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The Rise of Seller Impersonation: How Scammers Are Targeting Real Estate Transactions

a couple just realizing they were scammed

Scammers have been trying to get involved in real estate transactions for years — especially when it comes to wire fraud. While many have found themselves victims of these horrible crimes, those in the industry have taken steps to protect their clients against them. 

However, title companies, lenders, and realtors are finding out that when they protect against one thing, fraudsters will find another way to get what they want. 

Most recently, it has been seller impersonation fraud. Knowing what it is and the red flags to look out for can ensure that your real estate transaction is safe. 

What is Seller Impersonation Fraud? 

Seller impersonation fraud is a deceitful practice in which scammers fake their identities. They pretend to be legitimate property owners who want to sell the legal rights to their property. Except there is just one problem: they do not legally own it. 

So, how do they do it?

These scammers will comb through the property records to find those that do not have any liens or mortgages against them. They also look for properties that may not be watched too closely under the owner’s eye, such as vacant land or rental properties. 

Then, they find a listing agent and have the property listed for sale — acting as if they are the property's true owner. To avoid any direct contact, these ‘sellers’ will say they live elsewhere and will communicate without any face-to-face contact. 

The property is listed, an unsuspecting buyer makes an offer, and it goes through the title process. The funds for the purchase are sent directly to the scammer and the buyer gets nothing in return since the scammer didn’t have any rights to give in the first place. 

Seller Impersonation Fraud: The Red Flags

Seller impersonation fraud can be devastating for homebuyers and for the true property owner, too. The good news is that educating yourself on this type of fraud and knowing what to look for can minimize your risks.

Keep an eye out for these red flags: 

No Connection to the Realtor. While there are those individuals who may reach out to a specific realtor when wanting to sell their property, most have a reason why they chose that person, such as a mutual friend or acquaintance. But sellers who come to specific realtors through a random email or lead service? Questions should be asked. 

Low Sale Price. Sometimes sellers are distressed and want to list a property because they want to sell it fast and get it out of their hands. However, what they don’t typically do is ask the realtor to list the property way under its market value. This makes it enticing to buyers and it will gain traction. 

Accepting an Offer Right Away. Most sellers will want to negotiate the sale of their property. If someone comes in with a low offer and they accept without any hesitation, this should always be a red flag. 

Insistence on Cash Buyers. What seller doesn’t love a cash buyer? But when they push and push toward cash buyers only, perhaps a closer look at the sale is warranted. 

A Rush to Close. Everyone knows that closing on a property takes time since there is a lot that needs to be done to ensure it is a legal, smooth transfer. Someone with something to hide, of course, is going to want to make this happen quickly so that there is less chance to get caught. 

Avoiding Direct Interaction. Scammers will want to do what they can to avoid as much interaction as possible, especially face–to–face. Although they may be remote, title companies can send notaries to meet them. When this is refused and they prefer a notary of their own, it is a good idea to dig deeper into the transaction. 

Protecting Yourself From Buying From a Fake Home Owner

As a buyer, what can you do to protect yourself from being a victim of seller impersonation fraud? 

Since you have a lot on your plate with buying the property, it can be very beneficial to surround yourself with a team that is up-to-date on the latest real estate scams. They should have safeguards in place to protect you from them. 

Still, it is always a good idea to stay educated and know what the red flags are. If something sounds too good to be true, it may be. Don’t be afraid to ask questions. Your diligence may just protect you from a devastating financial loss. 

Safe and Secure Transactions with Buchanan Settlement Services

Buchanan Settlement Services and its title agents stay on top of all the latest real estate scams to protect their clients. Come learn what we are all about!

Contact us today to learn more about what we have to offer. 

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