Beware of Real Estate Seller Impersonation Fraud

Red Flags and Tips for Avoiding the Scam

Seller impersonation fraud is the hottest new real estate scam being perpetrated throughout the nation. CertifID, a fraud detection and protection company, says that almost three out of four real estate firms have seen an increase in this kind of fraud since the beginning of 2023. The company did a survey in October 2023 that found that 54% of real estate professionals have experienced at least one seller impersonation fraud attempt within the previous six months.

What Is It?

The basic facts of the scheme are the same. A purported seller contacts a realtor to list a piece of property for the seller. The person claiming to be the owner says that they are out of town or out of the country and will need to handle everything electronically. They refuse to be present at the closing and are unwilling to do video conferencing with the realtor or the closing firm. The purported seller does provide an ID or driver’s license that appears to be legitimate. The scammers are sophisticated. They search the public records before they contact the realtor and find properties that are vacant land and have no liens. They almost always ask to list the property below market value and want an all-cash deal. The scammer uses the fake ID to get the closing documents notarized by a remote notary. If the scam is not discovered, an innocent buyer purchases the property and later discovers that they do not have good title. The seller must then clear the title, and the buyer must make a claim against their title insurance policy.

How Can You Avoid It?

To avoid this kind of scam, you should watch for some combination of the following red flags:

• The purported seller says he is out of town and can’t be present for closing and is unwilling to do video conferencing.
• The seller is in a rush and wishes to move quickly on the sale.
• The property being sold is vacant land and has no liens.
• The seller wants an all-cash deal.
• The listing price is below market value.

If you see most or all these red flags, you should do additional due diligence to confirm the seller’s true identity. Here are some steps you can take to root out the fraud:

1. Insist on receiving a high-quality color copy of the person’s driver’s license.
2. Insist on a video conference with the seller. If the seller refuses to do at least a video conference, you can probably safely assume that it is fraud.
3. Don’t let the purported seller rush you. Put the brakes on the transaction until you have been able to confirm the seller’s identity.
4. Ask the seller to send you copies of their closing documents from when they purchased the property.
5. Ask the seller to provide you with a copy of the seller’s most recent tax payment receipt.
6. Use reverse phone look up to determine whether the number being used by the seller matches the name of the owner of the property.
7. Consider talking to neighbors to see if you can get independent contact information about the owner. By talking to the neighbors about the intended sale, the neighbors might reach out to the true owner to see if they are really selling. Many of these scams are thwarted because of neighbors getting involved.
8. Ask the purported seller a question about some unique aspect of the property that only the owner or someone who has actually visited the property would now. For example, you might ask where the old tobacco barn is located on the property in a situation where you know that there is no tobacco barn on the property. If the seller gives you any information about the location of a tobacco barn, you will know that it is a fraud.
9. Trust your gut. If it just doesn’t seem right, it probably isn’t.
10. Enlist the services of a fraud detection company like CertifID.

If you have satisfied yourself that the transaction is a fraud, report the matter to the FBI’s Internet Crime Complaint Center (IC3). If possible, track down the true owner to let them know that someone is attempting to sell their property.

By watching for red flags and engaging in due diligence after the flags are spotted, you can substantially reduce the risk of falling for these schemes.