Real Estate Fraud Part 2: Seller Impersonation Fraud – Buyer Beware
In part 1 of this series, a scenario was presented that described how an unwitting buyer could be duped into buying real estate from a fraudster that did not own the real estate being sold. This is known as seller impersonation fraud and is just one type of real estate fraud that contributed to the 9,359 cases of real estate fraud reported to the Federal Bureau of Investigation in 2024 resulting in a loss of $173,586,820. This series of articles will identify some of the most common types of fraud in real estate transactions so that both buyers and sellers of real estate can be aware of the potential danger.
What are some of the warning signs that our innocent buyer missed? First the property was offered for below market value on a “for sale by owner” website. If a real estate professional is involved, they can sometimes be the first to spot fraudsters, however, a crafty criminal can sometimes even fool a real estate agent so the price that is “too good to be true” may be the buyer first warning.
In an effort to conceal their identity, a fraudulent seller will often insist that all communication be done only by text or email. A savvy buyer should insist on an in person or virtual meeting and copy of the seller’s government issued identification. The buyer should make sure that the name and address on the ID matches the name and address in the real estate records. Some additional internet searches can often reveal more facts about the identity of the true owner in order for a positive identification to be made.
The criminal will often want things done fast, insisting on a cash buyer, providing a speedy acceptance of the offer and pressing for a quick closing. This is done to keep the buyer scrambling to close, without the assistance of other professionals who might spot the fraud or require more due diligence, in an effort to get the buyer to act before thinking things through.
The fraudulent seller will insist on a remote closing, in order to avoid the scrutiny that should come with an in person closing at title company. Remote closings can be done securely, but should be handled by an attorney or title professional.
Finally, notary fraud is present in a large number of fraudulent real estate transaction. Instead of signing their documents in front of an actual notary, the fraudster will use fake notary credentials on the official documents or may even illegally use a real notary’s name and credentials to the documents.
Future articles will discuss how property owners can be at risk of seller impersonation fraud, prevention tips and information on other types of real estate fraud.