What is Seller Impersonation Fraud?
Seller impersonation fraud occurs when a scammer poses as the legitimate owner of a property to sell it without authorization. The fraudster might use forged documents, hacked accounts, or other deceptive means to create a convincing but fraudulent scenario. This type of fraud can result in significant financial loss for buyers, as well as legal and financial complications for the legitimate property owner.
How the fraudsters operate:
In most cases of Seller Impersonation Fraud, the fraudster searches public records to identify property that is free and clear of a mortgage loan or other liens, often targeting vacant land and rental properties owned by foreigners or the elderly. The fraudster then poses as the property owner and uses an internet request, email or text message to hire a real estate agent or sell the property by owner. The property is generally listed below market value with a request for an all-cash buyer and a quick closing.
When it comes to scheduling a signing appointment, the fraudster offers an excuse for not being able to sign documents in-person and requests to use a mobile notary. Then, impersonating the notary as well (or with the help of a co-conspirator), the fraudster delivers falsified documents to the title company or closing attorney. Once the transaction closes, the buyer’s funds are unknowingly wired to the fraudster’s bank account. The discrepancy in ownership is often not discovered until documents are recorded with the county clerk’s office, or months or years after the transaction has closed.
Here are some potential red flags to look out for:
Communication is strictly via email or text. The seller uses a multitude of excuses not to have an in-person meeting or video chat.
The seller has no documentary evidence linking them to the property.
The seller provides a different address than the property address or tax mailing address.
The seller wants to list the property below market value and to only accept offers from all-cash buyers.
The seller advises the real estate agent not to post a “For Sale” sign on the property.
Persistence about a quick closing, even willing to offer incentives or cut corners to close sooner.
Demands to use their own notary (to provide falsified documents to the title company or closing attorney).
Precautions to Take
To help combat the risk of becoming a victim to seller impersonation fraud, consider taking the following precautions throughout the real estate transaction.
Ask the real estate agent if they have met the seller in person or have otherwise verified the identity of the seller or used a third-party vendor to verify their identity.
Ask questions to learn the seller’s knowledge of the property that is not readily available in public records.
Mail a letter to the owner of the property at the address listed on tax records.
Contact the owner at an independently discovered and validated phone number.
Require notarization from a vetted and approved notary. If remote online notarization is not available in the state where the property is located, the title company or closing attorney should arrange the notary appointment.
Compare the seller’s signature to the signature of the owner shown on other recorded documents.
Follow your instincts, as they are generally the number one indicator of suspicious activity.
Always deal with professional real estate agents and closing agents who have experience.
What to Do If You’re a Victim
If you suspect that you are a victim of seller impersonation fraud, it is vital to act fast! File a fraud report with local and state law enforcement, the Federal Trade Commission at www.ftc.gov and the Federal Bureau of Investigation (FBI)’s Internet Crime Complaint Center at www.ic3.gov.
Conclusion
Seller impersonation fraud is a serious and growing threat in the real estate industry, but with vigilance and proper precautions, you can protect yourself and your investments. By understanding the tactics used by fraudsters, recognizing the signs of fraud, and taking proactive measures to verify the legitimacy of sellers, you can reduce your risk and ensure a safe and successful real estate transaction.
Feel free to share this information with others in the real estate community to help spread awareness and prevent fraud. Together, we can make the real estate market safer for everyone. Learn more at www.closewithsun.com
Comments