We receive at least one claim per month involving a fraudulent “seller,” meaning the fraudster pretends to own a property and lists it for sale with an unsuspecting agent. Often, the fraudster
impersonates the real owner and creates email and phone numbers that direct all communication to the fraudster. Claims arise against the listing agent, buyer’s agent and even escrow when parties discover the transaction was fraudulent.
But, there are ways to avoid these types of transactions.
Pay attention to these red flags:
• The agent is contacted online by an “out of area” seller.
• The seller is looking for a quick sale and will often list the property below market value to effectuate the sale.
• The property involves vacant land, which is true in 90% of fraudulent transactions.
• The seller cannot meet in person because they claim to live “out of the area.” They prefer to use What’s App, email, text and calls but often refuse to “meet” on camera.
If you are the listing agent:
• Be upfront with the “seller” and explain that due to the increase in fraud, you need to confirm that the seller is the legal owner. That statement alone may scare off the fraudster, while a real seller will appreciate your due diligence.
• Ask for a government-issued ID. Look up tax records to get owners’ names. Does the ID match the owner’s name?
• If the seller doesn’t have ID, or needs time to “find it,” that is a red flag. Most people can pull their licenses out of their wallets on the spot.
• Ask for property tax bills/payment records, utility bills and water/sewer bills; real sellers will have this information.
• Visit the property. Ask the seller questions unique to the property. Do not ask questions that can be answered by an online search or looking at Google Earth.
• Beware of below-market prices. Also, beware if the seller “needs a quick sale,” regardless of the reason.
• Let the listing agent know fraudulent sales are occurring with imposter sellers. Has the listing agent attempted to verify the seller’s authenticity? If so, what did they do?
• Ask for copies of the seller’s property tax payment records. Sellers should have payment confirmation from the state/county. Ask for copies of utility bills, water/sewer, etc.
• Make sure the buyer purchases title insurance.
Common practice:
As with any transaction, it is always best to have a written trail so if there is any question about what was said and when, it is in writing. Save text messages and emails in your records and confirm verbal conversations in writing.
If you suspect the transaction is fraudulent, immediately contact the lender, other agent, title, escrow/closing attorney and law enforcement.
