Imagine sitting down in a realtor’s office to close on a new property, signing all the paperwork—and then discovering the seller didn’t actually own the land you thought you were buying. It seems almost impossible, but seller impersonation fraud is a growing problem. One in five title companies reported dealing with such fraud in April 2024 alone, and 28% experienced at least one such attempt last year.
A study from the American Land Title Association examines the prevalence of seller impersonation fraud and what both individual buyers and industry professionals can do to limit the damage. Given the high demand and low inventory in the housing market lately, it’s only natural that fraudsters would be leveraging real estate scams to their advantage.
Some of the biggest red flags for this type of fraud include vacant land transactions, requests to use an unfamiliar notary, and all-cash transactions.
“If someone is looking to buy a home and finding their options are scarce, fraudsters can drum up a lot of interest by impersonating sellers who are motivated to sell their property quickly,” said Suzanne Sando, Senior Analyst of Fraud and Security at Javelin Strategy & Research. “Through fake listings and counterfeit documents created specifically for the property, a criminal would entice a desperate buyer into making a quick offer, often in cash and sight unseen, on a hot property that will sell quickly.”
The Perils of Vacancy
How do the scammers do it? According to Sando, criminals look for vacant property, unused lots, and sometimes vacation homes that are mostly unoccupied, and create forged documents to put the property up for sale.
“In some cases, the criminal uses stolen personally identifiable information belonging to the legitimate property owner, like Social Security number or driver’s license number, in order to increase the likelihood of their scam being successful,” Sando said.
The good news is that many of these fraud attempts are detected before closing. Nearly half of the title companies surveyed by ALTA reported it was at least somewhat common to identify and prevent fraudulent transactions before closing, compared to only 26% who said it was likelier after closing.
For those concerned about the validity of a real estate purchase, it’s advisable to ask if the realtor has met the seller in person or at least through a video call. Additionally, using a vetted and approved notary public and considering title insurance are important steps to protect against potential issues.