The scams begin with a hunt through public records for vacant land, an absentee owner and no mortgage. Look for red flags, like a refusal to talk in person.
CHICAGO – Real estate professionals should watch for these red flags in the course of the transaction.
The FBI’s Internet Crime Complaint Center warns that losses from real estate and rental scams are steadily increasing, reaching more than $396 million last year. Scammers are plotting elaborate schemes to dupe potential buyers, property owners and real estate professionals.
One of their latest targets is vacant land, warns Charlie Lee, senior counsel and director of legal affairs at the National Association of Realtors®, in the latest “Window to the Law” video.
Think like a criminal
Scammers comb through public records and flag vacant parcels of land and properties that don’t have a mortgage or other lien, Lee says. Then, they’ll pose as the landowner, asking a real estate agent to list the property.
“For the agent, the deal seems too good to pass up,” Lee says. “The seller is willing to sell below market value, the property generates great interest and they’ll quickly accept an offer – with a preference for a cash sale.”
Real estate attorney Victor Petrescu recently warned of an uptick in scammers known as “title pirates,” who use fraudulent or forged deeds and other documents to convey title to a property. Often, these scams go undetected until after the money has been wired to the scammer in the fraudulent sale.
“These scams have defrauded buyers out of great sums of money and left property owners and brokers and agents having to sort out the mess,” Lee says.
Lee says the following are some red flags to watch for:
- The “seller” requests to sell a vacant property for less than its fair market value.
- The “seller” only communicates electronically. Many of these imposters are out of state or from a different country and will decline face-to-face meetings, Lee says.
- The “seller” typically requests a remote closing using a remote notary – whom they’ll arrange on their own. Beware: The scammer may even impersonate the notary and provide fraudulent documents at closing, Lee warns.
Real estate pros should do their due diligence to verify that any person claiming to be the seller is the actual property owner, Lee says. Ask for multiple forms of identification and proof of ownership, and request a face-to-face meeting. Many of these scammers will only communicate electronically, he says. Test the seller’s knowledge about the property using information beyond what can be found in public records or online, Lee says.
Also, real estate pros should be cautious about any seller who arranges for a notary at closing on their own, Lee adds. Allow the title company to select a notary. If that’s not possible, make sure the notary is a “vetted, independent and approved remote online notary,” Lee suggests. Before transferring any funds in a transaction, ask the seller to provide a copy of a voided check with a disbursement authorization form.
© 2023 National Association of Realtors® (NAR)
©Florida Realtors®
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