Incidences of fraudulent property title transfer have mushroomed across the country. Thieves stealthily steal a property from the rightful owner without the owner’s knowledge. Usually, the owner finds out through indirect means. Real estate agents are sometimes contacted by a scammer posing as a seller, but the property may not be his. Don’t unwittingly aid a thief, deprive a rightful owner of their property, or sell a stolen property to a buyer.

How large are the losses?

Seller fraud is at a fever pitch in the real estate industry. Statistics from 2023 show that cybercrime is the third-largest economy after the United States and China. In 2023, there were $12.5 billion in losses, of which $2.5 billion was from the real estate industry.

Based on Secret Service estimates, $2.5 trillion moved through the real estate industry in 2024, representing 25% of the Gross Domestic Product (GDP). Eighty-six percent of fraudsters are using legal business structures as fronts for cybercrime. Of these, 50% are involved in global drug cartels and crime. Fake sellers of properties are often state-sponsored, and funds are used to support foreign economies.

In 2023, Alabama was the top state for cybercrime losses, with a total loss of $5,346,973 from 77 reported cases. Only 10% of real estate fraud is believed to be reported, so the actual number may exceed $50 million in this state alone.

Who is most at risk?

Criminals committing these brazen acts usually target unoccupied properties with an inattentive owner. This could be an unoccupied inherited property, a second home where the owner may or may not have tenants or vacationers occupying, or an undeveloped piece of land.

How do they do it? Through fake listings.

The thief finds such a property, looks up the owner on public records, and then extends his online search for personal information on the owner. He then commits identity fraud, creating a false ID using enough identity details to fool a county clerk, a real estate agent, or a title company into thinking he is the legitimate owner. The fraudulent “owner” typically pretends to be out of town to avoid face-to-face meetings. Who the crook deals with determines how he intends to cash in on his purloined property.

• The simplest step is for the crook to download and complete a quitclaim deed form, use fake IDs to pose as the legitimate owner at a county clerk’s office, and fraudulently transfer the property to a bogus third party. Then, he can monetize it in various ways. 
• He could pose as the legitimate owner, hire a real estate agent to sell the property with a listing, and collect the equity from the proceeds. This is the preferred scam for vacant, unattended properties.
• He could pose as the legit owner or use the quitclaim method to pose as the new owner and take out a HELOC or cash-out equity loan on the property.  
• He could rent the vacant house out and collect the monthly rental checks. 
• The fraudster could market a non-existent property using stolen photos from a closed property.

Practice Due Diligence

If you are approached by an out-of-town seller with a vacant property to offer, pursue due diligence with the following research points:

• How long has the current owner had title to the land? A recent transfer in public records followed shortly by attempting to sell is a big red flag.
• Is the seller a U.S. citizen or Permanent Resident? Can they document it?
• What is the seller’s location? Can they come to town so you can meet them in person?
• If the seller was referred to you, was it from a trusted source? Did the source know the seller personally? If not, what was the method of communication between the seller and your referral source?
• Is the seller offering the property at a “too good to be true” price and desiring a quick close?

Be attentive to grammar and syntax flaws in the seller’s email communications, which may indicate a foreign actor. Request an online Zoom or Google meeting and insist on live video contact. Ask them to hold up a photo ID to confirm their identity. Be suspicious if the seller makes excuses for appearing in the video or uses a still photo that may not be him. 

Useful resources

• Report all incidences of suspected cybercrime (business fraud, wire fraud, email scam, etc.) immediately to the FBI Internet Crime Complaint Center: ic3.gov
• You can confirm the seller’s telephone number via https://phonevalidator.com. 
• Check their IP address against the seller’s claimed location at https://whatismyipaddress.com.
• Verify passport information with https://emvlab.org.mrz/.

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