Understanding and Preventing Seller Impersonation Fraud in Real Estate

Seller impersonation fraud is a growing concern in real estate, especially for property owners and real estate brokers. This type of fraud involves criminals posing as property owners to sell real estate they do not own, often leaving the true owner and the unwitting buyer to deal with the fallout. Here’s a guide on how to identify and prevent seller impersonation fraud to protect your assets and your transactions.

What is Seller Impersonation Fraud?

Seller impersonation fraud typically occurs when fraudsters identify properties that are free of mortgages or other liens—such as vacant land, rental properties, or vacation homes. They then pose as the owners to sell these properties quickly, often at below-market prices. The fraud is usually conducted remotely, with all communications happening via email or text, and fake documents are used to complete the transaction.

Red Flags to Watch Out For

Both property owners and real estate brokers should be aware of the following red flags that may indicate seller impersonation fraud:

1. Remote Seller: The seller resides out of state or out of the country, only communicates via email or text, and refuses to meet in person or via video call.
2. Urgent Sale: The seller insists on a quick sale, often pricing the property below market value.
3. Digital Presence: The seller has a limited or exclusively digital presence, such as using a P.O. box for an address.
4. Unknown Notary: The notary chosen by the seller is unknown or not located in the same state as the property or seller.
5. Unusual Payment Requests: The seller demands that proceeds be wired to an account in a different location than the property, or provides wiring instructions that seem suspicious.

Steps to Prevent Seller Impersonation Fraud

Verify Seller Identity:

• Use independently discovered phone numbers to contact the seller directly.
• Ask for government-issued identification and review it for signs of tampering.
• Use identity verification platforms like CertifID to validate the seller’s credentials.
• Compare the seller’s signature with previously recorded documents.
• If dealing with an entity, verify the details of the officers or registered agents against official records.

Verify or Select Notary:

• Confirm the notary’s credentials with the commissioning authority.
• Require notarization by a vetted and approved notary, possibly using Remote Online Notarization (RON) if authorized by the state.
• Avoid using a notary chosen by the seller without proper vetting.

Control Disbursement:

• Refuse to send funds to anyone other than the name on the title.
• Require that seller proceeds be paid by check rather than wire transfer.
• Confirm wire instructions match the account details on the seller’s disbursement authorization form.

Investigate Property:

• Search the property address online for any existing listings or advertisements.
• Talk to neighbors, relatives, or tenants to verify ownership.
• Ask the seller property-specific questions that only the true owner would know.

By being vigilant and following these best practices, property owners and real estate brokers can significantly reduce the risk of falling victim to seller impersonation fraud. Always verify the identity of all parties involved, scrutinize documentation thoroughly, and trust your instincts if something feels off.

Contact Edwards Law today to learn more about how we can help protect your real estate transactions and ensure a secure and seamless process.