, etc.) for easy retrieval when needed.

Final thoughts…

I believe that for those familiar with foreclosed properties, it’s common knowledge that buyers should never give cash to real estate brokers/agents. It’s common knowledge because banks/lending institutions often remind buyers and brokers/agents. So here are some suggestions…

For sellers/developers: I hope you will also issue similar reminders for first-time home buyers, much like how banks/lending institutions do it, as described above.

For first-time home buyers: Please don’t be shy and ask questions, most especially when it comes to your payments! Don’t be afraid to ask if your payments are being credited accordingly. If you are abroad, and it’s hard to contact the developer, ask a relative/friend to help you.

As a licensed real estate broker who used to actively sell foreclosed properties, I have personally seen how most first-time property buyers expect the broker to do the the legwork for them, including payments (What I do is I explain why they should just remit their payment directly to the seller, which in my case are the banks). This brings me to my last suggestion…

For real estate professionals: Always advice buyers to remit their payments directly to the seller, and please don’t accept cash from buyers to begin with!

One last thing, they said they will file a case of estafa and also mentioned the Cybercrime Prevention Law because the victims learned about or met the real estate agent in social media… so please be very careful with what you find on facebook, etc… not everything online is true, so please don’t forget to do your due diligence!

If you have other suggestions, please feel free to share in the comments section below. Thanks.