Biggest Red Flags in a Real Estate Transaction: Part 2

By dev

We recently discussed some of the biggest red flags to watch out for when buying real estate to help you avoid being taken in by a seller impersonation scam. This type of fraud occurs when a scammer forges documents to impersonate the owner of a vacant or non-owner-occupied property, attempting to sell it quickly before the scheme is discovered. This is one of the more common real estate scams today, and according to a 2023 survey of real estate professionals, it’s currently on the rise. The survey revealed that more than half of respondents encountered at least one instance of seller impersonation fraud in the past 6 months.

In part 1 of our blog about the biggest red flags to watch out for in a real estate transaction, we revealed some of the most common hallmarks of seller impersonation fraud. Today we will explain how we can help protect you if you believe your seller might be impersonating the true owners of a property you want to buy.

Protecting Yourself from Seller Impersonation Fraud

There are many stages during a real estate transaction in which we may be able to identify seller impersonation fraud. Here are some steps we may take to find out whether the person you’re communicating with is the true owner of a property:

• Send a Confirmation Letter – Before signing any paperwork, making an offer, or allowing any money to be put into escrow, we send a certified confirmation letter to the seller’s address as listed with the county tax office. This letter should contain the details of the transaction and request a callback to confirm. Sending it by certified mail will allow us to know if the letter was received. If we don’t receive a callback after that, it’s likely that the seller does not actually live at the address listed with the county tax office.
• Insist on Using Your Own Notary – Seller impersonators often conduct their schemes by acting as their own notary. This allows them to more easily forge documents. By using a verified notary, we can take away one of the tools scammers use to take advantage of unsuspecting victims.
• Talk to the Seller’s Real Estate Agent – In many cases, scammers use unsuspecting real estate agents so they won’t ever have to communicate with the buyer in person. We’ll talk to the seller’s agent and ask them how the seller has been communicating with them. Will they only communicate with the agent by email or text? Has the agent ever met the seller in person? The answers to these questions can reveal serious red flags, helping prevent you and the real estate agent from being taken in by fraud.
• Try Contacting the Seller by Phone – If the seller won’t speak to us on the phone, it’s a definite red flag. If we can manage to get ahold of them, we ask them questions about the property that only the true owner would know. We ask them questions about specific physical characteristics of the property; if they can’t answer them correctly, it’s likely they have never actually set foot on it.
• Ask the Seller to Provide Documents Not in the Public Record – Certain documents, like the original closing statement, title insurance policy, or tax bills, are not in the public record. If the seller can’t provide copies of them, they probably never had possession of them in the first place.
• Compare the Seller’s Signature with Signatures on Older Documents – If the seller’s signature looks different from previously recorded signatures, they may have forged ownership documents.
• Use Identity-Confirming Software – We use software that allows us to confirm the true identity of a seller. If the seller is unwilling to submit to confirmation of their identity, you will probably want to back out of the deal as soon as possible.

As seller impersonation fraud becomes more common, real estate professionals and the title insurance industry are stepping up their efforts to combat it. Regardless, scammers can still slip through the cracks. 

As a leader in the title insurance industry, World Wide Land Transfer is on the front lines of the battle against seller impersonation fraud. If you need title insurance services anywhere in the country, we can help you find a policy that fits your needs and your budget. We will always work diligently to prevent our clients from becoming the victims of fraudulent sellers. Get in touch with our team today to find out more about the title and escrow services we offer, and what we’re doing to combat seller impersonation fraud.

World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.