Changes in technology and market practices overall have increased the levels of fraudulent activity in the practice of real estate. It is impossible to be aware of every scam that exists, but that does not mean you should enter the market ill-informed.
Scammers will attempt to trick you into sending them confidential information and money by presenting desperate buyers with deals that are too good to be true. There have even been cases of scammers attempting to sell a home that they do not even own.
We want all realtors to be safe when practicing and to not feel bad for taking any precautions. Here are 5 things you can implement now to avoid fraud.
But before we continue, never hesitate to consult an attorney that has experience in real estate law and has seen all sorts of attempts at fraudulent real estate transactions. No one can aid you in a more effective and personalized manner than an experienced attorney. Contact us today at (813) 563-1759 or visit our website brownlawandtitle.com to learn more and schedule a free consultation.
What are the indicators of a fraudulent real estate transaction?
The first glance at a real estate transaction can give a lot of hints that could lead to you concluding that the transaction is fraudulent, and they are quite easy to point out. You should first analyze the deal and ask yourself: “Is this a reasonable asking price”? If the asking price is too low in comparison to the estimated value of the property, you might want to investigate it further.
Next, you’ll want to investigate the owner of the property. Is the property vacant? Is the owner a foreigner? Answers to these questions will grant you a great lead.
You’ll always want to consider a fraudulent transaction when a property is vacant or has a different address than the owner’s tax mailing address. If there are no outstanding mortgages or liens on the property, this is another potential indicator. Other potential indicators include:
- They want a quick sale and don’t want to negotiate.
- Refuse to do a video call.
- Demand a cash buyer and funds via wire transfer.
- Only communicates via text or email.
- Is unable to verify their identity.
- Wants to use their own notary.
Thankfully, there are a lot of options you have when a transaction is potentially fraudulent, and the seller cannot be contacted directly. First off, never hesitate to search the public records to compare signatures or sales prices to the appraisal value or sale history, as well as for verifying names. Don’t be afraid to take control of the disbursement and demand wire verification and a copy of a voided check.
Everyone should try to report fraud to law enforcement. File a report to IC3.gov, your local law enforcement office, and state law enforcement. It may also be a good idea to report this to your title insurance underwriter.
How can I safely wire money?
When it comes to wire transfers, fraud isn’t the only issue, rather someone requesting/wiring money isn’t being careful with number inputs or confidentiality. You should always request payoff letters in a secure method. Whether that is in person or through a video call, you should never send it via email. Pay attention to the lender and any changes in their contact information, the bank of the lender, and compare it with multiple other payoff letters.
One should always use a wire verification service and match account details with the disbursement authorization form in case of updates contact or wiring information and any potential fraud. It is important that you obtain any contact information and any verifications independently in case of a conspiring effort to defraud.
What can I do to ensure that the seller of a vacant lot is the real owner?
It is a lot harder to ensure a vacant lot sale is legit since you can’t knock on the door of an invisible house and make sure the owners are truly selling their house. Since this is the case, scammers can claim to be the owner and attempt to sell online (on websites like Zillow) and fool buyers.
With vacant lots, you should never use information provided by online sources. Instead, send a letter to the address where property tax bills are sent. The fraud indicators for a vacant lot are more limited, so you will want to not only ensure identification is provided, but don’t deal with them if the seller is out of state, the property has been owned for a long time, and they insist on using their own notary.
It may also be wise to search for previous owners of the lot, contact the listing agent directly, and request a video chat with identification. Another thing you’ll want to compare is the date of birth to the date of title, since disparities between age and when the property was purchased is suspicious. For example, if a property is owned by a couple for 20 years and the seller’s driver’s license shows them both to be 30 years old, you should automatically be suspicious.
You should also note that any quick closing surrounding vacant land is a red flag. When combined with long ownership of the property, you should ask yourself if it is suspicious that they are selling it.
What should I do if the signature on the deed is forged or if I suspect it to be forged?
A deed that is forged is void. Since forgery is a civil tort, all that you need to do is prove by a preponderance of the evidence to invalidate a forged deed. If you suspect that the signature on the deed is forged, you should look for recorded proof of the time of execution of the deed, verification by the owner of the property, and any changes made to the document after it was signed. If the deed was forged, it could result in the following:
- You experience issues with the mortgage loan.
- You stop receiving bills for property tax.
It has happened where the name on the deed was changed fraudulently, and a scammer attempted to sell a house with the “forged” signature on the new deed. A situation like this one is why you should note the indicators of a fraudulent transaction and apply them to your practice.
Specific indicators of a forged signature on the deed include the seller being out of state or the deed being changed recently. If the deed is indeed forged, you’ll first want to contact the title insurance underwriter for assistance and protection against forgery.
If you are still unsure, you’ll at least want to ensure that a warranty deed was involved in the transaction, since a warranty deed grants the covenant of seisin, which promises that the seller owns the property being sold and that there aren’t any conflicting interests.
How can I make sure a notarized document is not fake?
Fake notaries in real estate transactions are becoming a common occurrence with online notarization being available. You should verify that there is a stamp on the notarized document, and that it is valid. Indicators of fraud include there being no identification provided or the seller insisting on using their own notary. You can conduct a notary search online at online-notary.sunbiz.org.
Verify the name and the location of the notary as well as comparing the handwriting with previous documents with the same name. You’ll want to look out for misspellings on the passport and notary stamp. There has been complete identity theft in this regard.
Other practices you can implement are requiring a second form of identification and contact information and verifying the notary is affiliated with an applicable government agency. You should also look for any misspellings on a stamp, as this could indicate a fake. It would also be a good idea to call the notary to verify they notarized said document.
Most importantly, we want all realtors to be safe when practicing and to remember that it is ALWAYS a good idea to take precautions, even if it may cost you more time in the short run. Never hesitate to contact us today at (813) 563-1759 or visit our website brownlawandtitle.com to learn more and schedule a free consultation.