Ways to identify and stamp out seller impersonation fraud were recently laid out by AmTrust Title Insurance Co. Underwriting Counsel James Tarlton, who also highlighted thecriteria that makes certain properties more vulnerable to fraud.
“If a property is vacant, this is not necessarily an issue,” he said. “It’s likely the owner already moved to a new location. However, it’s possible that the ‘seller’ saw or learned of a vacant home or one occupied by a tenant and decided to seize the opportunity to commit fraud with the house.
“If the seller says they can’t attend the closing because they are on vacation, work overseas, or have a family emergency, that may be true. Or they might be trying to avoid showing up in person for fear of being exposed as not being the real owner of the home. Excuses like these are suspicious and could be a sign that the purported seller is trying to prevent exposure as a fraud.”
According to an October 2023 survey from wire fraud protection firm CertifID, 54 percent of real estate professionals reported having experienced at least one seller impersonation fraud attempt within the past six months.
Meanwhile, 77 percent of those surveyed claimed to have seen an increase in seller impersonation fraud attempts within the same period.
Tarlton said to always be on the lookout for sellers who refuse to speak in person or over the phone and make all communication electronic.
“If someone is trying to pull off a scam, communicating solely via email gives them time to formulate responses and do research before getting back to you,” he said. “Instead, buyers should strive to speak in person or, at least, by phone to better assess whether or not the seller can readily and effortlessly answer simple questions about themselves or the property.”
A seller being overly agreeable about making concessions is another big red flag, Tarlton added.
“Before closing, the buyer might mention repairs the house needs and ask the seller to reduce the price of the home or pay for the issue,” he said. “If they agree to the requests too quickly, you might be dealing with a fraudulent seller. Legitimate sellers need time to think through requests that affect their proceeds.”
If a property Is unencumbered by voluntary liens such as a deed of trust, Tarlton said that’s a surefire sign for extra precaution.
“If there’s no mortgage on the property, it could be that the seller paid off their mortgage,” he said. “However, it should prompt further investigation because when a mortgage restricts the property, the closing agent coordinates between the seller and mortgagor, often requiring personal information that a fraudster wouldn’t have access to. If there’s no mortgage, it’s easier for a ‘seller’ to forge the real seller’s signature, sign the property over to themselves, and then offer it for sale.”
Additional red flags cited by Tarlton include a listing being far below market value and a seller trying to aggressively rush the closing process along.
Simply remaining alert and taking action when necessary can make it hard for bad actors to commit fraud in transactions, Tarlton said.
“A real estate transaction takes time,” he said. “Sellers often rush to receive their funds, but if a seller tries to move things along too quickly, that may cause concern. They might be an imposter who wants to complete the transaction before the others involved in the sale discover them. Ask them why they are in such a rush and listen for contradictions or unrealistic claims. Have another professional involved in the transaction bring up the topic with the seller as well and compare notes. If there’s any information that’s verifiable, see if it checks out. There might be a simple answer, like they’re buying a different property and need the sale proceeds of their sale to cover their purchase, but proceed with caution.”