A seller approaches you seeking a quick sale on a vacant lot. That seller communicates and interacts with you strictly via email and/or text message and uses words indicating urgency. The seller requests a list price that is less than market value. These are all potential red flags for seller impersonation fraud.
Seller impersonation fraud is a nationwide problem. In fact, the American Land Title Association recently reported the following:
“According to an October 2023 survey from CertifID, 54% of real estate professionals reported having experienced at least one seller impersonation fraud attempt within the past six months. Meanwhile, 77% of real estate professionals surveyed claimed to have seen an increase in seller impersonation fraud attempts within the same period.”
Seller impersonation fraud is right here in the DMV. In October 2023, NBC News4 I-Team aired a story about an incident in Montgomery County, Maryland where a fraudster attempted to sell a vacant two-acre lot in Potomac. In that case, the unsuspecting owner discovered his family’s property, which they’ve owned since the 1970s, listed for sale online. The ad described the property as, “a unique opportunity to own and build your own beautiful home” and requested cash offers. The owner tracked down the listing agent, proved his family as the true owners, and thwarted a potential fraudulent sale. However, things did not end there. The owner had prudently signed up for Google alerts on the property address and, sure enough, another fake listing for the property popped up online shortly thereafter – this time with a different listing agent. In this second instance, the new listing agent requested a valid driver’s license from the fraudulent seller which foiled the fraudster in his tracks.
An unsuspecting property owner in Washington DC was not so lucky. In February 2024, a U.S. District Court judge sentenced a Maryland man to 40 months in prison, $580,663.73 in restitution, and a $111,000.00 criminal forfeiture money judgment for fraud related to seller impersonation on a vacant residential property in the District. In this case, the fraudster forged signatures - for the real owner and the notary – on the deed and other settlement documents as well as on loan documents - ultimately transferring title to the property to a company that he owned and pocketing the proceeds from the sale. The fraudster then resold the property to another purchaser. The FBI’s Washington Field Office ultimately uncovered the fraudster’s scheme, but not without substantial financial implications for the unsuspecting true owner and the innocent subsequent purchaser.
Various criminal enterprises perpetuate these seller impersonation frauds and most originate overseas in regions such as eastern Europe, the Middle East, West Africa, China and Hong Kong. Others, such the Washington DC case referenced above, appear to be local. In the past, Florida saw the largest volume of these cases. Now, the problem has proliferated nationwide, runs the gamut from vacant land to residential to commercial properties, and plagues both rural and metropolitan areas. Thankfully, there are some red flags that can clue you in to a potential seller impersonation fraud and there are some best practices you can employ to stop a fraudster in his or her tracks.
Below are some realtor red flags. There are other clues and cues at the title and settlement phase such as the use of fake identification documents and fake notary seals, but this article will concentrate on those at the realtor level.
Realtor Red Flags Related to the Seller Location:
The owner’s mailing address on the property tax records is outside the United States.
The owner’s mailing address is in the United States but the seller claims to be living abroad or living in a state which differs from the mailing address in the tax records.
The seller may wish to use a Power of Attorney for closing and/or request a remote closing with his or her own notary or at a U.S. Embassy or Consulate.
However, please note that some fraudulent enterprises work with local accomplices who are willing to speak in person and sign in person.
Realtor Red Flags Related to Communications:
The seller communicates only via email or other electronic means.
Seller emails include language “fingerprints” including:
Use of the word “kindly” in lieu of “please;”
Improper use of religious terms, terms of friendship or excessive praise and/or friendliness;
Use of risk words indicating a possible negative action or outcome to you personally (examples include: concern, prevent, failure, avoid);
Use of negative words (examples include: shall not, never, must not, do not do).
The seller uses a generic email address pattern. (For example: johnsmith2020@outlook.)
Realtor Red Flags Related to the Property:
The seller seeks to list the property below market price.
The seller desires a cash buyer and a quick closing.
The property is “for sale by owner,” in the event you represent a buyer.
The property is unimproved land, vacant, or a rental.
There are no mortgage liens encumbering the property.
The seller claims that they do not have a social security number or tax ID number.
Realtor Best Practices:
Slow down and ask questions. As exciting as it may seem to have a potential seller who wants to close quickly, don’t let the seller’s urgency cause you to miss potential signs of seller impersonation fraud. The urgency of the fraudster’s alleged need to sell is an important component of the overall fraud scheme.
Request a valid form of photo identification upon first meeting with a seller. In the earlier example on the Potomac, Maryland property, the listing agent’s request for photo identification stopped the fraudster in his or her own tracks. Scrutinize the identification for anything unusual. You can also perform a reverse image search to see if the photo on the identification was pulled from the internet.
Set up a video call with the seller. Confirm that the person on the video call is the same person in the photo identification. Be aware of any last-minute changes such as the use of an image or photograph in lieu of the actual live person. Ask questions that a seller should know such as age, mailing address, date the property was purchased and price, number of bedrooms, bathrooms, etc.
Research the seller online. An online search can reveal useful information about an individual.
Mail a notification letter to the property owner in the tax records.
Confirm the seller’s location on the closing date. Be wary if the location varies from that in the tax records and/or photo identification provided.
Check the seller’s cell phone number and email address using online tools available. See https://phonevalidator.com/ and https://www.whatismyipaddress.com/.
Remember: If you employ due diligence, you can spot and stop a fraudster. Don’t feel like you are intrusive in asking questions; you are protecting innocent sellers in doing so and a legitimate seller should be grateful. You can always reach out to us at Vesta if you are ever in doubt. We may have additional tools that can help determine if there is a potential seller impersonation issue. As always, if you have specific questions regarding a seller or transaction, please seek legal consultation. Finally, the ALTA Homeowner’s (enhanced) Policy for title insurance affords certain protections to innocent purchasers in the event they become victim to a seller impersonation scheme.
References:
Czaja, Stanley J., Esq., ITP, SVP, Central Region Manager & Underwriting Counsel, WFG National Title Insurance Company. (2023 October 19). Safeguarding Against Seller Impersonation Fraud: The Top 5 Things You Need to Know! Slideshow. Chicago, IL, United States.
Frano, Sarah, VP, Corporate Underwriting, First American Title Insurance Company. (2023 May 16). For Sale by Fraudster, Slideshow. United States.