In an uninhabited lot or seller impersonation fraud, public records are browsed to recognize property that is devoid of home mortgage or other liens, along with the identity of the homeowner. Oftentimes this causes the discovery of uninhabited lots. Then, impersonating the homeowner, the fraudster contacts a realty representative to note the property. All of the interactions happen through digital or email user interfaces. The property is then noted, usually listed below market price to produce interest in the listing. When it pertains to close on the sale of the property the fraudster will ask for a remote notary finalizing. The fraudster then impersonates the notary and returns falsified files to the title company or closing lawyer associated with the deal. The title company then moves the closing continues to the fraudster.
“You hear about people getting duped by people pretending to be title companies or Realtors and directing parties within the transaction,” said David Kennedy, the CEO of Fidelity Land Title Agency of Cincinnati. “That is the typical fraud that we usually see with someone impersonating somebody already involved in the transaction and trying to get them to send the wire to the wrong place. This time was different though because they were pretending to be a party in the transaction right from the very beginning.”
Kennedy’s company had a close encounter with uninhabited lot scams previously this year, however they captured it prior to the deal closed.
“We’ve been hearing about this type of fraud for two years, but this was the first time that we have actually seen it take place here in our area,” Kennedy said. “We are glad we felt that something fishy was going on and that our technology partner, CertifID, verified those feelings for us.”
According to CertifID, uninhabited lot scams is normally not found till the time of recording or moving files with the appropriate county.
“This recent trend involving seller impersonation is particularly concerning, as the real property owner is typically not aware nor in a position to prevent the fraud, until it is too late,” said Thomas W. Cronkright II, Executive Chairman of CertifID. “Unfortunately, it’s just the latest evolution of wire fraud that affects title companies, law firms, lenders, realtors, and home buyers and sellers.”
In Florida, Christian Ross of Ross Law | Ross Title is no complete stranger to seller impersonation scams.
“Someone recently told me that the Florida of today is the U.S. of tomorrow, so a lot of times we see this type of stuff before most other parts of the county and this was no exception,” Ross said. “We have a lot of absentee owners here that come from all over the world, fall in love with the beaches and buy property, so when these fraudsters started to target this game, it was a natural option because it is a very transient community.”
In addition to the regular comings and goings of Florida homeowner, the state likewise sees many land sales every year. In 2021, Florida was accountable for 12.8% of overall land sales in the U.S., 2nd just to Texas (14.6%), according to information from Realtors Land Institute and the National Association of Realtors. This, together with the reality that lots of homes in Florida are not inhabited year-round, makes Florida a prime play ground for scammers.
Other states with high land sale rates consist of South Dakota, Idaho, Iowa and Utah, with land sales comprising 60.0%, 32.4%, 29.4% and 28.6% of real estate agent’s sales in 2021, according to information from Realtors Land Institute and NAR.
Over the previous couple of years all kinds of scams have actually been on the increase. In 2022, the Internet Crime Complaint Center (IC3) determined a possible scams loss for the year of $10.2 billion, up from $6.9 billion in 2021. In addition, of the 800,944 problems received by the IC3 in 2022, 11,727 were property associated.
“Real estate represents a high value target for criminals, so as fraud increases generally, we will likely continue to see new types of scams emerge in the housing space,” Elizabeth Blosser, the American Land Title Association’s vice president of federal government affairs, composed in an email.
Over at CertifID, Adams thinks the recent uptick in seller impersonation scams is because of the general decline in the variety of property deals, with existing home sales dropping 34% year over year in 2022 to a yearly speed of 5.03 million, according to NAR.
“Fraudsters are always going to go for the easiest place to generate money,” Adams said. “There were fewer real estate transactions taking place, so there were less opportunities for them to defraud a particular transaction, and so what we saw was that they started to go out and manufacture closings by posing as sellers and reaching out to real estate agents. With fewer deals happening, agents are eager to jump on the listing and they maybe aren’t doing as much of their due diligence.”
Adams said crucial to avoiding seller impersonation scams is taking a layered method to identity confirmation and recognition for sellers. This consists of gadget confirmation, where the celebration functioning as the seller should properly recognize their geographical area based upon the IP address of the gadget they initially signed up with CertifID, multifactor authentication utilizing the validated contact number the seller supplied, and knowledge-based authentication.
This method is essential as merely utilizing an ID card validator is insufficient, according to Adams.
“There are a lot of services that you can purchase where you can take a picture of the front and back of a license and it will tell you whether or not the card is legitimate or fraudulent and unfortunately those services have a high rate of false positives,” Adams said. “They also, in some cases, can’t tell the difference between a fake ID and a real ID, and they are not able to say who is actually in possession of that ID card.”
This is an obstacle Jaime Kosofsky of Brady & Kosofsky in North Carolina has actually encountered. His company was struck by 2 seller impersonation scams in the fall of 2022, in spite of having several layers of cyber security, a catastrophe healing strategy and deal confirmations in location. Kosofsky feels phony IDs are at the core of his company’s bad luck.
“You can buy fake scannable IDs,” Kosofsky said. “You then take that ID to a bank, set up an account with the fake ID and then you find a suitable property by using public record and you are ready to commit seller impersonation fraud and that is exactly what happened to us. The guy had a Texas ID, a Florida notary and the property was in North Carolina. Just checking IDs is not enough.”
While market specialists worry that identity confirmation is an essential action in making sure a secure deal, Ross at Ross Law | Ross Title, said there are lots of indication you can watch out for even previous to reaching the closing table.
Like the scammer Kosofksy’s company handled, Ross said to be cautious of a seller who has an out of state ID and home address and is utilizing a notary from a 3rd state.
“We’d get people who would be impersonating someone who’s forwarding address was in Michigan, so they would get a fake ID with a driver’s license from Michigan with the correct forwarding address on it, but then they would be in England for the signing and then they’d want the money sent to a bank in Singapore,” Ross said. “That definitely tipped us off because very few people really live like that.”
Ross likewise kept in mind that alerting bells ring for him when scammers impersonating sellers are “almost too easy to work with,” which they are constantly inexplicably out of town.
His company has actually started the practice of mailing letters to the homeowner’s home address as noted on tax and property records, specifically if the property being noted for sale is not their main residence.
In addition to Ross’ warnings, ALTA recommends comparing the seller’s signature to formerly taped public files, to handle the notarization procedure and just utilize verified contact information, such as the mailing address on tax records, to get in touch with the seller.
“Knowing scammers are constantly changing tactics, ALTA members frequently share their latest experiences defending against fraud with other real estate professionals via meetings, communication portals and educational events,” Blosser composed. “While it is a big win every time a title agent identifies and stops fraud, the sooner fraud can be detected in a transaction, the better it is for everyone. Certainly, everyone involved in a real estate transaction has a role to play in combating fraud.”
