What is Seller Impersonation Fraud and How Does it Work?
What is Seller Impersonation Fraud and How Does it Work?
Oct 26, 2023
During the dip in home sales in 2023, cybercrime rings turned to new tactics to compensate for the lower housing market transaction volume. Seller impersonation fraud — also known as vacant land fraud, vacant lot fraud, owner fraud, and absentee seller fraud — has become one of the fastest-growing and newest forms of wire fraud in real estate.
As a real estate professional or property owner, knowing how it’s perpetrated, what to look out for, and how to protect yourself is essential. Here’s what you need to know about seller impersonation fraud.
What is seller impersonation fraud?
The most common forms of wire fraud involve impersonating a title agent or real estate agent to get a buyer to transfer funds into a fraudulent account. Seller impersonation fraud takes a different form. Seller impersonation fraud is a real estate scam where a fraudster impersonates the owner of a vacant or unoccupied property to steal the funds from the sale.
Seller impersonation fraud in six minutes: Watch as Tom Cronkright, our executive chairman of CertifID, explains the ins and outs of seller impersonation fraud.
How seller impersonation fraud works
Most scammers follow a similar strategy when committing seller impersonation fraud. Knowing how a bad actor commits this type of fraud will help you recognize the red flags.
Scammer searches public records. Fraudsters scrape publicly available databases or tax records to discover “unimproved” or “vacant” properties. These properties are also typically free and clear of any creditor claims or mortgage liens, making them easier to sell without a watchful eye.
Scammer creates fake credentials. Once they find a property that fits their criteria, they gather information about the owner using publicly available data. They create usernames, email addresses, and state- or federally-issued credentials like driver’s licenses or ID cards using the owner’s real name and address. The fraudster will typically use a money mule to stand in as the owner. The money mule’s photo is used across the fraudulent credentials to appear like the legitimate owner.
Scammer poses as the owner and contacts a real estate agent to list the property for sale. They use property feeder sites like Zillow, Redfin, or Trulia or browse local brokerage websites to find a listing agent. They fabricate a story using local details to build credibility with the listing agent and generally only communicate via email or text.
Scammer undervalue the property. After a scammer makes contact and hires a real estate agent, the agent lists the property on the MLS. The scammers set the home's listing price at or under the current market value to attract buyers.
Scammer quickly accepts an offer. Scammers will accept an offer from a buyer — almost as soon as it’s made — with a preference for cash sales and minimal diligence. Cash sales close quicker than financed deals and are more valuable to the fraudster.
Scammer refuses an in-person closing. Scammers will request a remote notary in almost every instance of seller impersonation fraud. They will sign before a notary using their fake credentials or impersonate or steal notary credentials and stamp the documents themselves.
Scammers disappear with the funds after closing. Because it is a vacant or unoccupied piece of land, it may be weeks or months after closing until the fraud is discovered. This makes recovery of seller impersonation scams very difficult.
What are the common signs of seller impersonation fraud?
The scammer moves fast during a seller impersonation fraud attempt. Vigilance and speed are vital to sniffing out the fraudster.
In most instances of seller impersonation fraud, the scammer fits a similar profile. This includes an out-of-town home address, a brand new submission to the listing agent's database through an online lead form, and an urgent or emotional story about why they need to sell the property quickly. If the seller or the property has any of the following characteristics, it might be a fraudulent attempt.
Common signs of seller impersonation fraud:
The listed property is vacant land. Scammers target unoccupied properties because they’re rarely top of mind for the owner. If you’re a listing agent and get a request for a property that has sat vacant and is suddenly and “urgently” for sale, take heed. You may be dealing with a fraudster.
The “seller” lives “out of town.” As part of their story, the scammer will inform you they live in a different location than that of the property. This detail helps them create a convenient excuse to request a remote or virtual closing. The scammer aims to create a complex narrative, so tracking their movements is more challenging.
The “seller” is a new lead. Real estate agents: be especially cautious if a lead for a vacant land sale comes through an online portal or a similar lead service and has no previous relationship with you. To perpetuate the fraud, scammers will submit their fraudulent listing request to multiple brokerages or real estate agent sites at a time to see who will agree to list the property. All it takes is one agent to agree to the terms, and the fraudulent transaction is in motion.
The listing price is below market value. Despite being willing to waste your time, scammers do not want to waste theirs. They will request to list the property below market value to initiate a quick sale. If the suggested listing price is suspiciously low, proceed with caution.
The “seller” accepts an offer quickly. Don’t expect a negotiation battle. Since it’s not their money or property, scammers will promptly accept an offer with little-to-no negotiation and a preference for cash sales.
The “seller” requests a remote notary. Scammers cannot risk an in-person closing exposing their nefarious actions. If the seller refuses to meet and close in person, you might be dealing with a fraudster.
Who is the target of seller impersonation fraud?
Owners of vacant or out-of-state properties are especially vulnerable to seller impression fraud attempts. Additionally, any real estate agent is targeted, as their services are needed to get the fraud in motion.
In a recent survey, nearly 73% of real estate professionals reported seeing increased seller impersonation fraud attempts. Additionally, 58% of respondents experienced seller impersonation fraud personally or through their company over the last six months.
Unfortunately, this will likely be a trend in 2024. As interest rates throttle real estate transactions, expect seller impersonation fraud attempts to increase.
How can I prevent seller impersonation fraud?
There are many ways to ensure you don’t become the next victim of seller impersonation fraud. Like most wire fraud or real estate scams, your best offense is a strong defense.
Recognize the signs. Fraudsters will use every tactic to trick you out of your time and money. The more you know about how they operate and act, the better prepared you’ll be when faced with an attack.
Use identity verification technology. We offer identity verification technology to ensure that wire transfers are safe and sent to the correct parties. Our system can help flag and identify fraudulent accounts at the time of closing. If you become an unfortunate victim of wire fraud, we also offer fraud recovery services.
Increase awareness of seller impersonation fraud. Education is critical to preventing fraud. Everyone plays a role in fraud prevention, from the seller to the agent. We highly recommend signing up for our newsletter, The Wire, for weekly updates about the latest in wire fraud. We also offer a variety of resources and regularly host webinars — like our To Catch a Fraudster webinar — with industry experts and fraud specialists.
Trust your gut. As a professional, you manage deals all day long. If the deal or seller seems suspicious, slow the transaction down or ask questions. Doing your due diligence will give you peace of mind, and your client will appreciate the extra care. You can also connect with your colleagues, like your title or real estate agent, for a second opinion about the account. (Bonus: Watch this webinar on bridging the gap between your transaction partners to fight fraud.)
Listen to a story about how CertifID protected Pacific Northwest Title of Kitsap County from seller impersonation fraud.
Stay vigilant against seller impersonation fraud
Unfortunately, seller impersonation fraud is here to stay. But you don’t have to become a victim. You can trust CertifID to ensure your transactions are safe from beginning to end. If you’re looking for a new identity verification partner to protect your transactions, we can help.
For more on seller impersonation fraud, explore the following resources:
Watch our seller impersonation fraud webinar: Tom Cronkright, our executive chairman of CertifID, hosted a webinar with industry experts Adella Pearson of US Title and Christian Ross of Ross Law on this topic. Listen in as they break down the ins and outs of seller impersonation fraud.
Will is a Content Marketing Manager at CertifID. His multi-disciplinary experience as a copywriter and designer has powered growth for numerous consumer, tech, and real estate companies from the startup to enterprise level.
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