Amidst a Surge in Home Sale Scams; Here's how Estate Agents and Buyers can Stay Safe
A surge in land sale fraud
The real estate market, already grappling with historic inventory lows, is facing a new and concerning threat as home sale scams continue to escalate across the United States. In a recent incident reported by Patty Zuzek, a seasoned broker, a colleague fell victim to a fraudulent land sale scheme that highlights the emerging trend of scammers attempting to sell properties they don't actually own.
How the scam unfolded
In November 2023, a real estate agent in Zuzek's office received a call from an individual who had discovered the agency through a Facebook post. The caller expressed a desire to sell a vacant lot at a staggering $75,000 below market value but insisted on a cash transaction for a swift deal. Eager to seize what seemed like a golden opportunity, a builder was quickly brought on board as a buyer. However, the situation took a sharp turn when the actual property owner confronted the builder two days later, asserting that the land was not for sale.
FBI data reveals an alarming trend
This incident is part of a broader trend identified by law enforcement agencies and real estate professionals across the country. The Federal Bureau of Investigation (FBI) received a staggering 11,727 real estate-related complaints in 2022, amounting to losses exceeding $396 million, which is an 86% increase compared to 2020. The U.S. Secret Service, in collaboration with CertifID Inc., issued a warning earlier this year about the surge in real estate fraud associated with vacant and unencumbered properties.
Seller impersonation on the rise
Deployment of seller impersonation as a tactic has seen a significant uptick with 77% of real estate professionals surveyed reporting an increase in such incidents over the last six months. The scammers exploit publicly available records to impersonate property owners, capitalizing on the desperation of real estate agents seeking potential deals in the current housing landscape. Real estate agents, facing a drastic reduction in the number of homes available for sale, are particularly vulnerable.
Navigating the vulnerabilities of the real estate landscape
What makes these scams more insidious is the minimal paperwork required by fraudulent sellers to initiate transactions. Using fake IDs and conducting transactions via phone and email, scammers go to great lengths to make their impersonation convincing. With a focus on vacant parcels and unoccupied properties that are lien-free, these fraudsters are targeting a specific niche that is more challenging to monitor.
Protecting buyers: Challenges and solutions in the aftermath of scams
For buyers ensnared in these scams, the aftermath involves a painstaking process of regaining lost funds through a title insurance claim. The National Association of Realtors acknowledges that this can be an aggravating and time-consuming ordeal. CertifID, however, has emerged as a crucial ally in the fight against real estate fraud. The organization has assisted 378 customers who fell victim to this type of scam with 60% representing buyers. Zuzek recounted a specific case where, once the police were involved, the real estate firm stepped back, allowing law enforcement to take the lead. The builder, who has already paid for the property, is expected to recover the funds once the original owner files a complaint with authorities.
The pervasive nature of home sale scams
The pervasiveness of these scams is a cause for concern within the real estate community. As the real estate industry grapples with these evolving threats, it becomes imperative for stakeholders to remain vigilant. Homebuyers, real estate agents, and law enforcement must collaborate to implement effective measures to identify and combat this emerging menace in the housing market.
Safeguarding the future of real estate transactions
With scammers becoming increasingly sophisticated, it is crucial for all stakeholders to stay informed, implement stringent verification processes, and leverage technology solutions like CertifID to fortify the defenses against fraudulent activities.