Fraud and impersonation crimes have been on the rise over the past decade, especially in the real estate sector. Fraudsters are criminals that illegally sell commercial or residential properties while impersonating the actual property owner. The more sophisticated fraudsters use property owners’ real social security and driver’s license numbers in transactions. They also use legitimate, notarized documents, often without the notary’s knowledge. Even though seller impersonators are becoming more advanced in their practices, there are plenty of steps buyers can take to avoid falling victim to seller impersonation fraud.
Impersonation Fraud Red Flags
1. Property red flags
Buyers should be cautious when evaluating a property to buy. Properties that are vacant or not occupied by the owner, like investment, vacation, or rental properties are at a high risk for seller impersonation fraud. Another thing to look for is a matching address. If a property address doesn’t match the address belonging to the owner or the tax mailing address, there is room for suspicion. Looking for outstanding mortgage or liens on a property is another good way to verify property authenticity. Lastly, buyers should proceed with caution when a property is listed or sold below market value because this can be a sign of problems with the property or documentation.
2. Seller red flags
When doing business with a seller, buyers need to be sure they are dealing with the actual property owner. Buyers should be careful when a seller wants to push through a quick sale, doesn’t negotiate fees and pushes for a cash buyer. Buyers should also be wary of sellers that are difficult to reach, claim they are out of the state or country or only communicate via text and email messages, never in person or video call. Some impersonators also demand the proceeds be wired and insist on using their own notary. If a seller is demonstrating any of these traits, buyers should take steps to make sure they are dealing with a legitimate seller so they can avoid seller impersonation fraud.
Precautions Buyers Should Take
1. Use independent sources to contact the seller
Buyers who want to avoid seller impersonation fraud should contact the seller a few different ways through verified lines of communication to make sure they are communicating with the correct person. Buyers should independently find a verified phone number they can use to call the seller directly. Buyers should also send mail to the seller at the address on tax records, the property address and the grantee address. Another step buyers should take is asking the real estate agent if they personally know or can verify the seller’s identity.
2. Control the notarization process
Because fraudsters often want to control the notarization process, it is important in real estate transactions to use a vetted, approved notary selected by the title company. This normally involves finding an attorney’s office, title agency or bank that uses a credential scanner or multifactor authentication in their document execution and arranging for the seller to go to the allocated location.
3. Verify the identity of the seller
One of the most important parts of a real estate transaction is making sure the seller is who he or she says. One way to verify a seller’s identity is by sending a link to go through an identity verification process through a third-party service. Buyers should also use a verification program to run the seller’s email and phone number through to make sure they belong to the property owner. It is also good to ask conversational questions to the seller, making sure the answers can’t be easily found in public records.
4. Research public records
Throughout the real estate transaction process, a lot of signatures take place. One way for buyers to make sure a seller is legitimate is by researching signatures on previously recorded documents and comparing them with the ones on the documents that they are currently handling. If they don’t appear to match, the buyer could be dealing with an impersonator. Buyers should also compare the property price to previous sale prices, appraisals, and tax appraisal values to make sure they aren’t drastically different.
5. Disbursement process
Another way sellers can exert control over the transaction process is by controlling the disbursement process. It is recommended that buyers use a wire verification service, or manually confirm the wire instructions provided match the account details on the seller’s disbursement authorization form. Buyers should also obtain a copy of a voided check along with the disbursement authorization form. Sellers can also require a check to be sent instead of a wire for seller proceeds.
Even though seller impersonation fraud is on the rise and fraudsters seem to come up with new ways to impersonate sellers every day, buyers can protect themselves from becoming victims by executing due diligence and staying cautious throughout the transaction process. County recorder’s offices are also helpful in offering property monitoring services, and buyers also have the option to purchase the American Land Title Association Homeowner’s Policy of Title Insurance which provides additional protection against fraud.
Landmark Title Assurance Agency has an experienced and dedicated team of escrow and title officers committed to ensuring a secure and seamless closing. Our team of knowledgeable professionals is available to answer any title and escrow questions, and we work with reputable realtors and brokers that can assist with any further questions or concerns regarding seller impersonation fraud. Don’t hesitate to contact us to speak to one of our team members and learn more about the services Landmark Title offers.