Selling a Home, But Not Your Own: The Dramatic Rise of Seller Impersonation Fraud

The American Land Title Association surveyed hundreds of title companies — 783, to be precise —  and found seller impersonation fraud rising year over year. More than 20% of the firms reported recent instances of this bizarre activity.

Crafting elaborate hoaxes, these con artists pretend to be ordinary real estate owners. They are masters of stealing real deed holders’ personal information.

Forewarned is forearmed, so ALTA’s survey caught our attention. Here, we run through some questions a deed holder might have.

What Actually Is Seller Impersonation Fraud?

Seller impersonators go through public records looking for property. The perfect targets? Vacant land without loans or other liens. Homes belonging to older people, who have paid off their mortgages and may have moved, whether to live with their loved ones or in assisted-living settings.

After pinpointing real estate they think they can manipulate, seller impersonators sift through the public records for details about the actual owner. Then, they pretend to be that person.

Impersonating the owner involves putting together an online persona, and creating fake IDs meant to pass for the owner’s. Seller impersonators hire real estate agents from afar. Or they get stand-ins to show up locally — especially when it’s time to collect the funds.

And when it’s time for signing documents, seller impersonators abuse notarization. They’re experts at faking notary credentials, or misusing someone’s real notary credentials. Their scam includes forgery, as it involves faking the notary’s and owner’s signatures. The deed, the closing documents, a loan agreement — all can bear manufactured signatures and false affirmations. All are submitted by the con artist to the closing attorney or title firm.

Some impersonators convey the deed to their businesses — companies they’ve set up just for this purpose. And of course the culmination of the whole, complicated drama is to get the money out of a duped buyer. They close the deal and receive the purchaser’s wired funds. They sell thin air. And then they repeat the trick with the next unsuspecting soul.

After everything is said and done, it could take months until the real owners or their relatives find out something’s wrong. Undoing this type of illegitimate real estate sale is very hard. It’s essential to prevent a deal like this from going through in the first place.

As a Buyer, How Can I Avoid Scam Sellers?

Awareness is key. If you’re looking for real estate, be careful with low-priced listings. Look for:

• Sellers who only accept cash purchases.

• Real estate that does not call attention to itself. If you drive by, for instance, there’s no “For Sale” signage.

• People listing unoccupied properties or unbuilt land that the real owner might not be watching.

• People who list homes through the regular online broker sites for low prices, looking to sell quickly. Turns out they’re not interested so much in negotiation, as in getting someone else’s home sold in a hurry.

• People with dramatic reasons for being highly motivated to sell — from a distance.

• “For sale by owner” homes.  

• A seller who wants to use their own notary public.

• A seller who cannot supply a social security or tax ID number at the appropriate time.

• Real estate without mortgages or liens.

Some impersonators are represented by a power of attorney at closing; others want to close electronically.

You could run into a seller who insists on a virtual closing and remote notarization, yet who refuses to  do audio-visual calls. That’s because personal interactions put scammers at risk of unmasking.

Drat, Foiled Again! How Do You Bust a Con Artist?

Alert real estate professionals often do catch and stop impersonators before their dirty deals go through. This is according to the American Land Title Association. The ALTA survey shows about half the title companies busting the fraud before a buyer is defrauded.

A mindful real estate agent can usually derail a seller impersonator by examining credentials.

If you’re looking to buy, your agent is wise to take these steps throughout your transaction:

• Converse with the seller. Verify the phone number; don’t just call the number that the seller immediately gives.

• Ask probing questions. Be sure the seller actually knows details about the property that only someone familiar with it would know.

• Insist on a legitimate notary public. Here again, don’t simply use the one the seller immediately locates. Let the title company or closing attorney set up the signings and notarizations.

• Look up the owner’s signature, as it appears on prior documents recorded with the county. Be sure your seller’s signature is identical to the owner’s signature on record.

And of course, listing agents should always ask for photo ID from people putting real estate up for sale.

As a Deed Holder, How Can I Avoid Being Impersonated?

If you hold the deed to your home, check your county’s website. Find out if the recorder of deeds has set up an automated alert system, as more and more are doing. If it’s available, it’s a good tool to sign up for. It enables property owners of record to receive messages telling them some activity or claim is impacting their titles.

Set up an alert for your address on your search engine, too.

If you have elder loved ones, you can help keep them safe from swindles and hacks.

Read our tips for keeping seniors safe from fraudulent deed conveyances.

And remember: If you own but don’t live in a property, your deed has a heightened appeal to fraudsters.

If you’ve paid off your mortgage, you are also at heightened risk (because there’s no company watching your title).

If I’m Swindled Through Seller Impersonation Fraud, Will Insurance Help Me Recover My Deed?

First things first. If you’re pretty sure a seller impersonator has impacted your property rights, your first move should be making a report of wire fraud with your police department, to the Federal Trade Commission (ftc.gov), and to the FBI’s Internet Crime Complaint Center (ic3.gov).

Next, check your title insurance for coverage, if you have a policy. And if you are just now buying a home, get an owner’s title insurance policy and shop for it carefully.

Home buyers can protect their deeds by getting home or condo owner’s title insurance that covers future acts of forgery or identity theft.

In 46 states, ALTA says, you can find enhanced policies that deal with seller impersonation. And about four in ten policy holders do select title insurance policies that cover forgery, including seller impersonation fraud, that occurs after closing.

Now you know.