A Warning to Buyers and Sellers: The Rise of Real Estate Impersonation Fraud

A Warning to Buyers and Sellers The Rise of Real Estate Impersonation Fraud - 1 (800) 880-7954

The Nevada Division of Insurance along with the Nevada Real Estate Division have issued warnings to the public regarding a sophisticated scam infiltrating the real estate market. Dubbed “vacant lot fraud” or “seller impersonation fraud,” this scheme involves deceitful individuals who falsely assume the identity of property owners to illicitly profit from selling real estate that they do not own.

The Mechanics of Vacant Lot Fraud

At the core of this scam is the exploitation of public records by fraudsters. These individuals meticulously sift through databases to locate real estate properties, particularly those without mortgages or liens, indicating a clear path to impersonate the owner. Focusing specifically on vacant lots, investment properties, and vacation or rental properties not inhabited by the owner, these scammers engage real estate agents while posing as the rightful owner, intending to list the property for sale. This type of fraud primarily targets properties that are less likely to draw immediate attention from the actual owners, making it easier for the scam to proceed without detection.

Execution and Implications of the Scam

Once listing the property, the scammer swiftly accepts an offer and then provides fraudulent documents to the title firm or closing attorney involved in the transaction. The scammer deceitfully redirects the closing proceeds to their account. Often, no one notices the magnitude of the fraud until the county officially records the fraudulent transaction documents, putting the rightful property owner, the buyer, and the real estate professionals in a precarious position.

Recognizing Red Flags of Seller Impersonation

The American Land Title Association (ALTA) has outlined several warning signs indicative of potential fraudulent activity. These include the seller being elusive or refusing to engage in video calls, insisting on below-market listing prices for quick, cash transactions with minimal negotiation, and a refusal to attend signings under the pretext of being out of town.

Other suspicious behaviors include insisting on using a specific notary, demanding wire transfers for transaction proceeds, and discrepancies between the seller’s provided address and the official owner’s address on record. Such red flags necessitate heightened vigilance and possibly halting the transaction to conduct further due diligence.

Proactive Measures Against Real Estate Scams

To combat such deceptive practices, ALTA recommends a series of precautionary steps for title and real estate professionals. These include sending verification emails to the seller’s address as per tax records, verifying the seller’s identity through third-party services, and ensuring all notarial acts are conducted by vetted professionals, preferably in person. Additionally, employing conversational tactics to gauge the seller’s knowledge of the property, verifying wire instructions meticulously, and requiring specific verification forms such as a voided check for disbursement authorization are crucial steps. These measures are aimed at early detection and prevention of fraudulent activities, safeguarding all parties involved in real estate transactions.

By understanding and implementing these guidelines, professionals and buyers alike can significantly reduce the risk of falling victim to the sophisticated and damaging schemes of real estate fraudsters.